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Lorenzini Apparels Ltd.

BSE: 540952 Sector: Industrials
NSE: N.A. ISIN Code: INE740X01015
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NSE 05:30 | 01 Jan Lorenzini Apparels Ltd
OPEN 5.40
PREVIOUS CLOSE 5.40
VOLUME 10000
52-Week high 7.04
52-Week low 3.00
P/E 15.00
Mkt Cap.(Rs cr) 5
Buy Price 4.80
Buy Qty 10000.00
Sell Price 6.00
Sell Qty 10000.00
OPEN 5.40
CLOSE 5.40
VOLUME 10000
52-Week high 7.04
52-Week low 3.00
P/E 15.00
Mkt Cap.(Rs cr) 5
Buy Price 4.80
Buy Qty 10000.00
Sell Price 6.00
Sell Qty 10000.00

Lorenzini Apparels Ltd. (LORENZINIAPPAR) - Auditors Report

Company auditors report

To The Members of LORENZINI APPARELS LIMITED

Report on the Audit of the Financial Statements

Opinion

We have audited the accompanying financial statements of LORENZINI APPARELS LIMITED (the Company) which comprise the Balance Sheet as at March 31 2019 the Statement of Profit and Loss and the Statement of Cash Flows for the year ended on that date and a summary of the significant accounting policies and other explanatory information (hereinafter referred to as the 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 givea true and fair view in conformity with the Accounting Standards prescribed under section 133 of the Act and other accounting principles generally accepted in India of the state of affairs of the Company as at March 31 2019 the profit & Loss statement and its cash flows for the year ended on that date.

Basis for opinion

We conducted our audit of the financial statements in accordance with the Standards on Auditing specified under section 143(10) of the Act (SAs). Our responsibilities under those Standards are further described in the Auditor's 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 independence requirements that are relevant to our audit of the financial statements under the provisions of the Act and the Rulesmade thereunder and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ICAI'sCode of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for ouraudit opinion on the financial statements.

Key audit matters

Key audit matters are those matters that in our professional judgment were of most significance in our audit of the financial statements of the current period. 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. We havedetermined the matters described below to be the key audit matters to be communicated in our report.

1 Revenue Recognition

(refer Note. 1 related to Revenue)

We focused on this area as a key audit matter due to the risk of incorrect timing of revenue recognition and estimation related to recording the discount and rebates. According to the financial statement' accounting principles revenue is recognized at a point in time when the control of the goods is transferred to the customer according to delivery terms. Due to variation of contractual sales terms and practices across the marketand the pressure the management may feel to achieve performance targets there is a risk of material error.

Auditor's Response

To address this risk of material misstatement relating to revenue recognition our audit procedures included:

 Assessing the compliance of company's revenue recognition policies with applicable accounting standards including those related to discounts and rebates.

 Assessing the revenue recognition processes on showroom and online sales.

 Assessing the adequacy of relevant disclosures.

2 Inventory valuation

(refer Note. 1 related to inventories)

Inventory were considered as a Key audit matter due to the size of the balance and because inventory valuation involves management judgement. According to company's accounting policies inventories are measured at the lower of cost or net realizable value.

Auditor's Response

To address the risk for material error on inventories our audit procedures included amongst other:

 Assessing the compliance of company's accounting policies over inventory with applicable accounting standards.

 Assessing the Inventory valuation processes on showroom.

 Assessing the analyses and assessment made by management with respect to slow moving stock.

Information Other than the Financial Statements and Auditor's Report Thereon

The Company's Board of Directors is responsible for the preparation of the other information. The other information comprises the information included in the Management Discussion and Analysis

Board's Report including Annexures to Board's Report Business Responsibility Report Corporate Governance and Shareholder's Information but does not include the financial statements and our auditor's report thereon.

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 andin doing so consider whether the other information is materially inconsistent with the financial statements or ourknowledge obtained during the course of our audit or otherwise appears to be materially misstated.

If based on the work we have performed we conclude that there is a material misstatement of this other information we arerequired to report that fact. We have nothing to report in this regard.

Management's 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 and cash flows of the Company in accordance with the 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 appropriate accounting policies; making judgments 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 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.

The Board of Directors are responsible for overseeing the Company's financial reporting process.

Auditor's 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 auditor's 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 individuallyor 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 judgment and maintain professional skepticism 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 forone resulting from error as fraud may involve collusion forgery intentional omissions misrepresentations or the override of internal control.

Obtain an understanding of internal financial controls 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 onwhether 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 relateddisclosures made by management.

Conclude on the appropriateness of management's use of the going concern basis of accounting and based on the auditevidence obtained whether a material uncertainty exists related to events or conditions that may cast significant doubt onthe Company's ability to continue as a going concern. If we conclude that a material uncertainty exists we are required todraw attention in our auditor's report to the related disclosures in the financial statements or if such disclosuresare inadequate to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor's 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 consider quantitative materiality and qualitative factors in (i) planning the scope of our audit work and in evaluating the results of our work; and (ii) to evaluate the effect of any identified misstatements in the financial statements.

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 auditor's 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 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 best of our knowledge and beliefwere 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 it appearsfrom our examination of those books.

c) The Balance Sheet the Statement of Profit and Loss including Other Comprehensive Income Statement of Changes inEquity and the Statement of Cash Flow dealt with by this Report are in agreement with the relevant books of account.

d) In our opinion the aforesaid financial statements comply with the Ind AS specified under Section 133of the Act read with Rule 7 of the Companies (Accounts) Rules 2014.

e) On the basis of the written representations received from the directors as on March 31 2019 taken on record by the Board of Directors none of the directors is disqualified as on March 31 2019 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 over financial reporting of the Company and the operating effectiveness of such controls refer to our separate Report in Annexure A. Our report expresses an unmodified opinion on the adequacy and operating effectiveness of the Company's internal financial controls over financial reporting.

g) With respect to the other matters to be included in the Auditor's Report in accordance with the requirements of section 197(16) of the Act as amended: In our opinion and to the best of our information and according to the explanations given to us the remuneration paid by the Company to its directors during the year is in accordance with the provisions of section 197 of the Act.

h) With respect to the other matters to be included in the Auditor's 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 :

i) The Company has disclosed the impact of pending litigations on its financial position in its financial statements.

ii) The Company has made provision as required under the applicable law or accounting standards for material foreseeable losses if any on long-term contracts including derivative contracts.

iii) There has been no delay in transferring amounts required to be transferred to the Investor Education and Protection Fund by the Company.

2) As required by the Companies (Auditor's Report) Order 2016 (the Order) issued by the Central Government interms of Section 143(11) of the Act we give in Annexure B a statement on the matters specified in paragraphs3 and 4 of the Order.

For MITTAL & ASSOCIATES

Chartered Accountants

Firm Registration number: 106456W

Sd/-

Hemant Bohra

Partner

Membership number: 165667

Mumbai

May 27 2019

Annexure A to the Independent Auditor's Report

(Referred to in paragraph 1(f) under `Report on Other Legal and Regulatory Requirements' section of our report to the Members of LORENZINI APPARELS LIMITED of even date) Report on the Internal Financial Controls Over Financial Reporting under Clause (i) of Sub-section 3 of Section 143 of the Companies Act 2013 (the Act)

We have audited the internal financial controls over financial reporting of LORENZINI APPARELS LIMITED (the Company) as of March 31 2019 in conjunction with our audit of the financial statements of the Company for the year ended on that date.

Management's Responsibility for Internal Financial Controls

The Board of Directors of the Company is responsible for establishing and maintaining internal financial controls based on theinternal control over financial reporting criteria established by the Company considering the essential components of internalcontrol stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Instituteof Chartered Accountants of India. These responsibilities include the design implementation and maintenance of adequateinternal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business includingadherence to respective company's policies the safeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation of reliable financial information as requiredunder the Companies Act 2013.

Auditor's Responsibility

Our responsibility is to express an opinion on the internal financial controls over financial reporting of the Company based on our audit. We conducted our audit in accordance with the Guidance Note on

Audit of Internal Financial Controls Over Financial Reporting (the Guidance Note) issued by the Institute of Chartered Accountants of India and the Standards on Auditing prescribed under Section 143(10) of the Companies Act 2013 to the extent applicable to an audit of internal financial controls. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting assessing the risk that a material weakness exists and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.

The procedures selected depend on the auditor's judgement including the assessment of the risks of material misstatement of the financial statements whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the internal financial controls system over financial reporting of the Company.

Meaning of Internal Financial Controls Over Financial Reporting

A company's internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and that receipts and expenditures of the company are being made only in accordance with authorisations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition use or disposition of the company's assets that could have a material effect on the financial statements.

Limitations of Internal Financial Controls Over Financial Reporting

Because of the inherent limitations of internal financial controls over financial reporting including the possibility of collusion or improper management override of controls material misstatements due to error or fraud may occur and not be detected.

Also projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion to the best of our information and according to the explanations given to us the Company has in all material respects an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at March 31 2019 based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.

For MITTAL & ASSOCIATES

Chartered Accountants

Firm Registration number: 106456W

Sd/-

Hemant Bohra

Partner

Membership number: 165667

Mumbai

May 27 2019

Annexure `B' to the Independent Auditor's Report

(Referred to in paragraph 2 under `Report on Other Legal and Regulatory Requirements' section of our report to the Members of LORENZINI APPARELS LIMITED of even date)

i) In respect of the Company's fixed assets :

a) The Company has maintained proper records showing full particulars including quantitative details andsituation of fixed assets.

b) The Company has a program of verification to cover all the items of fixed assets in a phased manner which inour opinion is reasonable having regard to the size of the Company and the nature of its assets. Pursuant tothe program certain fixed assets were physically verified by the management during the year. According to theinformation and explanations given to us no material discrepancies were noticed on such verification.

c) According to the information and explanations given to us the records examined by us and based on the examinationof the conveyance deeds / registered sale deed provided to us we report that the title deeds comprising all theimmovable properties of land and buildings which are freehold are held in the name of the Company as at thebalance sheet date.

ii) The Company has a program of verification to cover all the items of inventories in a phased manner which inour opinion is reasonable having regard to the size of the Company. According to theinformation and explanations given to us no material discrepancies were noticed on such verification.

iii) According the information and explanations given to us the Company has not granted any secured or unsecured loans to bodiescorporate firms LLP or other parties covered in the register maintained under section 189 of the Companies Act 2013. Accordingly reporting under clause 3

(iii) of the order is not applicable to the Company.

iv) In our opinion and according to the information and explanations given to us the Company has complied with theprovisions of Sections 185 and 186 of the Act in respect of grant of loans making investments and providing guaranteesand securities as applicable.

v) The Company has not accepted deposits during the year and does not have any unclaimed deposits as at March 312019 and therefore the provisions of the clause 3 (v) of the Order are not applicable to the Company.

vi) We have broadly reviewed the books of accounts maintained by the Company in respect of products where pursuant to the Companies (Cost Records and Audit) Rules 2014 as amended and prescribed by the Central Government under section 148(1) of the Act. We are of the opinion that prima facie the prescribed accounts and records have been maintained by the Company. The contents of these accounts and records have not been examined by us.

vii) According to the information and explanations given to us in respect of statutory dues :

a) The Company has generally been regular in depositing undisputed statutory dues including Provident Fund Employees' State Insurance Income Tax Goods and Service Tax Customs Duty Cess and other material statutory dues applicable to it with the appropriate authorities.

b) There were no undisputed amounts payable in respect of Provident Fund Employees' State

Insurance Income Tax Goods and Service Tax Customs Duty Cess and other material statutory dues in arrears as at March 31 2019for a period of more than six months from the date they became payable.

c) According to the information and explanations given to us there are no dues of income tax duty of excise and service tax and value added tax have not been deposited with the appropriate authorities on account of any dispute except the following:

Name of StatuteNature of the duesDue Amount (Rs.)period to which the due relatesForum where dispute is pending
Income Tax Act 1961Income Tax 2251172009-10 ASSESSING OFFICER
Income Tax Act 1961Income Tax4962012-13ASSESSING OFFICER
Income Tax Act 1961Income Tax917302013-14ASSESSING OFFICER
Income Tax Act 1961Income Tax46302017-18CPC

viii) In our opinion and according to information and explanation given to us the Company has not defaulted in repayment of Term Loans taken from Bank and the Company has not taken any loans or borrowings from financial institutions and government or has not issuedany debentures.

ix) The Company has not raised moneys by way of initial public offer or further public offer (including debt instruments)during the year however term loans taken were applied for the purpose for which those are raised.

x) To the best of our knowledge and according to the information and explanations given to us no fraud by the Company or no material fraud on the Company by its officers or employees has been noticed or reported during the year.

xi) In our opinion and according to the information and explanations given to us the Company has paid / provided managerial remuneration in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Act.

xii) The Company is not a Nidhi Company and hence reporting under clause 3 (xii) of the Order is not applicable to the Company.

xiii) In our opinion and according to the information and explanations given to us the Company is in compliance with Section 177 and 188 of the Companies Act 2013 where applicable for all transactions with the related parties and the details of related party transactions have been disclosed in the financial statements as required by the applicable accounting standards.

xiv) During the year the Company has not made any preferential allotment or private placement of shares or fully or partly paid convertible debentures and hence reporting under clause 3 (xiv) of the Order is not applicable to the Company.

xv) In our opinion and according to the information and explanations given to us during the year the Company has not entered into any non-cash transactions with its Directors or persons connected to its directors and hence provisions of section 192 of the Companies Act 2013 are not applicable to the Company.

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

For MITTAL & ASSOCIATES

Chartered Accountants

Firm Registration number: 106456W

Sd/-

Hemant Bohra

Partner

Membership number: 165667

Mumbai

May 27 2019

   

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