The Members of Lorenzini Apparels Limited
Report on the Audit of the Financial Statements:
We have audited the accompanying Financial Statements of Lorenzini Apparels Limited("the Company") which comprise the Balance Sheet as at 31st March2021 the Statement of Profit and Loss the Statement of Cash Flows for the year ended onthat date and a summary of the -s significant accounting policies and other explanatoryinformation (hereinafter referred to as "the Financial Statements").
In our opinion and to the best of our information and according to the explanationsgiver; to us the aforesaid Financial Statements give the information required by theCompanies Act 2013 ("the Act") in the manner so required and give a true andfair view in conformity with the Accounting Standards prescribed under section 133 of theAct and other accounting principles generally accepted in India of the state of affairsof the Company as at 31sl March 2021 the profit and its cash flows for theyear ended on that date.
Basis for opinion
We conducted our audit of the Financial Statements in accordance with the Standards onAuditing specified under section 143(10) of the Act (SAs). Our responsibilities underthose Standards are further described in the Auditor's Responsibilities for the Audit ofthe Financial ^ Statements section of our report. We are independent of the Company inaccordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia (ICAI) together with the independence requirements that are relevant to our audit ofthe Financial Statements under the provisions of the Act and the Rules made there underand we have fulfilled our other ethical responsibilities in accordance with theserequirements and the ICAI s Code of Ethics. We believe that the audit evidence we haveobtained is sufficient and- appropriate to provide a basis for our audit opinion on theFinancial Statements.
Key audit matters
Key audit matters are those matters that in our professional judgment 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. Wehave determined the matters described below to be the key audit matters to be communicatedin our report.
|Key Audit Matters |
|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 market and 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 Revenue) |
|Inventory was considered as a key audit matters due to the size of the balance and because inventory valuation involves management judgment. According to company accounting policies inventory are measured at the lower of cost or net realizable value. |
|Auditors Response |
|- Assessing the compliance of the company's accounting policies over inventory with applicable accounting standard. |
|- Assessing the inventory valuation process on showroom. |
|- Assessing the analysis and assessment made by the management with respect to slow moving stock. |
The Company's Board of Directors is responsible for the preparation of the otherinformation. The other information comprises the information included in the ManagementDiscussion and Analysis Board's Report including Annexure to Board's Report BusinessResponsibility Report Corporate Governance and Shareholder's Information but does notinclude the 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 during thecourse of our audit or otherwise appears to be materially misstated.
If based on the work we have performed we conclude that there is a materialmisstatement of this other information; we are required to report that fact. We havenothing to report in this regard.
Management's Responsibility for the Financial Statements
The Company's Board of Directors is responsible fpr the matters stated in section134(5) of the Act with respect to the preparation of these Financial Statements that givea true and fair view of the financial position financial performance and cash flows ofthe Company in accordance with the Accounting Standards and other accounting principlesgenerally accepted in India. This responsibility also includes maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the Company and for preventing and detecting frauds and other irregularities;selection and application of appropriate accounting policies; making judgments andestimates that are reasonable and prudent; and design implementation and maintenance ofadequate internal financial controls that were operating effectively for ensuring theaccuracy and completeness of the accounting records relevant to the preparation andpresentation of the Financial Statements that give a true and fair view and are free frommaterial misstatement whether due to fraud or error.
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 managementeither intends to liquidate the Company or to cease operations or has no realisticalternative but to do so.
The Board of Directors are responsible for overseeing the Company's financial reportingprocess.
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 with SAswill always detect a material misstatement when it exists. Misstatements can arise fromfraud or error and are considered material if individually or in the aggregate theycould reasonably be expected to influence the economic decisions of users taken on thebasis of these Financial Statements.
As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:
1. Identify and assess the risks of material misstatement of the Financial Statementswhether due to fraud or error design and perform audit procedures responsive to thoserisks and obtain audit evidence that is sufficient and appropriate to provide a basis forour opinion. The risk of not detecting a material misstatement resulting from fraud ishigher than for one resulting from error as fraud may involve collusion forgeryintentional omissions misrepresentations or the override of internal control.
2. Obtain an understanding of internal financial controls 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 theCompany has adequate internal financialcontrols system in place and the operatingeffectiveness of such controls.
3. Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by management.
4. Conclude on the appropriateness of management's use of the going concern basis ofaccounting and based on the audit evidence obtained whether a material uncertaintyexists 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 existswe 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.
5. 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.
Materiality is the magnitude of misstatements in the Financial Statements thatindividually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the Financial Statements may be influenced. We considerquantitative materiality and qualitative factors in (i) planning the scope of our auditwork and in evaluating the results of our work; and (ii) to evaluate the effect of anyidentified misstatements in the Financial Statements.
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 have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.
From the matters communicated with those charged with 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 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 and the Statement of Cash Flowdealt with by this Report are in agreement with the relevant books of account.
d) In our opinion the aforesaid Financial Statements comply with the AccountingStandards specified under Section 133 of 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 31blMarch 2021 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2021 from being appointed as a director in termsof Section 164 (2) of the Act.
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 A". Our report expresses an unmodified opinion onthe adequacy and operating effectiveness of the Company's internal financial controls overfinancial reporting.
g) With respect to the other matters to be included in the Auditor's Report inaccordance 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 explanationsgiven to us the remuneration paid by the Company to its directors during the year is inaccordance with the provisions of section 197 of 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 does not have any pending litigation which would impact its financialposition.
ii. The Company did not have any long-term contracts including derivative contracts; assuch the question of commenting on any material foreseeable losses thereon does not arise.
iii. There were no amount which was required to be transferred to the InvestorEducation and Protection Fund by the company.
2. 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 B" a statement on the matters specified in paragraphs 3 and 4 of theOrder.
| ||For Mittal & Associates Chartered Accountants FRN: 106456W |
|Place: Mumbai Date: 28th June 2021 ||Sourabh Bagaria Partner M.No.:183850 UDIN:21183850AAAABV3145 |
Annexure "A" to the Independent Auditor's Report
(Referred to in paragraph 1(f) under 'Report on Other Legal and RegulatoryRequirements' section of our report to the Members of Lorenzini Apparels Limited of evendate)
Report on the Internal Financial Controls Over Financial Reporting under Clause (i) ofSubsection 3 of Section 143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls over financial reporting of LorenziniApparels Limited ("the Company") as of 31st March 2021 inconjunction with our audit of the Financial Statements of the Company for the year endedon that date.
Management's Responsibility for Internal Financial Controls
The Board of Directors of the Company is 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. 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.
Our responsibility is to express an opinion on the internal financial controls overfinancial reporting of the Company based on our audit. We conducted our audit inaccordance with the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting (the "Guidance Note") issued by the Institute of Chartered Accountantsof India and the Standards on Auditing prescribed under Section 143(10) of the CompaniesAct 2013 to the extent applicable to an audit of internal financial controls. ThoseStandards and the Guidance Note require that we comply with ethical requirements and planand perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls over financial reporting was established and maintained and if suchcontrols operated effectively in all material respects. Our audit involves performingprocedures to obtain audit evidence about the adequacy of the internal financial controlssystem over financial reporting and their operating effectiveness. Our audit of internalfinancial controls over financial reporting included obtaining an understanding ofinternal financial controls over financial reporting assessing the risk that a materialweakness exists and testing and evaluating the design and operating effectiveness ofinternal control based on the assessed risk. The procedures selected depend on theauditor's judgment including the assessment of the risks of material misstatement of theFinancial Statement 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 internal financial controls system overfinancial reporting of the Company.
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 of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company;
(2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of Financial Statements in accordance with generally accepted accountingprinciples and that receipts and expenditures of the company are being made only inaccordance with authorizations of management and directors of the company; and
(3) provide reasonable assurance regarding prevention or timely detection ofunauthorized acquisition use or disposition of the company's assets that could have amaterial effect on the Financial Statements.
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.
In our opinion to the best of our information and according to the explanations givento us the Company has in all material respects an adequate internal financial controlssystem over financial reporting and such internal financial controls over financialreporting were operating effectively as at 31st March 2021 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.
| ||For Mittal & Associates |
| ||Chartered Accountants |
| ||FRN: 106456W |
| ||Spurabh Bagaria |
| ||Partner |
|Place: Mumbai ||M.No.:183850 |
|Date: 28th June 2021 ||UDIN:21183850AAAABV3145 |
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)
1) In case of the Company's Fixed Assets:
(a) According to the information and explanations given to us the Company hasmaintained proper records showing full particulars including quantitative details andsituation of fixed assets;
(b) The Fixed Assets have been physically verified by the management in a phased mannerwhich in our opinion is reasonable having regard to the size of the company and natureof its assets. Pursuant to the program a portion of the fixed asset has been physicallyverified by the management during the year and no material discrepancies between the booksrecords and the physical fixed assets have been noticed.
(c) According to the information and explanations given to us and the records examinedby us and based on the examination of the registered sale deed provided to us we reportthat the title deeds comprising all the immovable properties of land and buildings whichare freehold are held in the name of the Company as at the balance sheet date.
2) The Company has a program of verification to cover all the items of inventories in aphased manner which in our opinion is reasonable having regard to the size of theCompany. According to the information and explanations given to us no materialdiscrepancies were noticed on such verification.
3) The Company has not granted any loans secured or unsecured to Companies firmsLimited Liability Partnerships or other parties covered in the Register maintained underSection 189 of the Act; Accordingly the provisions of clause 3 (iii) (a) to (c) of theOrder are not applicable to the Company and hence not commented upon.
4) 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 Companies Act 2013In respect of loans investments guarantees and security.
5) The Company has not accepted deposits during the year and does not have anyunclaimed deposits as at 31st March 2021 and therefore the provisions of theclause 3 (v) of the Order are not applicable to the Company.
6) We have broadly reviewed the books of accounts maintained by the Company in respectof products where pursuant to the Companies (Cost Records and Audit) Rules 2014 asamended and prescribed by the Central Government under section 148(1) of the Act. We areof the opinion that prima facie the prescribed accounts and records have been maintainedby the Company. The contents of these accounts and records have not been examined by us.
7) a) According to information and explanations given to us and on the basis of ourexamination of the books of account and records the Company has generally been regularin depositing undisputed statutory dues including Income-Tax Goods and Services Tax andany other material statutory dues applicable to it with the appropriate authorities.
b) According to the information and explanations given to us no undisputed amountspayable in respect of the above were in arrears as at 31st March 2021 for aperiod of more than six months from the date on when they become payable.
c) According to the information and explanations given to us there are no dues ofincome tax duty of excise and service tax and value added tax have not been depositedwith the appropriate authorities on account of any dispute.
|Nature of the Statute ||Nature of the Dues ||Due Amount ||Period to which due relates ||Forum where dispute is pending |
|Income Tax Act 1961 ||Income Tax ||225117 ||A.Y. 2009-10 ||Assessing Office |
|Income Tax Act 1961 ||Income Tax ||' 91730 ||A.Y. 2013-14 ||Assessing Office |
8) In our opinion and according to information and explanation given to us the Companyhas not defaulted in repayment of Loans/Borrowings taken from Banks/FinancialInstitutions.
9) In our opinion and according to the information and explanations given to us theCompany has not raised any moneys by way of initial public offer or further public offer(including debt instruments). The company has spent the amount raised through term loansfor the purpose for which such loans were availed.
10) Based upon the audit procedures performed and the information and explanationsgiven by the management we report that no fraud by the Company or on the Company by itsofficers or employees has been noticed or reported during the year.
11) Based upon the audit procedures performed and the information and explanationsgiven by the management the managerial remuneration has been paid or provided inaccordance with the requisite approvals mandated by the provisions of section 197 readwith Schedule V to the Companies Act;
12) In our opinion the Company is not a Nidhi Company. Therefore the provisions ofclause 4 (xii) of the Order are not applicable to the Company.
13) In our opinion all transactions with the related parties are in compliance withsection 177 and 188 of Companies Act 2013 and the details have been disclosed in theFinancial Statements as required by the applicable accounting standards.
14) Based upon the audit procedures performed and the information and explanationsgiven by the management the company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures during the year underreview. Accordingly the provisions of clause 3 (xiv) of the Order are not applicable tothe Company and hence not commented upon.
15) Based upon the audit procedures performed and the information and explanationsgiven by the management the company has not entered into any non-cash transactions withdirectors or persons connected with him. Accordingly the provisions of clause 3 (xv) ofthe Order are not applicable to the Company and hence not commented upon.
16) The company is not required to be registered under section 45IA of the Reserve Bankof India Act 1934.
| ||For Mittal & Associates Chartered Accountants FRN:106456W |
|Place: Mumbai Date: 28th June 2021 ||Sourabh Bagaria Partner M.No.:183850 UDIN:21183850AAAABV3145 |