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Monte Carlo Fashions Ltd.

BSE: 538836 Sector: Industrials
NSE: MONTECARLO ISIN Code: INE950M01013
BSE 00:00 | 14 Oct 391.20 2.55
(0.66%)
OPEN

373.05

HIGH

394.45

LOW

373.05

NSE 00:00 | 14 Oct 392.05 3.45
(0.89%)
OPEN

388.00

HIGH

394.70

LOW

385.75

OPEN 373.05
PREVIOUS CLOSE 388.65
VOLUME 9279
52-Week high 402.00
52-Week low 175.55
P/E 11.65
Mkt Cap.(Rs cr) 811
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 373.05
CLOSE 388.65
VOLUME 9279
52-Week high 402.00
52-Week low 175.55
P/E 11.65
Mkt Cap.(Rs cr) 811
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Monte Carlo Fashions Ltd. (MONTECARLO) - Auditors Report

Company auditors report

To the Members of Monte Carlo Fashions Limited Report on the Audit of theFinancial Statements

Opinion

1. We have audited the accompanying financial statements of Monte Carlo FashionsLimited (‘the Company') which comprise the Balance Sheet as at 31 March 2020 theStatement of Profit and Loss (including Other Comprehensive Income) the Cash FlowStatement and the Statement of Changes in Equity for the year then ended and a summary ofthe significant accounting policies and other explanatory information.

2. 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 (‘Act') in the manner so required and give a true and fair viewin conformity with the accounting principles generally accepted in India including IndianAccounting Standards (‘Ind AS') specified under section 133 of the Act of the stateof affairs (financial position) of the Company as at 31 March 2020 and its profit(including other comprehensive income) its cash flows and the changes in equity for theyear ended on that date.

Basis for Opinion

3. We conducted our audit in accordance with the Standards on Auditing specified undersection 143(10) of the Act. Our responsibilities under those standards are furtherdescribed in the Auditor's Responsibilities for the Audit of the Financial Statementssection of our report. We are independent of the Company in accordance with the Code ofEthics issued by the Institute of Chartered Accountants of India (‘ICAI') togetherwith the ethical requirements that are relevant to our audit of the financial statementsunder the provisions of the Act and the rules thereunder and we have fulfilled our otherethical responsibilities in accordance with these requirements and the Code of Ethics. Webelieve that the audit evidence we have obtained is sufficient and appropriate to providea basis for our opinion.

Emphasis of Matter – Uncertainties related to Covid-19

4. We draw attention to Note 44 to the accompanying financial statements whichdescribes the uncertainties due to the outbreak of COVID - 19 pandemic and management'sassessment of the impact on the financial statements of the Company as at the balancesheet date. The impact of these uncertainties on the Company's operations is significantlydependent on future developments. Our opinion is not modified in respect of this matter.

Key Audit Matters

5. 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.

6. We have determined the matters described below to be the key audit matters to becommunicated in our report.

Key audit matters How the matter was addressed in the audit
Sales returns
Refer accounting policies in note 1 (i) to the Financial Statements. Our audit procedures in relation to revenue returns included but were not limited to the following:
One of the significant adjustments considered in revenue recognition is the adjustment for sales returns. The Company has arrangements with the customers where the customers have the right to return the goods in the normal course of business with no specified period of return from the date of purchase. Returns are generally made upto 3 years from the date of sale. Further the Company has various types of arrangements with the customers including outright sales sales with right of return in normal course of business etc. • Reviewed the process of sales returns and assessed the appropriateness of the accounting policy adopted by the Company for revenue recognition.
• Assessed the design and implementation of controls in respect of the revenue recognition and sales returns and tested the effectiveness of key revenue controls operating across the business.
• Obtained the historical trends for revenue and corresponding sales returns based on the accounting records maintained by the Company.
The above arrangements result in a significant risk that sales recognised during the current year might be reversed subsequently in future years. Management adjusts revenue recognized during the year for expected returns in the subsequent years based on sales made during the current year and historical trends of sales return in the earlier years for various transactions which are grouped on the basis of similar characteristics. • Analysed the appropriateness for the exclusions of certain revenue transactions from the estimations for expected sales returns. Verified the customer's right to return goods with the signed agreements and corroborated the sales return estimates made by the management for the year based on discussions with management around past trends and other relevant factors.
In accordance with Ind-AS 115 Revenue from contracts with customers revenue has been adjusted for the expected return with a corresponding refund liability being recognised. • Obtained the classification of contracts with similar characteristics performed detailed analysis of the terms applicable for different types of contracts.
The Company has corresponding recognized the right to recover the products from customers. • Tested the arithmetical accuracy of the calculations performed by the management in arriving at the expected value of sales returns.
Accordingly Company has adjusted the revenue of the current year by Rs 1165.60 lakhs. Company has recognized refund liability amounting to Rs 3898.33 lakhs and corresponding right to recover the products from customers Rs amounting to 2732.73 lakhs.
• Ensured that the accounting treatment in accordance with the provisions of Ind AS 115.
Considering the materiality of the amounts involved combined with retrospective application of new accounting standard and significant judgements discussed including the inherent limitations involved in estimating the future sales returns based on past trends this matter has been identified as a key audit matter for the current year audit • Assessed the adequacy and appropriateness of the disclosures made in the financial statements is in accordance with the applicable accounting standards.
Lease accounting Our audit procedures in relation to leases included but were not limited to the following:
As described in note 1 (o) and note 42 to the financial statements Company has several stores across India obtained on lease for sale of its products. • Reviewed the management process for lease accounting in compliance with Ind AS 116 and assessed the appropriateness of the accounting policy.
The Company has adopted the new standard on lease accounting Ind AS 116 Leases (Ind AS 116) in the current year w.e.f. 1 April 2019 and used the modified retrospective approach for transition wherein the lease liability has been measured at present value of the remaining lease payments at the date of initial application (i.e. 1 April 2019) and discounted using the incremental borrowing rate at the date of initial application. • Assessed the design and implementation of controls in respect of lease accounting and tested the effectiveness of key controls operation in relation to the lease accounting;
As a result of such adoption Company has recognized lease liability amounting to Rs 8038.56 lakhs and Right of Use asset amounting to Rs 7585.74 lakhs as at 31 March 2020. Company has adjusted the rent expense by Rs 1466.89 lakhs interest expense on lease liability amounts to Rs 634.65 lakhs and the depreciation on Right of Use assets amounts to Rs 1285.06 lakhs in the statement of profit and loss for the year ended 31 March 2020. • Verified the accuracy of the underlying lease data by agreeing a representative sample of leases to original contract or other supporting information and verified the integrity and arithmetic accuracy of the calculations for each lease sampled through recalculation of the expected Ind AS 116 adjustment.
• Assessed the appropriateness of the assumptions applied to determine the discount rates for the lease accounting;
A number of judgements including determination of leases lease term use of practical expedients and discount rates for each lease have been applied and estimates made in determining the impact of the accounting standard. • Assessed the appropriateness of lease rentals and lease escalations used in computations of Right of Use asset and corresponding Lease Liability for the entire lease tenure supported by the agreements with the lessor.
Considering the materiality of the amounts involved combined with significant judgements and estimates used this matter has been identified as a key audit matter for the current year audit. • Assessed the appropriateness of leases excluded from the scope of Ind AS-116 being short term leases or leases for which underlying asset is of low value.
• Ensured that the accounting treatment including the transition provisions adopted by the Company are in accordance with the provisions of Ind-AS 116.
• Assessed the adequacy and appropriateness of the disclosures made in the financial statements is in accordance with the applicable accounting standards.

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

7. 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. The Annual Report is expectedto be made available to us after the date of this auditor's report.

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

In connection with our audit of the financial statements our responsibility is to readthe other information identified above when it becomes available and in doing soconsider whether the other information is materially inconsistent with the financialstatements or our knowledge obtained in the audit or otherwise appears to be materiallymisstated. When we read the Annual Report if we conclude that there is a materialmisstatement therein we are required to communicate the matter to those charged withgovernance.

Responsibilities of Management and Those Charged with Governance for the FinancialStatements

8. The Company's Board of Directors is responsible for 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 state of affairs (financial position) profit or loss(including other comprehensive income) changes in equity and cash flows of the Company inaccordance with the accounting principles generally accepted in India including the IndAS specified under section 133 of the Act. This responsibility also includes maintenanceof adequate accounting records in accordance with the provisions of the Act forsafeguarding of the assets of the Company and for preventing and detecting frauds andother irregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the financial statements that give a true and fair viewand are free from material misstatement whether due to fraud or error.

9. 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.

10. Those Board of Directors are also responsible for overseeing the Company'sfinancial reporting process.

Auditor's Responsibilities for the Audit of the Financial Statements

11. 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.

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

• Identify and assess the risks 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 control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under section 143(3)(i)of the Act we are also responsible for expressing our opinion on whether the Company hasadequate internal financial controls system 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 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.

• 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.

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

14. We also provide those charged with governance with a statement that we 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.

15. From the matters communicated with those charged with governance we determinethose matters that were of most significance in the audit of the financial statements ofthe current period and are therefore the key audit matters. We describe these matters inour auditor's report unless law or regulation precludes public disclosure about the matteror when 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

16. As required by section 197(16) of the Act we report that the Company has paid andprovided remuneration to its directors during the year in accordance with the provisionsof and limits laid down under section 197 read with Schedule V to the Act.

17. As required by the Companies (Auditor's Report) Order 2016 (‘the Order')issued by the Central Government of India in terms of section 143(11) of the Act we givein the Annexure I a statement on the matters specified in paragraphs 3 and 4 of the Order.

18. Further to our comments in Annexure I as required by section 143(3) of the Act wereport that: a) we have sought and obtained all the information and explanations which tothe best of our knowledge and belief were necessary for the purpose of our audit; b) inour opinion proper books of account as required by law have been kept by the Company sofar as it appears from our examination of those books; c) the financial statements dealtwith by this report are in agreement with the books of account; d) in our opinion theaforesaid financial statements comply with Ind AS specified under section 133 of the Act;e) the matter described in paragraph 4 under the Emphasis of Matter in our opinion mayhave an adverse effect on the functioning of the Company; f) on the basis of the writtenrepresentations received from the directors and taken on record by the Board of Directorsnone of the directors is disqualified as on 31 March 2020 from being appointed as adirector in terms of section 164(2) of the Act; g) we have also audited the internalfinancial controls over financial reporting (IFCoFR) of the Company as on 31 March 2020 inconjunction with our audit of the financial statements of the Company for the year endedon that date and our report dated 24 June 2020 as per Annexure II expressed unmodifiedopinion; and h) with respect to the other matters to be included in the Auditor's Reportin 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 givento us: i. the Company as detailed in note 29 to the financial statements has disclosedthe impact of pending litigations on its financial position as at 31 March 2020; ii. theCompany did not have any long-term contracts including derivative contracts for whichthere were any material foreseeable losses as at 31 March 2020; iii. there were no amountswhich were required to be transferred to the Investor Education and Protection Fund by theCompany during the year ended 31 March 2020; and iv. the disclosure requirements relatingto holdings as well as dealings in specified bank notes were applicable for the periodfrom 8 November 2016 to 30 December 2016 which are not relevant to these financialstatements.

Hence reporting under this clause is not applicable.

For Walker Chandiok & Co LLP
Chartered Accountants
Firm's Registration No.: 001076N/N500013
Sandeep Mehta
Partner
Membership No.: 099410
UDIN: 20099410AAAABI8264
Place: Mohali
Date : 24 June 2020

Annexure I to the Independent Auditor's report of even date to the members of MonteCarlo Fashion Limited on the Financial Statements for the year ended 31 March 2020Annexure I

Based on the audit procedures performed for the purpose of reporting a true and fairview on the financial statements of the Company and taking into consideration theinformation and explanations given to us and the books of account and other recordsexamined by us in the normal course of audit and to the best of our knowledge and beliefwe report that: i) (a) The Company has maintained proper records showing full particularsincluding quantitative details and situation of fixed assets.

(b) The Company has a regular program of physical verification of its fixed assetsunder which fixed assets are verified in a phased manner over a period of three yearswhich in our opinion is reasonable having regard to the size of the Company and thenature of its assets. In accordance with this program certain fixed assets were verifiedduring the year and no material discrepancies were noticed on such verification.

(c) The title deeds of all the immovable properties (which are included under the head‘Property plant and equipment') are held in the name of the Company.

ii) In our opinion the management has conducted physical verification of inventory atreasonable intervals during the year except for goods-in-transit and stocks lying withthird parties. For stocks lying with third parties at the year-end written confirmationshave been obtained by the management. No material discrepancies were noticed on theaforesaid verification.

iii) The Company has not granted any loan secured or unsecured to companies firmsLimited Liability Partnerships (LLPs) or other parties covered in the register maintainedunder Section 189 of the Act. Accordingly the provisions of clauses 3(iii)(a) 3(iii)(b)and 3(iii)(c) of the Order are not applicable.

iv) In our opinion the Company has not entered into any transaction covered underSections 185 and 186 of the Act.

Accordingly the provisions of clause 3(iv) of the Order are not applicable.

v) In our opinion the Company has not accepted any deposits within the meaning ofSections 73 to 76 of the Act and the Companies (Acceptance of Deposits) Rules 2014 (asamended). Accordingly the provisions of clause 3(v) of the Order are not applicable.

vi) The Central Government has not specified maintenance of cost records undersub-section (1) of Section 148 of the Act in respect of Company's products. Accordinglythe provisions of clause 3(vi) of the Order are not applicable.

vii) (a) Undisputed statutory dues including provident fund employees' stateinsurance income-tax sales-tax service tax goods and services tax duty of customsduty of excise value added tax cess and other material statutory dues as applicablehave generally been regularly deposited to the appropriate authorities though there hasbeen a slight delay in a few cases. Further no undisputed amounts payable in respectthereof were outstanding at the year-end for a period of more than six months from thedate they became payable.

(b) The dues outstanding in respect of income-tax sales-tax service-tax goods andservices tax duty of customs duty of excise and value added tax on account of anydispute are as follows: Statement of Disputed Dues

Name of the statute Nature of dues Amount (Rs in lakhs) Amount paid under Protest (Rs in lakhs) Period to which the amount relates Forum where dispute is pending
West Bengal Value Added Tax 2003 Interest on VAT 1.33 - FY 2008-09 Deputy Commissioner of Commercial Taxes Kolkata
Central Sales Tax 1956 Interest on CST 0.16 - FY 2008-09 Deputy Commissioner of Commercial Taxes Kolkata
West Bengal Value Added Tax 2003 Penalty on VAT 2.31 2.31 FY 2009-10 West Bengal Taxation Tribunal

viii) The Company has not defaulted in repayment of loans or borrowings to any bankduring the year. The Company has no loans or borrowings payable to a financial institutionor government and no dues payable to debenture-holders during the year. ix) In ouropinion the Company has applied the term loans for the purposes for which these wereraised. The Company did not raise moneys by way of initial public offer/ further publicoffer (including debt instruments) during the year. x) No fraud by the Company or on theCompany by its officers or employees has been noticed or reported during the periodcovered by our audit.

xi) Managerial remuneration has been paid and provided by the Company in accordancewith the requisite approvals mandated by the provisions of Section 197 of the Act readwith Schedule V to the Act. xii) In our opinion the Company is not a Nidhi Company.Accordingly provisions of clause 3(xii) of the Order are not applicable. xiii) In ouropinion all transactions with the related parties are in compliance with Sections 177 and188 of Act where applicable and the requisite details have been disclosed in thefinancial statements etc. as required by the applicable Ind AS. xiv) During the year theCompany has not made any preferential allotment or private placement of shares or fully orpartly convertible debentures. xv) In our opinion the Company has not entered into anynon-cash transactions with the directors or persons connected with them covered underSection 192 of the Act. xvi) The Company is not required to be registered under Section45-IA of the Reserve Bank of India Act 1934.

For Walker Chandiok & Co LLP
Chartered Accountants
Firm's Registration No.: 001076N/N500013
Sandeep Mehta
Partner
Membership No.: 099410
UDIN: 20099410AAAABI8264
Place : Mohali
Date : 24 June 2020

Annexure II to the Independent Auditor's report of even date to the members of MonteCarlo Fashion Limited on the Financial Statements for the year ended 31 March 2020

Annexure II

Independent Auditor's Report on the internal financial controls with reference to thefinancial statements under Clause (i) of Sub-section 3 of Section 143 of the CompaniesAct 2013 (‘the Act')

1. In conjunction with our audit of the financial statements of Monte Carlo FashionsLimited (‘the Company') as at and for the year ended 31 March 2020 we have auditedthe internal financial controls with reference to financial statements of the Company asat that date.

Responsibilities of Management and Those Charged with Governance for Internal FinancialControls

2. The Company's Board of Directors 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 the Company's business including adherence to the 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 Act.

Auditor's Responsibility for the Audit of the Internal Financial Controls withReference to Financial Statements

3. Our responsibility is to express an opinion on the Company's internal financialcontrols with reference to financial statements based on our audit. We conducted our auditin accordance with the Standards on Auditing issued by the Institute of CharteredAccountants of India (‘ICAI') prescribed under Section 143(10) of the Act to theextent applicable to an audit of internal financial controls with reference to financialstatements and the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting (‘the Guidance Note') issued by the ICAI. 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 withreference to financial statements were established and maintained and if such controlsoperated effectively in all material respects.

4. Our audit involves performing procedures to obtain audit evidence about the adequacyof the internal financial controls with reference to financial statements and theiroperating effectiveness. Our audit of internal financial controls with reference tofinancial statements includes obtaining an understanding of such internal financialcontrols assessing the risk that a material weakness exists and testing and evaluatingthe design and operating effectiveness of internal control based on the assessed risk. Theprocedures selected depend on the auditor's judgement including the assessment of therisks of material misstatement of the financial statements whether due to fraud or error.

5. 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 withreference to financial statements.

Meaning of Internal Financial Controls with Reference to Financial Statements

6. A Company's internal financial controls with reference to financial statements is aprocess designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles. A Company's internal financial controlswith reference to financial statements include those policies and procedures that (1)pertain to the maintenance of records that in reasonable detail accurately and fairlyreflect the transactions and dispositions of the assets of the Company; (2) providereasonable assurance that transactions are recorded as necessary to permit preparation offinancial statements in accordance with generally accepted accounting principles and thatreceipts and expenditures of the Company are being made only in accordance withauthorisations of management and directors of the Company; and (3) provide reasonableassurance regarding prevention or timely detection of unauthorised acquisition use ordisposition of the Company's assets that could have a material effect on the financialstatements.

Inherent Limitations of Internal Financial Controls with Reference to FinancialStatements

7. Because of the inherent limitations of internal financial controls with reference tofinancial statements including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected. Also projections of any evaluation of the internal financial controls withreference to financial statements to future periods are subject to the risk that theinternal financial controls with reference to financial statements may become inadequatebecause of changes in conditions or that the degree of compliance with the policies orprocedures may deteriorate.

Opinion

8. In our opinion the Company has in all material respects adequate internalfinancial controls with reference to financial statements and such controls were operatingeffectively as at 31 March 2020 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.

For Walker Chandiok & Co LLP
Chartered Accountants
Firm's Registration No.: 001076N/N500013
Sandeep Mehta
Partner
Membership No.: 099410
UDIN: 20099410AAAABI8264
Place : Mohali
Date : 24 June 2020

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