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E-Land Apparel Ltd.

BSE: 532820 Sector: Industrials
NSE: ELAND ISIN Code: INE311H01018
BSE 00:00 | 24 Sep 4.34 -0.22
(-4.82%)
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4.50

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NSE 05:30 | 01 Jan E-Land Apparel Ltd
OPEN 4.50
PREVIOUS CLOSE 4.56
VOLUME 14281
52-Week high 7.85
52-Week low 3.72
P/E
Mkt Cap.(Rs cr) 21
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 4.50
CLOSE 4.56
VOLUME 14281
52-Week high 7.85
52-Week low 3.72
P/E
Mkt Cap.(Rs cr) 21
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

E-Land Apparel Ltd. (ELAND) - Auditors Report

Company auditors report

To the Members of E-Land Apparel Limited

Report on the Audit of the Financial Statements

Opinion

We have audited the accompanying financial statements of E-Land Apparel Limited (“theCompany”) which comprise the Balance Sheet as at March 31 2020 theStatement of Profit and Loss (including Other Comprehensive loss) the Statement of CashFlows and the Statement of changes in equity for the year ended on that date and notes tofinancial statements including a summary of the significant accounting policies and otherexplanatory information.

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid financial statements give the information required by theCompanies Act 2013 as amended (“the Act”) in the manner so required and give atrue and fair view in conformity with the accounting principles generally accepted inIndia including Indian Accounting Standards (‘Ind AS') specified under Section 133 ofthe Act of the state of affairs (financial position) of the Company as at 31 March 2020and its losses (financial performance including other comprehensive loss) its cash flowsand the changes in equity forthe year ended on that date.

Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing (Standards onAuditing) specified under section 143(10) of the Companies Act 2013. Our responsibilitiesunder those Standards are further described in the ‘Auditor's Responsibilities forthe Audit of the Financial Statements' section of our report.

We are independent of the Company in accordance with the ‘Code of Ethics' issuedby the Institute of Chartered Accountants of India (‘ICAI') together with the ethicalrequirements that are relevant to our audit of the financial statements under theprovisions of the Companies Act 2013 and the Rules thereunder and we have fulfilled ourother ethical responsibilities in accordance with these requirements and the ICAI's Codeof Ethics. We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our opinion on the financial statements.

Key Audit Matters

Key audit matters are those matters that in our professional judgement were of mostsignificance in our audit of the financial statements of the current period. These matterswere addressed in the context of our audit of the financial statements as a whole and informing our opinion thereon and we do not provide a separate opinion on these matters.

Key Audit Matter How our audit addressed the key audit matter
The Company has incurred losses during the current year and in earlier years. Its net worth is eroded as at that March 312020. These may create a doubt regarding the Company's ability to continue as a going concern. However the financial statements have been prepared on a going concern basis in view of the financial support from the holding company and the management's plan to generate cash flows through operations and sale of certain non- core assets which would enable the Company to meet its financial obligations as and when they fall due. We considered this to be a key audit matter because management's assessment is largely dependent on the support obtained from its Holding Company. Our procedures included the following:
• Obtained the management assessment of appropriateness of Going Concern basis of accounting.
• Discussed with the management on future business and their plans to liquidate certain assets to ensure availability of liquid funds.
• Verified that the holding company has supported the Company in the past when the need arose.
• Verified the support letter obtained by the Company from its holding company indicating that holding company will take necessary actions to organize for any shortfall in liquidity in Company that may arise to meet its financial obligations during the period of 12 months from the balance sheet date.
Based on the above procedures we noted the management assessment of going concern basis of accounting as appropriate.

Emphasis of Matter

• We draw attention to Note 38 in the annual financial statements which describesuncertainties the Company is facing as a result of COVID-19 and the management evaluationof its operations and financial reporting for the year ended 31st March 2020. Suchassessments are dependent on the circumstances as they evolve in the subsequent periods.

• We draw attention to Note 39 in the annual financial statements for the yearended 31 st March 2020 wherein the management of the company has detected fraud in thecompany. As of the reporting date from the total vendor accounts which were verifiedwrongful discounting and swindling with the vendor payment from Company bank accountidentified were for Rs. 26506890/- Company has recovered amount of Rs. 11795540/-and is in the process of recovering the balance amount of Rs. 14711350/-.

Information other than the Financial Statements and Auditor's Report thereon

The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Annual Report but does not includethe financial statements and our auditor's report thereon.

Our opinion on the financial statements does not cover the other information and we donot express any form of assurance conclusion thereon.

In connection with our audit of the financial statements our responsibility is to readthe other information and in doing so consider whether the other information ismaterially inconsistent with the financial statements or our knowledge obtained in theaudit or otherwise appears to be materially misstated. If based on the work we haveperformed we conclude that there is a material misstatement of this other information weare required to report that fact. We have nothing to report in this regard.

Responsibilities of Management for the Financial Statements

The Company's Board of Directors is responsible for the matters stated in section134(5) of the Companies Act 2013 (“the Act”) with respect to the preparation ofthese financial statements that give a true and fair view of the financial positionfinancial performance total comprehensive loss changes in equity and cash flows of theCompany in accordance with the accounting principles generally accepted in Indiaincluding the Indian Accounting Standards specified under section 133 of the Act. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding of the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; anddesign implementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the financial statements thatgive a true and fair view and are free from material misstatement whether due to fraud orerror.

In preparing the financial statements Management is responsible for assessing theCompany's ability to continue as a going concern disclosing as applicable mattersrelated to going concern and using the going concern basis of accounting unless the Boardof Directors either intends to liquidate the Company or to cease operations or has norealistic alternative but to do so.

The Board of Directors are also responsible for overseeing the Company's financialreporting process Auditor's Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financialstatements as a whole are free from material misstatement whether due to fraud or errorand to issue an auditor's report that includes our opinion. Reasonable assurance is a highlevel of assurance but is not a guarantee that an audit conducted in accordance withStandards on Auditing will always detect a material misstatement when it exists.Misstatements can arise from fraud or error and are considered material if individuallyor in the aggregate they could reasonably be expected to influence the economic decisionsof users taken on the basis of these financial statements.

As part of an audit in accordance with Standards on Auditing we exercise professionaljudgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risk of material misstatement of the FinancialStatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentional omissions misrepresentations or the override of internal control.

• Obtain an understanding of internal financial control relevant to the audit inorder to design audit procedures that are appropriate in the circumstances. Under Section143(3)(i) of the Act we are also responsible for expressing our opinion on whether hasadequate internal financial controls systems in place and the operating effectiveness ofsuch controls.

• Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management's use of the going concern basisof accounting and based on the audit evidence obtained whether a material uncertaintyexits related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty exitswe are required to draw attention in our auditor's report to the related disclosures inthe 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 auditor'sreport. However future events or conditions may cause the Company to cease to continue asa going concern.

• Evaluate the overall presentation structure and content of the FinancialStatements including the disclosures and whether the Financial Statements represent theunderlying transactions and events in a manner that achieves fair presentation.

We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we may havecomplied with relevant ethical requirements regarding independence and to communicatewith them all relationships and other matters that may reasonably be thought to bear onour independence and where applicable related safeguards.

From the matters communicated with those charged from governance we determine thosematters that were of most significance in the audit of the financial statements of thecurrent period and are therefore the key audit matters. We describe these matters in ourauditor's report unless law or regulation precludes public disclosure about the matter orwhen in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order 2016 (“the Order”)issued by the Central Government in terms of Section 143(11) of the Act we give in“Annexure A” a statement on the matters specified in paragraphs 3 and 4 of theOrder.

2. As required by Section 143(3) of the Act based on our audit we report that:

a) We have sought and obtained all the information and explanations which to the bestof 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 theCompany so far as it appears from our examination of those books.

c) The Balance Sheet the Statement of Profit and Loss including Other Comprehensiveloss Statement of Changes in Equity and the Statement of Cash Flow dealt with by thisReport are in agreement with the relevant books of account.

d) In our opinion the aforesaid financial statements comply with the Ind AS specifiedunder Section 133 of the Act read with Companies (Indian Accounting Standards) Rules2015 as amended.

e) On the basis of the written representations received from the directors as on March312020 taken on record by the Board of Directors none of the directors is disqualifiedas on March 312020 from being appointed as a director in terms of Section 164 (2) of theAct.

f) With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate Report in “Annexure B”. Our report expresses a qualified opinion on theadequacy and operating effectiveness of the Company's internal financial controls overfinancial reporting.

g) In our opinion the managerial remuneration for the year ended March 312020 hasbeen paid/provided by the Company to its directors in accordance with the provisions ofSection 197 read with Schedule V to the Act

h) With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 as amended inour opinion and to the best of our information and according to the explanations given tous:

i. The Company has disclosed the impact of pending litigations on its financialposition in its financial statements - Refer Note No. 34 to the financial statements.

ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses.

iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company during the year ended 31 March2020.

For HINESH R. DOSHI & CO LLP
Chartered Accountants
Firm Registration No: 103677W/W100056
HINESH R DOSHI
Partner
Membership No. 042539
UDIN: 20042539AAAAHR8252
Place: Mumbai
Date: 13th July
2020

Annexure A to the Auditor's Report

Referred to in Paragraph 2 under the heading of “Report on other Legal andRegulatory Requirements” of our report to the members of E-Land Apparel Limited ofeven date

On the basis of such checks as we considered appropriate and in terms of theinformation and explanations given to us we report that:

i. In respect of companies fixed assets:

a) The Company has maintained proper records showing full particulars includingquantitative details and situation of its fixed assets.

b) The Company has a programme of physical verification of its fixed assets by whichfixed assets are verified in a phased periodic manner which in our opinion is reasonablehaving regard to the size of the Company and the nature of its assets. No materialdiscrepancies were noticed on such verification.

c) According to the information and explanations given to us the records examined byus and based on the examination of the registered sale deed/transfer deed/conveyance deedprovided to us we report that the title deeds comprising all the immovable propertiesof land and buildings are held in the name of the company as at the balance sheet date.

In respect of immovable properties of land that have been taken on lease and disclosedas fixed asset in the financial statements the lease agreements are in the name of thecompany where the company is the lessee in the agreement.

ii. As explained to us the inventories were physically verified during the year by theManagement at reasonable intervals and no material discrepancies were noticed on physicalverification.

iii. The Company has not granted loans secured or unsecured to companies firmsLimited Liability Partnerships or other parties listed in the register maintained underSection 189 of the Companies Act 2013.

iv. In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of Section 185 and 186 of the Act in respect ofgrant of loans making investment and providing guarantees and securities as applicable.

v. According to the information and explanations given to us the company has notaccepted any deposits during the year and does not have any unclaimed deposits

vi. To our knowledge and explained to us the maintenance of cost records has not beenspecified by the Central Government under Section 148(1) of the companies Act 2013.

vii. According to information and explanations given to us in respect of statutorydues:

a) Undisputed statutory dues pertaining to Provident fund and Employees' StateInsurance Income Tax have not been regularly deposited with the appropriate authoritiesand there have been delays in a number of cases.

b) The undisputed amounts payable in respect of Value Added tax in arrears as at March312020 for a period of more than six months from the date they became payable are asfollows:

Name of Statute Nature of the dues Amount (in lakhs) Period to which the amount relates Due date Date of subsequent payment
Sales Tax Central Sales Tax 1.07 2014- 15 and 2015- 16 April 21 2015 and August 21 2015 Not Paid
Income Tax Interest on Tax Deducted at source 39.31 2007 to 2012 7th day of the subsequent month Not Paid

c) Details of dues of Income tax Sales tax Duty of Customs Duty of Excise and ValueAdded tax which have not been deposited as on March 31 2020 on account of disputes areas follows:

Name of Statute Nature of the dues Forum where Dispute is pending Period to which the amount relates Amount (Rs. lakhs)
Income Tax Act 1961 Income Tax Commissioner of Tax (Appeals) 2008- 09 and 2009- 10 140.36
Sales Tax Sales Tax including interest and penalty Commissioner of Sales Tax Maharashtra 2001-02 and 2004-05 250.22

viii. In our opinion and according to the information and explanations given to us theCompany has not defaulted in repayment of loans or borrowings to financial institutionsbanks and government. The Company has not issued any debentures.

ix. The Company has not raised moneys by way of initial public offer or further publicoffer (including debt instruments) or term loans and hence reporting under this clause isnot applicable.

x. We draw attention to Note 39 in the standalone annual financial statements whereinthe management of the company has detected fraud in the company. As of the reporting datefrom the total vendor accounts which were verified wrongful discounting and swindlingwith the vendor payment from Company bank account identified were for Rs. 26506890/-.Employees were terminated from immediate effect and the company is in the process ofrecovery. Company has recovered amount of Rs. 11795540/- and is in the process ofrecovering the balance amount of Rs. 14711350/-.

xi. In our opinion and according to the information and explanations given to us thecompany has paid / provided managerial remuneration in accordance with the requisiteapprovals mandated by the provisions of Section 197 read with Schedule V to the CompaniesAct.

xii. In our opinion and according to the information and explanations given to us theCompany is not a Nidhi company. Accordingly provisions of this clause is not applicable.

xiii. In our opinion and according to the information and explanations given to us theCompany is in compliance with Sections 177 and 188 of the Companies Act 2013 whereapplicable for all transactions with the related parties and the details of related partytransactions have been disclosed in the Financial Statements as required by the applicableaccounting standards.

xiv. During the Year the company has not made any preferential allotment or privateplacement of shares fully or partly paid convertible debentures and hence reporting underthis clause is not applicable to the Company.

xv. In Our opinion and according to the information and explanations given to usduring the year the Company has not entered into any non-cash transactions with itsDirectors or persons connected to its directors and hence provisions of Section 192 oftheCompanies Act 2013 are not applicable to the Company.

xvi. The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934.

For HINESH R. DOSHI & CO LLP
Chartered Accountants
Firm Registration No: 103677W/W100056
HINESH R DOSHI
Partner
Membership No. 042539
UDIN: 20042539AAAAHR8252
Place: Mumbai
Date: 13th July
2020

Annexure B to the Auditors' Report

Referred to in Paragraph 2(f) under the heading of “Report on other Legal andRegulatory Requirements” of our report to the members of E-Land Apparel Limited ofeven date

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 (“the Act”)

We have audited the internal financial controls over financial reporting of E-LandApparel Limited (“the Company”) as of March 312020 in conjunction with ouraudit of the financial statements of the Company for the year ended on that date.

Management's Responsibility for Internal Financial Controls

The Company's Board of Directors are responsible for establishing and maintaininginternal financial controls based on the internal control over financial reportingcriteria established by the Company considering the essential components of internalcontrol stated in the Guidance Note on Audit of Internal Financial Controls over FinancialReporting issued by the Institute of Chartered Accountants of India (‘ICAI'). Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to respective company's policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information as required under the Companies Act 2013.

Auditors' Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting(the “Guidance Note”) and the Standards on Auditing issued by ICAI and deemedto be prescribed under Section 143(10) of the Companies Act 2013 to the extentapplicable to an audit of internal financial controls. Those Standards and the GuidanceNote require that we comply with ethical requirements and plan and perform the audit toobtain reasonable assurance about whether adequate internal financial controls overfinancial reporting was established and maintained and if such controls operatedeffectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgment including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls systemover financial reporting.

Meaning of Internal Financial Controls Over Financial Reporting

A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedures that (1) pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets ofthe company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures of the company are being made only in accordance with authorizations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorized acquisition use or disposition of thecompany's 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 financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.

Qualified Opinion

According to the information and explanations given to us and based on our audit thefollowing material weaknesses have been identified as at March 312020:

a. The company did not have adequate internal controls for timely reconciliations ofvendor ledger balances.

b. The company had inadequate controls towards getting acknowledgments for thedisbursements done towards outstanding vendor balances.

A ‘material weakness' is a deficiency or a combination of deficiencies ininternal financial control over financial reporting such that there is a reasonablepossibility that a material misstatement of the company's annual or interim financialstatements will not be prevented or detected on a timely basis.

In our opinion except for the effects/possible effects of the material weaknessesdescribed above on the achievement of the objectives of the control criteria the Companyhas maintained in all material respects adequate internal financial controls overfinancial reporting and such internal financial controls over financial reporting wereoperating effectively as of March 312020 based on “the internal control overfinancial reporting criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note on Audit of Internal FinancialControls Over Financial Reporting issued by the Institute of Chartered Accountants ofIndia”.

Explanatory paragraph

We also have audited in accordance with the Standards on Auditing issued by theInstitute of Chartered Accountants of India as specified under Section 143(10) of theAct the financial statements of E-land Apparel Limited Company which comprise theBalance Sheet as at March 312020 and the related Statement of Profit and Loss and CashFlow Statement for the year then ended and a summary of significant accounting policiesand other explanatory information. The material weaknesses identified as above wasconsidered in determining the nature timing and extent of audit tests applied in ouraudit of the March 2020 financial statements of the company and this report does notaffect our report dated 13th July 2020 on which we expressed an unqualifiedopinion on the financial statements.

For HINESH R. DOSHI & CO LLP
Chartered Accountants
Firm Registration No: 103677W/W100056
HINESH R DOSHI
Partner
Membership No. 042539
UDIN: 20042539AAAAHR8252
Place: Mumbai
Date: 13th July
2020

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