AUDIT AND ASSURANCE

CONTINUOUS INTERNAL ASSESSMENT

ANNUAL REPORT ANALYSIS OF

JOYALUKKAS INDIA LIMITED

Jacob Sebastian
23SJCCC131
2 BCOM B
 Financial Statement Analysis
Balance Sheet:
Majority of the non-current assets of the company comprised
of property, plant and equipment and right of use assets.
Overall, the non-current assets are at Rs 8,376.25 million,
showing increase of 8.19% from the previous year. 95.57% of
the current assets was inventory. Total of the current assets
are at Rs 48,898.81 million, showing an increase of 18% from
the previous year. Total assets of the company increased by
19.4% from the previous year. Equity is at Rs 24,190.21
million, showing an increase of 40.58% from the previous
year. Non-current liabilities are at Rs 6,261.13 million,
showing an increase of 2.4% from the previous year, most of
it being lease liabilities. Current liabilities are at Rs 26,823.72
million, showing an increase of 8.8% from the previous year,
most of it being short term borrowings. Total of equity and
liabilities increased by 19.4% from the previous year.
Income Statement:
Total revenue stood at Rs 103,339.41 million, showing an
increase of 27.62% from the previous year. Total expenses
incurred amounted to Rs 93,930.05 million, increasing by
25.09% from the previous year, majorly due to purchases of
stock in trade. Other comprehensive income was Rs 6,982.7
million, showing increase of 47.65% from the previous year.
Total profit earned by the company was Rs 7,001.45 million,
increasing by 48.41% from the previous year.
Cash Flow Statement
Net profit before tax and extraordinary items was Rs 9,409.36
million, increasing by 47.73%. Operating profit before
changes in working capital was Rs 12,042.42 million,
increasing by 36.85%. Net cash flow from operating activities
was Rs 1,871.74 million, showing decrease of 43.41%. Net
cash used in investing activities was Rs 1,403.01 million,
showing increased use of cash by 263.45%. Net cash used
financing activities was Rs 737.62 million, showing increase
of 71.36%. Overall, there was net decrease in cash and cash
equivalents of Rs 268.89 million, with them amounting to Rs
488.99 million at the end of the financial year.
Ratio Analysis
Current ratio is 1.82, with increase of 11.65% from the
previous year signifying the company’s improvement in the
liquidity and its ability to meet its short-term obligations.
Debt-Equity ratio was 0.65, showing company’s less reliance
on debt. This also implies there is no proper and ideal mix of
debt and equity, indicating questionable solvency position.
Inventory turnover ratio has improved to 2.02 times, showing
that the company is faster in selling goods using the
inventory. Return on capital employed is increased by 7.79%.
Net profit ratio showed an increase of 16.29%, indicating
good profitability caused due to increase in selling price of
goods. Trade receivables turnover ratio stood at 1.93 times,
which was too low compared to previous year. This was
because the credit sales during the current year was reduced
by 60%. Trade payables ratio stood at 11.57 times, which was
too high compared to last year as there was delay in payment
to suppliers due to Covid-19 lockdown.
Joyalukkas showed good financial performance with increases
in revenue and profit. The company's efficiency improved as
shown by better margins and return ratios, despite higher
expenses being incurred compared to last year and an increase
in liabilities. This growth shows the company’s successful
recovery from the impacts of the COVID-19 and expansion in
its market presence.

Audit Report Review

The audit procedure for Joyalukkas India Limited was done
by MSKA and Associates Chartered Accountants. They are
independent of the company in accordance with Code of
Ethics issued by the Institute of Chartered Accountants of
India. The audit opinion given by them is an unqualified
opinion. They believe that the audit evidence they have
received is sufficient and appropriate to provide a basis for
their opinion. Therefore, it indicates that the auditors are
satisfied with the company’s financial reporting. They don’t
possess any adverse comments and it doesn’t include any
disclaimers about any clauses or the audit process. They
believe that the company’s activities are in line
with governance principles and necessary laws and are free
from material misstatements. They have stated that financial
statements give the necessary information required by the
Companies Act, 2013 in the manner as prescribed and give a
true and fair view in conformity with the Indian Accounting
Standards.
The auditors do bring to notice regarding note 29(ii) in the
financial statements as emphasis of matter. That note states
that income voluntarily offered in the earlier years for the
assessment years from 2009-2010 to 2018-2019 consequent to
search proceedings under Section 132 of the Income Tax Act
1961. The company has made provision for taxation including
interest in above respect in the earlier years. As stated, in the
note any additional income tax, interest liability and other
charges cannot be estimated until the proceedings are
complete. Therefore, their opinion is not changed in respect of
the above situation.

Internal Control Assessment

The Board of Directors of the Company formed a Risk
Management Committee to frame, implement and monitor the
risk management plan for the company. The committee is
responsible for monitoring and reviewing the risk
management plan and ensuring its effectiveness. The Audit
Committee has additional oversight in the area of financial
risks and controls. The major risk areas identified are
systematically addressed through mitigating actions on a
continuing basis. By identifying risks before it materialises,
the company can find ways to either embed the risk, reduce its
impact or eliminate it altogether. The company has a whistle
blower policy and has established the necessary vigil
mechanism for directors and employees in confirmation with
Section 177(9) of The Companies Act to report concerns
about the unethical behaviour. At the beginning of each
financial year, an internal audit plan is rolled out with
approval by the company’s audit committee. The plan is
aimed at evaluation of the efficacy and adequacy of internal
control systems and compliance, robustness of internal
processes, policies and accounting procedures and compliance
with laws and regulations. Based on those reports, process
owners undertake corrective action in their respective areas.
Significant audit observations and corrective actions are
regularly presented to the Audit Committee of the Board. The
inventory is physically verified during the year by the
management. The frequency of verification, coverage and
procedure of such verification is reasonable and appropriate.
This ensures no wastage of input or any abnormal loss arising
due internal or external factors. These internal controls
promote adherence to organisational norms and rules. These
functions are aimed to decrease substantial errors, omissions
and frauds that negatively impact the company.

Corporate Governance Review

Joyalukkas is committed to implement sound corporate
governance practices to bring about transparency in its
operations and maximize shareholder value. The Company’s
core philosophy on the code of Corporate Governance is to
ensure:
• Compliance of applicable statute
• Transparent and timely disclosure of financial and
management information
• Effective management control and monitoring of
performance by the Board
• Adequate representation of Promoter, Executive and
Independent Directors on the Board.
The Corporate Governance framework of the company is
based on an effective and independent Board, separation of
the Board’s supervisory role from the senior management
team and constitution of the Board Committees, as required
under applicable laws. The Board of Directors comprises of
six directors, of which five are Non- Executive Directors. The
Company has a Managing Director and two Non-Executive
Directors and Three Non-executive Independent Directors.
Independent Directors comprise half of the total strength of
the Board. The details of attendance during meetings were
also provided. Around ten board meetings were held during
the year. The relationship between directors were also
disclosed along with which all directors held shares in the
company. Audit Committee is established to oversee
company’s financial reporting process and the disclosure of its
financial information to ensure that the financial statement is
correct, sufficient and credible and to provide
recommendations for appointment, replacement,
reappointment, remuneration and terms of appointment of
auditors of the Company. They conducted 4 meetings and
comprise of two independent directors and one Non-
Executive director. The governance report contains other
details such as information on remuneration and nomination
committee, stakeholder relationship committee and all the
meetings held by them and their composition. Good corporate
governance creates transparent rules and controls, guides
leadership and aligns the interests of shareholders, directors,
management, and employees. It helps build trust with
investors, the community, and other stakeholders.
 Sustainability and CSR Reporting
Joyalukkas emphasizes sourcing materials, particularly gold
and gemstones, from suppliers who adhere to ethical
practices. They ensure fair labour practices throughout its
supply chain. This includes providing safe working
conditions, fair wages and supporting the welfare of artisans
and workers involved in their jewellery production. The
company implements its CSR activities mainly through a
registered Trust, Joyalukkas Foundation in accordance with
Section 135 of the Companies Act 2013. The undertaking of
CSR activities through institutions other than Joyalukkas
Foundation shall be with the approval of the CSR Committee,
which is established to oversee the allocation of funds and
organisation of activities pertaining to CSR. Main CSR
activities done by the company include:
• Focusing on construction of houses for the needy and
improving the condition of homes, old age homes, special
schools, orphanages, day care centres, etc by providing
necessary financial aid either regularly or otherwise and to
initiate measures for reducing inequalities faced by socially
and economically backward groups
• Focusing on promoting healthcare by conducting medical
camps, organizing awareness programmes, providing
financial support for treatments and surgeries either directly or
through hospitals and other medical institutions
• Promoting education, including special education and
employment enhancing vocational skills especially among
women and the differently abled.
As part of CSR, the company is mandated to spend 2% of the
net profit of the company which is Rs 912 lakhs. This Rs 912
lakhs will be used for undertaking the company’s CSR
activities. The company has transferred the unspent CSR
amount to a separate account and is being spent for the
ongoing project of setting up of homes for the needy and
special needs people. Due to these practices, brand image of
the company is enhanced thereby improving brand loyalty and
trust. Initiatives like supporting local communities or eco-
friendly practices make customers feel good about their
purchase decisions, leading to repeat sales and positive word-
of-mouth. Consumers tend to favour brands that are socially
responsible, which in turn drives their purchase intentions.