Indian automotive industry is a cornerstone of the nation's economy, contributing around 7.1% to the GDP and nearly 49% to the manufacturing GDP. In…

Indian automotive industry is a cornerstone of the nation's economy, contributing around 7.1% to the GDP and nearly 49% to the manufacturing GDP. In the fiscal year 2020-2021, the industry produced over 22 million vehicles, including passenger cars, commercial vehicles, and two-wheelers. The two-wheeler segment dominates the market, with over 80% of the total automotive sales. In the same period, India exported approximately 4.5 million vehicles, showcasing its growing influence in the global automotive market. The government aims to make India a hub for electric vehicles (EVs), targeting a 30% EV adoption rate by 2030. This ambitious goal is supported by policies such as the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) scheme, which allocates significant funds to boost EV infrastructure and adoption. Raj Malhotra, founder of JayZee Ltd. a leading manufacturer of automotive spare parts, envisioned the company's potential during one of his visits to the USA. In 1998, he anticipated the forthcoming boom in the Indian automotive industry, particularly from 2011 to 2020. Foreseeing this growth, he decided to establish JayZee Ltd. to provide high-quality and affordable spare parts for the Indian market. The company is based in Gurgaon, Haryana, with manufacturing facilities in Uttarakhand and Uttar Pradesh strategically located to leverage government benefit schemes. Over the years, JayZee Ltd. has expanded its product range to include various components such as engine parts, brake systems, suspension systems, electrical components, and more. The company has a state-of-the-art manufacturing facility spread over 20 acres, equipped with advanced machinery imported from Germany and Japan. JayZee Ltd. employs over 1,000 skilled technicians, engineers, and support staff dedicated to maintaining the highest standards of quality. JayZee Ltd.'s commitment to quality has earned it a reputation as a trusted supplier among domestic and international customers. The company follows stringent quality control measures adhering to international standards like ISO 9001, TS 16949, and IATF 16949, ensuring its products meet stringent performance, safety, and environmental regulations. While Raj Malhotra provided the technical vision, his sons Arjun and Karan, have been instrumental in driving the company's financial strategy and decision-making processes. Their astute financial acumen and business insights have played a crucial role in JayZee Ltd.'s growth and expansion plans. In addition to the domestic market, JayZee Ltd. has a strong global presence, exporting to over 30 countries across Asia, Europe, Africa, and North America. Major export destinations include the UAE, Saudi Arabia, South Africa, Germany, USA, and Canada. The company has established robust distribution networks and partnerships in these regions. In line with the government's vision, Raj Malhotra knows that the next decade, from 2021 to 2030, will be a boom period for the EV market in India. He foresees this due to the recent government push towards Atmanirbhar Bharat with its Production Linked Incentive (PLI) Scheme and the global shift towards India as part of the China Plus One strategy. This strategy essentially means that companies do not want all their manufacturing footprint in China due to geopolitical tensions. Additionally, the fast acceleration towards EVs is driven by climate and sustainability strategies of companies. To meet the burgeoning demand, JayZee Ltd. has implemented aggressive expansion plans, including the construction of two new state-of-the-art manufacturing units in Gujarat and Tamil Nadu. The company has also invested heavily in R&D, collaborating with leading automotive engineering institutes to develop innovative products using advanced materials and cutting-edge technologies. Apr'2023 Begining To support the company's strategic objectives, JayZee Ltd. relies on its skilled workforce, who are considered as the backbone of the organization. In order to foster long-term loyalty and engagement, the company is offering Employee Stock Ownership Plans (ESOPs) to its employees. As the company achieves its earnings targets, shares will vest, granting employees ownership in the company. JayZee Ltd. grants 100 shares to each of its 500 employees on 1st April, 2023. The employees should remain in service during the vesting period. Annexure 1 containing Terms and Conditions of Employee Stock Option Plan has been approved by the shareholders of JayZee Ltd. passing a special resolution. JayZee Ltd.'s success is attributed to its strong leadership team, employee-friendly policies, continuous training programs, and a culture that fosters innovation. The company provides competitive compensation, growth opportunities, and a positive work-life balance, resulting in high employee satisfaction and low attrition rates. Despite challenges like increased competition, fluctuating raw material prices, and regulatory changes, JayZee Ltd. has maintained a steady growth trajectory with consistent profitability and a strong balance sheet. Guided by Raj Malhotra's principles and the financial expertise of his sons, Arjun and Karan, JayZee Ltd. Ltd thrived under the directors' unwavering dedication and the collective efforts of its team. As JayZee Ltd. looked towards the future, the directors' global vision and local roots served as a powerful combination, propelling the company's success in the competitive automotive spare parts industry. JayZee Ltd. is focused on enhancing its manufacturing processes and assessing the efficiency of its operations in relation to their full potential, while also identifying areas of loss. The company has a state-of-the-art production facility that operates in two shifts of 9 hours each, for 6 days a week. Under the leadership of Raj Malhotra, the founder, and his sons Arjun and Karan, the company emphasizes efficiency and productivity in its operations. One of JayZee Ltd.'s critical production lines, responsible for manufacturing essential spare parts, has been closely monitored by the team. Over the last 4 weeks, the following details have been collected for one of their important equipment: Lunch break is 30 mins and other miscellaneous breaks add up to 15 minutes; Hours for Planned Preventive Maintenance is 15 minutes per shift; For Breakdown Maintenance is 6 hours total; Set up Changes require 14 hours in total; Power Failure is 4 hours in total; Standard Cycle Time per piece is 3 minutes; No of Parts Produced per shift are 140; and Parts Accepted per shift are 131. Year Ended Mar 2024 In an effort to build long-term loyalty and enhance employee engagement, the company introduced Employee Stock Ownership Plans (ESOPs) in 2023. The ESOPs were designed to provide employees with a direct stake in the company's growth and success. By offering employees the opportunity to become shareholders, the company aims to foster a culture of ownership, where every team member has a vested interest in the organization's performance and outcomes. One year has now elapsed since the implementation of the ESOPs. The program has proven to be an effective way to show appreciation for the hard work of employees and to build stronger ties between the workforce and the company. At the end of FY 2023-24, earnings is 11%, and 29 employees left the organisation. The company expects that the shares will vest at the end of March 2025 subject to earnings target achieve. The company also expects that an additional 31 employees will leave the organisation in the FY 2024-25 and that 440 employees will receive their shares at the end of the FY 2024-25. JayZee Ltd., has always been proactive in capitalising on strategic opportunities for growth and diversification. Under the astute leadership of Raj Malhotra, the founder, and his sons, Arjun and Karan, the company has consistently made sound investment decisions to strengthen its position in the market. JayZee Ltd. acquired a building from Moon Ltd, another reputed manufacturing company, for a cost of 10 million on 1st April, 2020. The building, which Moon Ltd had previously used as a factory, was accounted for under the cost model. At the time of acquisition, JayZee Ltd.'s management, guided by their financial advisors, estimated the building's expected useful life to be 10 years. Initially, JayZee Ltd. had plans to repurpose the building and integrate it into their expanding operations. However, a few years down the line, the company faced a significant decline in demand for one of its product lines. As a result, the need for an additional factory became redundant. Recognizing the opportunity to generate alternative revenue streams, Arjun and Karan, known for their strategic foresight, proposed renting out the building to a third party. On 1st April, 2024, after conducting a thorough market analysis and obtaining necessary approvals, JayZee Ltd. successfully leased (in an operating lease agreement) the building to a reputable tenant, ABC Industries. At the time of leasing, JayZee Ltd.'s valuation experts assessed the fair value of the building to be 8 million, reflecting the current market conditions and the building's condition. In accordance with the company's accounting policies, JayZee Ltd. adheres to the cost model for recognizing its owned investment properties. With Arjun and Karan's strategic guidance, JayZee Ltd. is well-positioned to capitalise on emerging trends and maintain its leadership in the automotive spare parts industry. At the helm of JayZee Ltd. were three dynamic directors - Mr. Rajesh Sharma, Mr. Anil Gupta, and Ms. Priya Mehta. These directors were globetrotters, frequently travelling abroad to develop and secure sustainable business opportunities for JayZee Ltd. From exploring new markets to forging strategic partnerships, they left no stone unturned in their pursuit of growth. Despite their global pursuits, the directors remained deeply rooted in Gurgaon, understanding the importance of maintaining a strong presence at the company's registered office for legal compliance and organizational stability. Mr. Raj Malhotra, is dedicated to developing and securing sustainable business opportunities while exploring new markets and forging strategic partnerships. His recent business tour took him to North America, where he visited the USA and Canada to identify potential business ventures. After 4 months, Mr. Raj is now preparing to return to India. During his stay abroad, he acquired various items and, being a responsible citizen, I am mindful of the customs regulations. He sent an email (Annexure 2) to Mr. Sanjay, Finance and Taxation head to sought guidance his guidance, who is well-versed in legal and financial matters. Year Ended Mar 2025 Gumber & Associates has been appointed as Statutory Auditor for JayZee Ltd. for the financial year 2024-25. With a strong track record of excellence, Gumber & Associates has experience in auditing and tax advisory services, ensuring the highest standards of financial oversight and compliance. The firm has earned a stellar reputation for its meticulous attention to detail, in-depth knowledge of regulatory frameworks, and a proactive approach to addressing complex financial and tax matters. It has already been two years lapsed since the launch of ESOP 2023. At the end of FY 2024-25, the company's earnings is 19%. Therefore, the shares did not vest, only 29 employees left the organisation during second year. Company believes that additional 23 employees will leave during the third year and earnings will further increase so that the performance target will be achieved in FY 2025-26. Additionally, it's important to note that JayZee Ltd. has consistently maintained high standards of corporate governance and regulatory compliance, as overseen by Arjun and Karan. The company's financial statements are audited annually by a reputed firm, ensuring transparency and adherence to accounting principles. In a significant strategic move, JayZee Ltd. was considering expanding its market reach through acquisition of BM Autos Ltd., a company renowned for its strong foothold in the global automotive sector. Arjun and Karan, with their financial expertise, meticulously analysed the acquisition's potential benefits. They anticipated that the combined resources and expanded market reach would significantly bolster JayZee Ltd.'s position in the industry. This strategic acquisition was not just about expanding market presence but also about integrating innovative technologies and best practices from BM Autos Ltd. into JayZee Ltd.'s operations. JayZee Ltd.'s shares are currently traded at 20. The company has 25,00,000 shares outstanding and its earnings after taxes (EAT) amounted to 50,00,000. On the other hand, BM Autos Ltd. had 12,50,000 shares outstanding, with a current market price of 10. Its EAT was - 12,50,000. After extensive deliberation, BM Autos Ltd. agreed to be get acquired under which JayZee Ltd. would offer the current market value of BM Autos Ltd.'s shares in a stock swap exchange. This acquisition was seen as a strategic fit, enabling JayZee Ltd. to leverage BM Autos Ltd.'s robust market presence and enhance its competitive edge. The acquisition promised to enhance shareholder value, improve operational efficiencies, and foster a more resilient business model, well-equipped to navigate the complexities of the global automotive market. JayZee Ltd. places a strong emphasis on its employees as key assets to the company, understanding that their well-being and professional growth directly contribute to the organization's achievements. For many years, JayZee Ltd. has consistently paid bonuses to its employees, recognizing the constructive obligation to reward their hard work and dedication. JayZee Ltd. discovered that a provision for constructive obligation for payment of bonus to selected employees in the corporate office (material in amount), which was required to be recognized in the annual financial statements for the year ended 31st March, 2023, was not recognized due to oversight of facts. The bonus was paid during the financial year ended 31st March, 2024 and was recognized as an expense in the annual financial statements for the year 2024-25. JayZee Ltd. has significantly expanded its global presence by acquiring a major stake in a Singapore-based company. During the financial year 2022-23, JayZee Ltd. acquired a 54% stake in SYD Pte Ltd. (SPL), marking its first subsidiary company. This move underscored JayZee Ltd.'s commitment to international presence and leveraging new market opportunities. Mr. Rajesh Sharma, one of the dynamic directors at JayZee Ltd., was instrumental in this acquisition. His vision strengthening its for international expansion aligned perfectly with the company's growth strategy. Moreover, in the financial year 2024-25, his daughter, Sunita, who has been residing in Singapore for the past six years, was appointed as a director in SPL. Sunita's extensive experience in the region made her a valuable asset to SPL. She was appointed at a monthly remuneration of SGD 5082. (SGD 1 = INR 59). Sunita's appointment was a strategic decision aimed at ensuring strong leadership and effective governance at SPL. Her presence in Singapore facilitated smoother operations and stronger ties between JayZee Ltd. and its first international subsidiary. This expansion into Singapore not only broadened JayZee Ltd.'s market reach but also reinforced its position as a formidable player in the global automotive spare parts industry. Gumber & Associates has worked with a wide range of industries, providing tailored auditing services that align with the unique needs of each client, and has a long history of successfully navigating intricate tax laws to deliver optimal solutions. The firm's commitment to quality is reflected in its robust internal processes and a team of highly skilled professionals who continually update their expertise to stay ahead of industry trends. CA. Krish, engagement partner, is concerned about the non-verification of physical inventory. Management of JayZee Ltd. has not undertaken the physical verification of inventories at regular intervals. Inventories constitute 30% of the total assets of the company. Due to non-maintenance of adequate inventory records at the factory, audit team could not undertake the physical verification of inventory. Hence value of inventory as on 31st March, 2025 could not be verified. Annexure: 1 JayZee Ltd. (Regd. Office: JayZee tower, Gurgaon, Haryana) Employees Stock Option Plan 2023 (Plan as approved by the Shareholders through Special Resolution) 1. Name, Objective and Term of plan 1.1 This Employee Stock Option Plan shall be called Employee Stock Option Plan 2023 (“ESOP 2023” / “Plan”). 1.2 The objective of ESOP 2023 is to reward employees for association, dedication and contribution to the goals of the Company. 1.3 ESOP 2023 is applicable with effect from 1st April, 2023 on which the shareholders have approved the Plan by way of a special resolution and shall continue to be in force until earlier of: i. 31st March, 2026; or ii. The date all the options reserved under the Plan are granted and exercised; or iii. The date of termination, if any, of the Plan. 2. Grant and Acceptance of Grant 2.1 Grant of Options: Each grant under this ESOP 2023 shall be made in writing by the Company to the eligible employees fulfilling the eligibility criteria in a Letter of Grant as may be approved under the ESOP 2023 from time to time. 2.2 Acceptance of the Grant: Any employee who wishes to accept the Grant made under ESOP 2023 must deliver to the Company a duly signed acceptance of the Letter of Grant on or before the date (Closing Date) which shall not be more than 60 (Sixty) days from the date of the grant, as specified in the letter of Grant. 3. Vesting Schedule and Vesting Conditions: Options granted under ESOP 2023 would vest as the company achieves its targets. The shares will vest at the end of First year- if the company's earnings is 15%;Second year- if the company's earnings is 23% over the two-year period;Third year- if the entity's earnings is 29% over the three-year period. 4. Fair value of option: The fair value per share at the grant date is 122. Annexure: 2 Raj Malhotra/ Managing Director / JayZee Ltd. From: "Raj Malhotra" Sent: 15th April 2024 10:00 To: "Sanjay Kumar" Cc: "Manik Paul" Subject: Custom baggage's related Attachments: CA. Sanjay, Trust you are doing well! After a productive 4 months business tour in the USA, I am now preparing to return to India. During my stay abroad, I have acquired a few personal items, and as a responsible citizen, I want to ensure that I comply with all customs regulations upon my arrival. The following are the items I will be bringing back with me: Personal Effects items:59,00013-Inch Laptop:37,000Jewellery (15 grams, purchased in the USA):67,000Music System:1,25,000 I would appreciate it if you could kindly guide me on the proper procedures and any applicable customs duties or exemptions, I should be aware of regarding these items. Your expertise in finance and taxation matters would be greatly helpful in ensuring everything is in order for a smooth entry into India. Thank you for your time and assistance. Looking forward to hearing from you soon. Best regards, Raj Malhotra