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Key Audit Matters
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How our audit addressed the key audit matter
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1) Inventories
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As of 31st March, 2024, inventories appear in the Financial Statements
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Our audit procedure included, among others:
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for an amount of Rs. 149,455.51 lakhs constitutes 24.50 % of the total assets of the Company. Inventories are valued at the lower of cost and net realisable value.
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• Reviewing the Company's process and procedure for physical verification of the Inventories, identification of non-moving and obsolete items and accounting for the same.
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The Company may recognise an inventory allowance if inventory items are damaged, if the selling price has declined, or if the estimated costs to completion or to be incurred to make the sale have increased.
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• Obtaining the physical inventory count reports of the Management as per verification plan and discussing with the Management about the Control checks performed by them.
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We considered this matter as key audit matter due to the:
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• Assessing the methods used to value inventories and ensuring the
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• Significance of the inventories balance.
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consistency of accounting methods.
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• Complexities involved in determining the cost of inventories in
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• Testing, by sampling, the effectiveness of the controls set up by
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view of type of materials, multiple integrated manufacturing
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Management to prevent or detect possible errors in valuation of
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process, locations and obsolete inventories.
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inventories.
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Key Audit Matters
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How our audit addressed the key audit matter
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Refer note no. 1(C)(V) and 7 to the Financial Statements.
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• Analysing the Company's assessment of net realisable value and calculations for stock obsolescence.
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• Verifying the completeness of disclosure in the Financial Statements as per Ind AS 2.
• Obtaining representation letter from the Management as per SA 580 (revised) - Written representations.
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2)
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Accounting of Unlisted, Secured, Redeemable, Non-Convertible Debentures
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During the year, the Company has made allotment of 3,20,000
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Our audit procedure included the following:
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Unlisted, Secured, Redeemable, Non-Convertible Debentures with 14.50% per annum as Scheduled Coupon Rate and 3.00% per annum as Additional Coupon Rate, having face value of Rs. 100,000/- each aggregating to Rs. 320,000 lakhs on private placement basis to the various Debenture holders with a tenor of sixty months from the date
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• Verifying the compliance related to Companies Act, 2013.
• Obtaining direct balance confirmation from Debenture Trustee, Vistra ITCL (India) Limited.
• Verifying the calculation working of interest and its classification.
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of allotment.
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• Obtaining representation letter from the Management as per SA 580
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(Refer Note No. 18.01 to 18.04 to the Financial Statements)
Due to significance of balance and various statutory compliance under the Companies Act, 2013, we considered it as a key audit matter.
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(revised) - Written representations.
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3)
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Litigation and Regulatory Claims
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The Company is subject to number of significant litigations. Major
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Our audit procedure included the following:
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risks identified by the Company in that area related to Energy Development Cess, Attachment of the Company's property by the Directorate of Enforcement, Arbitration with the vendors/ customers, other litigation with Government authorities, etc. The amount of litigation may be significant and estimates of the amounts of provisions or contingent liabilities are subject to significant Management judgement. (Refer Note No. 2.07, 2.08, 3.03, 3.04, 29.01, 38 and 49 to the Financial Statements)
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• Assessing the procedures implemented by the Company to identify and gather the risks it is exposed to.
• Obtaining an understanding of the risk analysis performed by the Company, with related supporting documentation and studying written statements from internal legal experts, where applicable.
• Discussion with the management on the development in these litigations during the year.
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Due to complexity involved in these litigation and regulatory claims,
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• Enquiring from the Company's legal counsel and studying the
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management's judgement regarding recognition and measurement
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responses as received from them.
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of provisions for these legal proceedings is inherently uncertain
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• Verification that the accounting and/or disclosure as the case may be
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and might change over time as the outcomes of the legal cases are
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in the Financial Statements made by the Company is in accordance
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determined. Accordingly, it has been considered as a key audit matter.
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with the assessment of Company's legal counsel/management, based on the information currently available to the Company.
• Obtaining representation letter from the Management on the assessment of these matters as per SA 580 (revised) - Written representations.
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We have audited the accompanying financial statements of JAYASWAL NECO INDUSTRIES LIMITED ("the Company"), which comprise the Balance Sheet as at 31st March, 2024, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Cash Flows and the Statement of Changes in Equity for the year then ended, and notes to the Financial Statements, including a summary of material accounting policies and other explanatory information (hereinafter referred to as "Financial Statements").
In our opinion and to the best of our information and according to the explanations given to us, the aforesaid 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 31st March, 2024, its Profit including Other Comprehensive Income, its Cash Flows and the Statement of Changes in Equity for the year ended on that date.
Basis for Opinion
We conducted our audit in accordance with the Standards on Auditing ("SA") specified under Section 143(10) of the Act. Our responsibilities under those Standards are further described in the Auditors' Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India (ICAI) together with the ethical requirements that are relevant to our audit of the Financial Statements under the provisions of the Act and the Rules made thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ICAI's Code of Ethics. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our opinion on the Financial Statements.
Emphasis of Matter
We draw your attention to the Note No. 2.07 to the Financial Statements, regarding the attachment of the properties of the Company to the extent of Rs. 30,758.39 lakhs by the Directorate of Enforcement in earlier years, which has been contested by the Company and presently stayed. Further the Court of Special Judge (PC Act) (CBI), (Coal Block Cases-01), New Delhi, vide its order dated 19th March, 2024, has discharged the Company and two of its Directors under Section 3 and 4 of the Prevention of Money Laundering Act, 2002 (PMLA), holding that there would be no offence of money laundering in the absence of any charge of cheating in securing the allocation of coal block and accordingly the Company is of the view that the said properties will be released under Section 8 (6) & (7) of the PMLA.
Our opinion is not modified in respect of this matter.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the Financial Statements for the year ended 31st March, 2024. These matters were addressed in the context of our audit of the Financial Statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. For the matters below, our description of how our audit addressed the matter is provided in that context.
We have determined the matters described below to be the key audit matters to be communicated in our report. We have fulfilled the responsibilities described in the Auditors' responsibilities for the audit of the Financial Statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the Financial Statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying Financial Statements.
Information Other than the Financial Statements and Auditors' Report Thereon
The Company's Board of Directors is responsible for the other information. The other information comprises the management discussion and analysis and director's report included in the annual report but does not include the Financial Statements and our auditors' report thereon. The above information is expected to be made available to us after the date of this auditors' report.
Our opinion on the 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 Financial Statements, our responsibility is to read the other information identified above when it becomes available and, in doing so, consider whether the other information is materially inconsistent with the Financial Statements, or our knowledge obtained in the audit or otherwise appears to be materially misstated.
When we read the above other information, if we conclude that there is material misstatement therein, we are required to communicate the matter to those charged with governance.
Management Responsibility for the Financial Statements
The Company's Board of Directors is responsible for the matters stated in Section 134(5) of the Act, with respect to the preparation of these Financial Statements that give a true and fair view of the Financial Position, Financial Performance including Other Comprehensive Income, Cash Flows and the Statement of Changes in Equity of the Company in accordance with the Ind AS and other accounting principles generally accepted in India.
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 the appropriate accounting policies; making judgements 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 fair presentation of the Financial Statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
In preparing the Financial Statements, management is responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
Those Board of Directors is also responsible for overseeing the Company's financial reporting process.
Auditors' Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the 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 these Financial Statements.
As part of an audit in accordance with SAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the Financial Statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• 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 system 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 management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's 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 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 Financial Statements, including the disclosures, and whether the Financial Statements represent the underlying transactions and events in a manner that achieves fair presentation.
Materiality is the magnitude of misstatements in the Financial Statements that individually or in aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user of the Financial Statements may be influenced.
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 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.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditors' Report) Order, 2020 ("the Order"), issued by the Central Government of India in terms of sub-section (11) of Section 143 of the Act, we give in the "Annexure A" a statement on the matters specified in paragraphs 3 and 4 of the Order.
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 purposes 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, the Statement of Cash Flows 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 Financial Statements comply with the accounting standards specified under Section 133 of the Act;
(e) On the basis of written representations received from the directors as on 31st March, 2024 taken on record
by the Board of Directors, none of the directors is disqualified as on 31st March, 2024, from being appointed as a director in terms of Section 164(2) of the Act;
(f) With respect to the adequacy of the internal financial controls with reference to Financial Statements and the operating effectiveness of such controls, refer to our separate Report in "Annexure B".
(g) With respect to the other matters to be included in the Auditors' Report in accordance with the requirements of Section 197(16) of the Act, as amended,
I n our opinion and to the best of our information and according to the explanations given to us, the remuneration paid or provided by the Company to its directors during the year is in accordance with the provisions of Section 197 read with Schedule V of the Act.
(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, as amended, in our opinion and to the best of our information and according to the explanations given to us and as represented by the management:
i. The Company has disclosed the impact of pending litigations on its financial position in its Financial Statements as referred to in Note No. 2.07, 2.08, 3.03, 3.04, 29.01, 38 and 49 to the Financial Statements;
ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses.
iii. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.
iv. (a) Management has represented to us
that, to the best of its knowledge and belief, as disclosed in the notes to the Financial Statements, during the year no funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other persons or entities, including foreign entities ("Intermediaries"), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, whether, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries;
(b) Management has represented to us that, to the best of its knowledge and belief,
as disclosed in the notes to the Financial Statements, during the year no funds have been received by the Company from any person(s) or entity(ies), including foreign entities ("Funding Parties"), with the understanding, whether recorded in writing or otherwise, that the Company shall, whether, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries;
(c) Based on our audit procedure conducted that have been considered reasonable and appropriate in the circumstances, nothing has come to our attention that causes us to believe that the representation given by the management under paragraph (2) (h) (iv) (a) & (b) contains any material misstatement.
v. The Company has not declared or paid any dividend during the year and has also not proposed dividend for the year.
vi. Based on our examination, which included test checks, the Company has used accounting softwares for maintaining its books of account for the year ended 31st March, 2024 which has a feature of recording audit trail (edit log) facility and the same has operated throughout the year for all relevant transactions recorded in the software except that, audit trail feature was not enabled for direct changes to data in certain database tables, which was enabled subsequently. Further, during the course of our audit we did not come across any instance of audit trail feature being tampered with.
vii. As proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 is applicable from 1st April, 2023, reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014 on preservation of audit trail as per the statutory requirements for record retention is not applicable for the financial year ended 31st March, 2024.
For Chaturvedi & Shah LLP
Chartered Accountants
Firm Reg. No.: 101720W / W100355
Rupesh Shah
Partner
Membership No.: 117964
UDIN: 24117964BKFYCY6294
Mumbai
Date: 30th April, 2024
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