The Members of
LOVABLE LINGERIE LIMITED
Report on the Audit of the Standalone Financial Statements
We have audited the standalone financial statements of Lovable Lingerie Limited("the Company") which comprise the Balance Sheet as at 31st March2019 and the Statement of Profit and Loss (statement of changes in equity) and statementof cash flows for the year ended and notes to the financial statements including asummary of significant accounting policies and other explanatory information.
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone Financial Statements give the information requiredby the Companies Act 2013 ("the Act") in the manner so required and give a trueand fair view in conformity with the Indian Accounting Standards prescribed under Section133 of the Act read with the companies (Indian Accounting Standards) Rules 2015 asamended ("Ind AS") and other accounting principles generally accepted in Indiaof the state of affairs of the Company as at March 31 2019 and profit and totalcomprehensive income (including other comprehensive income) changes in equity and itscash flows for the year ended on that date.
Basis for Opinion
We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder section 143(10) of the Companies Act 2013. Our responsibilities under thoseStandards are further described in the Auditor's Responsibilities for the Audit of theFinancial 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 together with the ethical requirements that are relevant to our audit of thefinancial statements under the provisions of the Companies Act 2013 and the Rulesthereunder and we have fulfilled our other ethical responsibilities in accordance withthese requirements and the Code of Ethics. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our opinion.
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.
We have determined the matters described below to be key audit matter to becommunicated in our report.
|Sr. No ||Key Audit Matter ||Auditors Response |
|1. ||Measurement of Investment in accordance with Ind AS 109 "Financial Instruments" ||Principal Audit procedure: |
| ||On initial recognition investment is recognized at fair value in case of investment which is recognized at fair value through OCI. In that case that transaction costs are attributable to the acquisition value of the investments. ||Obtaining an understanding of the companies objectives for such investments and assessment thereof in terms of Ind AS 109. |
| ||The Company's investment are subsequently classified into following categories based on the objective to manage the cash flows and options available in the standard: ||Obtaining an understanding of the determination of the measurement of the investments and tested the reasonableness of the significant judgement applied by the management. |
| || || Evaluated the design of internal controls relating to measurement and also tested the operating effectiveness of the aforesaid controls. |
| ||At amortised cost || Obtaining understanding of basis of valuation adopted in respect of fair value investment and ensured that valuation techniques used are appropriate in circumstances and for which sufficient data are available to measure fair value. |
| ||At fair value through profit or loss (FVTPL) || |
| ||At fair value through Other comprehensive Income (FVTOCI) || |
| ||Since valuation of investment at fair value involves critical assumptions significant risk in valuation and complexity in assessment of objectives the valuation of investments as per Ind AS 109 is determined to be a key audit matter in our audit of the standalone financial statements. . || Assessed the appropriateness of the discloser in the standalone financial statements in accordance with the applicable financial reporting framework. |
|2 ||Valuation accuracy completeness and disclosures pertaining to inventories with reference to IND AS 2. ||Our audit approach consisted testing of the design and operating effectiveness of the internal controls and substantive testing as follows |
| ||Inventories constitutes material component of Financial Statement. Correctness completeness and valuation are critical for reflecting true and fair financial results of operations. || We assessed the company's process regarding maintenance of records valuation and accounting of transactions relating to inventory as per the Ind AS 2 |
| || || We have evaluated the design of internal controls relating to recording and valuation of inventory |
| || || We have carried out substantive audit procedures at financial and assertion level to verify the allocation of overheads to inventory. |
Responsibilities of Management for the Standalone 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 standalone financial statements that give a true and fair view of the financialposition financial performance changes in equity and cash flows of the Company inaccordance with the accounting principles generally accepted in India including theaccounting Standards specified under section 133 of the Act. This responsibility alsoincludes maintenance of adequate accounting records in accordance with the provisions ofthe Act for safeguarding of the assets of the Company and for preventing and detectingfrauds and other irregularities; selection and application of appropriate accountingpolicies; making judgments and estimates that are reasonable and prudent; and designimplementation 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 the Board of Directors is responsible forassessing the Company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessthe Board of Directors either intends to liquidate the Company or to cease operations orhas no realistic alternative but to do so.
Those 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 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:
Identify and assess the risk of material misstatement of the StandaloneFinancial Statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrol.
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 basis ofaccounting and based on the audit evidence obtained whether a material uncertainty exitsrelated to events or conditions that may cast significant doubt on the Company's abilityto continue as a going concern. If we conclude that a material uncertainty exits we arerequired to draw attention in our auditor's report to the related disclosures in theStandalone Financial Statements or if such disclosures are inadequate to modify ouropinion. 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 tocontinue as a going concern.
Evaluate the overall presentation structure and content of the standalone FinancialStatements including the disclosures and whether the Standalone Financial Statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.
Materiality is the magnitude of misstatement in the standalone Financial Statementsthat individually 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 misstatement 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 andsignificant 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.
Emphasis of Matter
We draw attention to note no. 23 of the financial statements which states that duringthe period there is short receipt of Rs. 41591552 insurance claim and loss of stock inconnection with the fire accidents in one of the units .
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 of India in terms of sub-section (11) of section 143 ofthe Companies Act 2013 we give in the Annexure A' statement on the mattersspecified in paragraphs 3 and 4 of the Order to the extent applicable.
2. As required by Section 143(3) of the Act 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 ouraudit.
(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) Balance Sheet the Statement of Profit and Loss and the Cash Flow Statement dealtwith by this Report are in agreement with the books of accounts.
(d) In our opinion the aforesaid standalone financial statements comply with theAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules2014.
(e) On the basis of the written representations received from the directors as on 31stMarch 2019 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2019 from being appointed as a director in terms of Section164 (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 B".
(g) 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 in our opinionand to the best of our information and according to the explanations given to us:
a. The Company has disclosed the impact of pending litigations on its financialposition in its financial statements.
b. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses.
c. There has been no delay in transferring amounts required to be transferred to theInvestor Education and Protection Fund by the Company.
For DMKH & Co.
Firm's Registration No. : 116886W
Durgesh Kumar Kabra
Membership No. 044075
Date: 29th May 2019
ANNEXURE "A" TO INDEPENDENT AUDITORS' REPORT
Referred to in Paragraph 2 under the heading of "Report on other Legal andRegulatory Requirements" of our report to the members of Lovable Lingerie 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 regular programme of physical verification of its fixed assets bywhich fixed assets are verified in a phased manner over regular interval. In accordancewith this programme certain fixed assets were verified during the year and no materialdiscrepancies were noticed on such verification. In our opinion this periodicity ofphysical verification is reasonable having regard to the size of the Company and thenature of its assets.
c) According to the information and explanations given to us the title deeds ofimmovable properties included in fixed assets are held in the name of the Company.
ii. a) As explained to us management has conducted physical verification of inventoryat regular intervals during the year.
b) In our opinion and according to the information and explanations given to us theprocedures of physical verification of inventory followed by the Management werereasonable and adequate in relation to the size of the Company and nature of its business.
c) In our opinion and according to the information and explanations given to us theCompany has maintained proper records of its inventories and no material discrepancieswere noticed on physical verification.
iii. According to the information and explanations given to us the Company has notgranted loans secured or unsecured to companies firms Limited Liability Partnershipsor other parties listed in the register maintained under Section 189 of the Companies Act2013. Accordingly the provisions of clauses 3(iii) (a) (b) and (c) of the order are notapplicable to the Company.
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. In The Company has not accepted any deposits from the public within the meaning ofthe directives issued by the Reserve Bank of India provision of Section 73 to 76 of theAct any other relevant provision of the Act and the relevant rules framed thereunder.
vi. The maintenance of cost records has not been specified by the Central Governmentunder Section 148(1) of the companies Act 2013 for the business activities carried out bythe company thus reporting under clause 3(vi) of the order is not applicable to theCompany.
vii. a) According to information and explanations given to us the Company has beengenerally regular in depositing undisputed statutory dues including Provident FundEmployees' State Insurance Income Tax Goods and Service Tax Custom Duty CessProfessional Tax and other material statutory dues applicable to it with the appropriateauthorities.
b) According to the information and explanations given to us no undisputed amountspayable in respect of Provident Fund Employees' State Insurance Income-tax Service TaxGoods and Service Tax Custom Duty Excise Duty Value Added Tax cess and other materialstatutory dues excepting those mentioned hereunder.
c) According to the information and explanations given to us there are no dues inrespect of Income-tax Service Tax Goods and Service Tax Custom Duty Excise DutyValue Added Tax cess that have not been deposited with appropriate authorities on accountof dispute.
|Name of Statue ||Nature of Dues ||Amount (Rs) ||Period to which amt. relates ||Forum where disputes is pending |
|Customs Act ||Demand ||*4719798 ||AY 2010-11 ||Com. Of Customs Bengaluru |
|Income Tax Act ||Asst. Demand ||954730 ||AY 2010-11 ||ITAT Mumbai |
|Income Tax Act ||Asst. Demand ||3070130 ||AY 2011-12 ||ITAI Mumbai |
|Income Tax Act ||Asst. Demand ||2505750 ||AY 2012-13 ||CIT (A) Mumbai |
*The amount indicated is after reducing of Rs. 2777000/- which has been paid underprotest.
viii. Based on our audit procedures and on the basis of information and explanationsgiven by the management we are of the opinion that the Company has not defaulted inrepayment of loans or borrowings from banks and debenture holders. The Company has nottaken any loans from Government or any Financial Institution.
ix. Based on audit procedure and on the basis of information and explanation given bythe management we are of the opinion that money raised by Company by way of term loan hasbeen applied for the purpose for which they were raised. The Company did not raise anymoney by way of Initial Public offer or further public offer.
x. To the best of our knowledge and according to the information and explanations givento us no fraud by the Company or no material fraud on the company by its officers oremployees has been noticed or reported during the year.
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.
Therefore paragraph 3(xii) of the Order 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 Standalone Financial Statements as required by theapplicable accounting 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 underclause 3 (xiv) of the Order 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 of theCompanies 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 DMKH & Co. |
|Chartered Accountants |
|Firm's Registration No. : 116886W |
|Durgesh Kumar Kabra |
|Membership No. 044075 |
|Place: Mumbai |
|Date: 29th May 2019 |
Annexure "B" to the Auditors' Report
Referred to in Paragraph 1(g) under the heading of "Report on other Legal andRegulatory Requirements" of our report to the members of Lovable Lingerie 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 LovableLingerie Limited ("the Company") as of March 31 2019 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 management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls over Financial Reportingissued 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.
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 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.
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.
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 March 31 2019 based on the internal controlover financial 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.
For DMKH & Co.
Firm's Registration No. : 116886W
Durgesh Kumar Kabra
Membership No. 044075
Date: 29th May 2019