Zodiac-JRD-MKJ auditors could not verify Rs 40,436 balances

Zodiac-JRD-MKJ’s statutory auditors could not verify reported bank balances of Rs 40,436 at March 31, 2026 because management did not provide confirmations, bank statements or other supporting evidence. The FY2026 consolidated audit report also identified incomplete Goods and Services Tax reconciliation and unmeasured employee retirement-benefit obligations.

Why could auditors not verify Zodiac-JRD-MKJ’s bank balances?

The auditors could not verify Zodiac-JRD-MKJ’s Rs 40,436 reported bank balances at March 31, 2026 because management could not provide bank confirmations, bank statements or other evidence. The issue was disclosed in Note 8 to the consolidated financial statements and concerned whether the relevant accounts existed or had been closed.

The qualification does not state that the Rs 40,436 balance was inaccurate or missing. Rather, the auditors said the available records did not let them substantiate the existence or closure of the accounts, preventing verification of the reported amount at the FY2026 reporting date.

The Letter of Offer identifies this as a material qualified opinion in the audit report for the year ended March 31, 2026. That report addressed consolidated financial statements, meaning it covered Zodiac-JRD-MKJ and its subsidiary rather than standalone financial information alone.

The FY2026 bank matter is an evidence issue rather than a disclosed measurement adjustment. Zodiac-JRD-MKJ reported the amount in its financial statements, but the auditors said management had not supplied the independent bank documentation needed to test the balance as at March 31, 2026.

What were Zodiac-JRD-MKJ’s other FY2026 audit qualifications?

Zodiac-JRD-MKJ’s final Goods and Services Tax, or GST, output liability and input-tax-credit claim for FY2026 remained subject to reconciliation when its consolidated financial statements were signed. The Letter of Offer does not disclose a rupee value for either the unreconciled output-tax liability or the input-tax-credit claim.

This GST qualification concerns an incomplete annual reconciliation process, not a stated tax demand. Until that process is completed, the disclosure leaves unresolved the final GST output liability and the claimable input tax credit for the year ended March 31, 2026.

Zodiac-JRD-MKJ and its subsidiary had also not recognised or provided for employee retirement benefits in accordance with Indian Accounting Standard 19, Employee Benefits, at March 31, 2026. The obligations were accounted for on a cash basis rather than through recognition of the measured obligation in the consolidated financial statements.

No actuarial valuation report was available for those retirement benefits. As a result, the auditors said they could neither determine the liability nor quantify its effect on the FY2026 consolidated financial statements, distinguishing this matter from the Rs 40,436 bank-balance verification limitation.

How did Zodiac-JRD-MKJ’s earlier audit concerns differ?

Zodiac-JRD-MKJ’s FY2025 audit report included an inventory qualification because management had not undertaken year-end physical verification and could not provide complete inventory records and reports. The auditors said the responsible person was unavailable, preventing their annual physical verification and an assessment of inventory’s realisable value.

Management had said it would appoint an independent certified valuer or chartered accountancy firm to conduct physical verification and valuation under Indian Accounting Standard 2, Inventories. The FY2025 disclosure said that action had not yet occurred, while the Letter of Offer notes that the matter applied to the previous Rights Issue rather than the current one.

For FY2024, the auditors referred to a vendor balance of Rs 49.33 lakh that had remained outstanding for more than three years without confirmation from the vendor. The auditors could not quantify the impact of the unavailable confirmation at March 31, 2024.

The same vendor balance appeared as an emphasis-of-matter item in FY2025. Zodiac-JRD-MKJ said the vendor had been under the Corporate Insolvency Resolution Process since January 2018 and that the balance was written back because no claim or vendor confirmation had been received.

FY2024 also included an additional doubtful-debts provision of Rs 2.7665 crore for trade receivables. The auditors said no proper reason, confirmation or direct third-party balance confirmation had been provided, and they could not comment on the ultimate realisability of assets and receivable balances.

What disputed tax dues did Zodiac-JRD-MKJ report under CARO 2020?

Zodiac-JRD-MKJ reported three disputed income-tax items under the Companies (Auditor’s Report) Order, 2020, or CARO 2020, for FY2026. They comprised Rs 73,000 for assessment year 2011-12, Rs 1.0686 crore for assessment year 2014-15 and Rs 4.18 lakh for assessment year 2020-21.

The assessment year 2011-12 matter was pending for rectification before the Assessing Officer or Centralised Processing Centre. The assessment year 2014-15 matter was pending before the Assessing Officer, while the assessment year 2020-21 dispute was before the Commissioner of Income Tax (Appeals).

The three FY2026 items totalled Rs 1.1177 crore. This was higher than the Rs 17.58 lakh disclosed in both FY2025 and FY2024, when the CARO 2020 disclosure listed only the assessment year 2020-21 matter before the Commissioner of Income Tax (Appeals).

The comparison shows that the set of reported disputed tax matters expanded in FY2026 to include assessment years 2011-12 and 2014-15. Separately, the Letter of Offer’s summary of material litigation showed nil cases against Zodiac-JRD-MKJ, its subsidiary, promoters and directors as of the document date.

What should readers watch after the FY2026 qualifications?

Zodiac-JRD-MKJ states that there is no assurance that similar qualifications or CARO 2020 comments will not appear in future audit reports. The disclosed next steps are therefore the completion of GST reconciliation, the availability of an actuarial valuation for retirement benefits and support for the reported Rs 40,436 bank balances.

The company is also pursuing diversification into automotive components after operating in cut and polished diamond trading. Its proposed Rights Issue uses include Rs 24.50 crore for acquiring Aerocom Automotives Private Limited, Rs 5 crore for working capital and Rs 4 crore for investment in subsidiary VEM Plastic Molding Private Limited.

The Letter of Offer says the proposed issue objects have not been appraised by a bank or financial institution, and the company says the spending will not be monitored by an independent agency. It also says the final amount for general corporate purposes, estimated at Rs 4.4528 crore, will be finalised after determination of the issue price.

Conclusion

Zodiac-JRD-MKJ disclosed audit matters across FY2024 to FY2026, with the latest consolidated report focusing on unverified Rs 40,436 bank balances, unfinished GST reconciliation and retirement-benefit obligations that could not be measured without an actuarial report. Earlier disclosures involved physical inventory verification, an unconfirmed Rs 49.33 lakh vendor balance and a Rs 2.7665 crore doubtful-debts provision.

Readers should watch whether subsequent financial statements document completion of the FY2026 GST reconciliation, actuarial measurement of employee benefits and evidence for the bank accounts. The company also plans to use Rights Issue proceeds for a Rs 24.50 crore automotive-components acquisition, while the final issue-related allocation remains subject to determination of the issue price.