To the Members of Praxis Home Retail Limited Report on the Financial Statements Opinion
We have audited the accompanying financial statements of Praxis Home Retail Limited ("theCompany") which comprise the Balance Sheet as at March 31 2020 the Statement ofProfit and Loss (including Other Comprehensive Income) the Statement of Cash Flows andthe Statement of Changes in Equity for the year then ended and a summary of significantaccounting 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 explanationsgiven 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 Indian Accounting Standards prescribed under section 133of the Act read with the Companies (Indian Accounting Standards) Rules 2015 as amended("Ind AS") and other accounting principles generally accepted in India of thestate of affairs of the Company as at March 31 2020; and its loss and total comprehensiveincome changes in equity and its cash 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 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 together with the ethicalrequirements that are
relevant to our audit of the financial statements under the provisions of the Act andthe Rules thereunder and we have fulfilled our other ethical responsibilities inaccordance with these requirements and the Code of Ethics. We believe that the auditevidence we have obtained is sufficient and appropriate to provide a basis for ouropinion.
Material Uncertainty Related to Going Concern
We draw attention to Note 43 of the financial statements wherein the Company'snetworth is eroded due to losses incurred during the year as well as previous year whichindicate a material uncertainty exists that may cast a significant doubt on the Company'sability to continue as a going concern. However for the reasons more fully described inthe aforesaid note the accounts of the Company have been prepared as a Going Concern. Ouropinion is not modified in respect of this matter.
Emphasis of Matter
We draw attention to Note 46 of the financial statements as regards to the managementevaluation of impact of COVID - 19 on the future performance of the Company. Our opinionis not modified in respect of this matter.
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 year. 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. Inaddition to the matters described in the Material Uncertainty related to Going Concernsection we have determined the matters described below to be the key audit matters to becommunicated in our report.
|Key Audit Matter ||How our audit addressed the key audit matter |
|Valuation of Inventories As of March 31 2020 the Company total inventory balance amounted to Rs 17605.86 Lakhs representing 71% of the total current assets of the financial statement and 28% of the total assets of the Company. Refer Note 7 of the financial statements. For accounting principles and relevant accounting policy on inventory refer Note 2.12 to the financial statements. The Company is exposed to risk of slow-moving and/or obsolete inventory as a result of seasonal/festival demand for products. Significant judgment is required for the estimation of the net realisable value and allowance for slow-moving and obsolete inventories. Such estimation is made after taking into consideration factors such as movement in price current and expected future market demand and pricing competition. As such we determined that this is a key audit matter. ||Obtained Store/Warehouse wise list of the item from the management as at March 31 2020. Obtained the Physical Verification report done by the stock auditor of the Company for different location for various cut off periods. We evaluated the appropriateness of the basis and processes used by management in determining the net realisable value of inventories. We obtained inventory reports for calculation of the shrinkage provision of various stores /warehouse from management performed by the stock auditor where he witnessed the controls in place around recording the volume of shrinkage. We also evaluated the assumptions and estimates used by the management in determining the provision for slow and non-moving inventory |
The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Board's Report including Annexuresto Board's Report and Shareholder's Information and Corporate governance Report but doesnot include 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 thefinancial statements our responsibility is to read the other information and in doingso consider whether the other information is materially inconsistent with the financialstatements or our knowledge obtained in the audit or otherwise appears to be materiallymisstated. 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 Responsibility for the financial statements
The Company's Management and Board of Directors are responsible for the matters statedin Section 134(5) of the Act with respect to the preparation of these financial statementsthat give a true and fair view of the financial position financial performance change inequity and cash flows of the Company in accordance with the accounting principlesgenerally accepted in India including the Indian Accounting Standards (Ind AS) specifiedunder section 133 of the Act read with the Companies (Indian Accounting standards) Rules2015 as amended. This responsibility also includes maintenance of adequate accountingrecords in accordance with the provision of the Act for safeguarding the assets of theCompany and for preventing and detecting frauds and other irregularities; selection andapplication of the appropriate accounting policies; making judgements and estimates thatare reasonable and prudent; and design implementation and maintenance of adequateinternal financial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe financial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.
In preparing the financial statements management and Board of Directors areresponsible for assessing the Company's ability to continue as a going concerndisclosing as applicable matters related to going concern and using the going concernbasis of accounting unless management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so.
Board of Directors is also 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 scepticism 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 with reference to financial statements in place andthe operating effectiveness of such 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.
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 ourauditors' report unless law or regulation precludes public disclosure about the matter orwhen in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government of India in terms of sub-section (11) of section 143 ofthe Act we give in "Annexure A" a statement on the matters specified inparagraphs 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 our audit;
b) In our opinion proper books of account as required by law have been kept by theCompany so far as appears from our examination of those books.
c) The balance sheet the statement of profit and loss (including other comprehensiveincome) the statement of cash flow and the statement of change in equity dealt with bythis report are in agreement with the books of account.
d) In our opinion the aforesaid financial statements comply with the Indian AccountingStandards specified under section 133 of the Act read with the Companies (IndianAccounting standards) Rules 2015 as amended.
e) On the basis of the written representations received from the directors as on March31 2020 taken on record by the Board of Directors none of the directors are disqualifiedas on March 31 2020 from being appointed as a director in terms of section 164(2) of theAct.
f) The going concern matter described in Material Uncertainty Related to Going ConcernSection and Emphasis of Matter paragraph above in our opinion may have an adverse effecton the functioning of the Company.
g) With respect to the adequacy of the internal financial controls with reference tofinancial statements of the Company and the operating effectiveness of such controlsrefer to our separate Report in "Annexure B".
h) 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.
i) With respect to the other matters to be included in the Auditor's Report inaccordance with Rules 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:
i. The Company has disclosed the impact of pending litigations on its financialposition in its financial statements in note 41 to the financial statements;
ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses;
iii. There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company for the year ended March 31 2020.
Annexure A to Independent Auditors' Report
Referred to in Independent Auditors' Report of even date to the members of Praxis HomeRetail Limited on the financial statements as of and for the year ended March 31 2020
(i) (a) The Company is maintaining proper
records showing full particulars including quantitative details and situation of itsfixed assets.
(b) As informed to us the fixed assets are physically verified by the Managementduring the year and no material discrepancies between the book records and the physicalinventory have been noticed.
(c) The Company does not have any immovable property; hence the provisions of theclause 3(i)(c) of the said Order is not applicable to the Company.
(ii) In our opinion the inventory has been physically verified by the management duringthe year. In our opinion the frequency of verification is reasonable. As informed thediscrepancies noticed on physical verification of inventory as compared to book recordswere not material.
(iii) In our opinion and according to the information and explanations given to us theCompany has not granted any loans secured or unsecured to any company firm limitedliability partnerships or other party covered in the register maintained under Section 189of the Act. Accordingly the provisions stated in paragraph 3(iii) (a) (b) & (c) ofthe Order are not applicable.
(iv) According to the records examined by us and according to the information andexplanation given to us the Company has not granted any loans or made any investments orprovided any guarantees or security to the parties covered under Section 185 and 186 ofthe Act. Accordingly the provisions of Clause 3(iv) of the said Order are not applicableto the Company.
(v) In our opinion and according to the information and explanations given to us theCompany has not accepted any deposits from the public within the provisions of Sections 73to 76 of the Act and the rules framed there under. Accordingly the provisions of Clause3(v) of the said Order is not applicable to the Company.
(vi) In our opinion and according to the information given to us no cost records havebeen prescribed by the Central Government of India under sub section (1) of section 148 ofthe Act.
(vii) (a) According to the information and explanations given to us and the records ofthe Company examined by us in our opinion the Company is generally regular in depositingthe undisputed statutory dues including provident fund employees' state insurance goodsand service tax customs duty excise duty cess and other material statutory dues asapplicable with the appropriate authorities.
(b) According to the information and explanations given to us and the records examinedby us no undisputed amounts payable in respect of provident fund employees' stateinsurance income-tax customs duty sales tax value added tax excise duty goods andservice tax cess and other material statutory dues as applicable were outstanding at theyear end for a period of more than six months from the date they became payable.
(c) According to the information and explanations given to us and the records of theCompany examined by us there are no dues of service tax sales tax customs duty exciseduty and value added tax as at March 31 2020 which have not been deposited on account ofa dispute except for income tax dues for the following:
|Name of the statute ||Nature of Dues ||Amount (Rs in Lakhs) ||Period to which it relates ||Forum where the dispute is pending |
|Income Tax Act 1961 ||Income tax ||34.13 ||AY 2018-19 ||CIT (Appeals) Mumbai |
|Income Tax Act 1961 ||Income tax ||50.72 ||AY 2019-20 ||CIT (Appeals) Mumbai |
|Income Tax Act 1961 ||Income tax ||28.96 ||AY 2020-21 ||CIT (Appeals) Mumbai |
(viii) According to the records of the Company examined by us and the information andexplanations given to us the Company has not defaulted in repayment of loans orborrowings to any financial institutions or banks and in payment of dues to the debentureholders except for the default in repayment of interest amounting to Rs 70.84 Lakhspertaining loan facility availed from BajajFinance Limited outstanding as on March 312020. The period of default ranges between 33 days to 68 days. The said dues weresubsequently paid on April 2 2020 and May 7 2020.
The Company did not have any loans or borrowings from government during the year.
(ix) In our opinion and according to the information and explanation given to us duringthe year the Company has not raised money by way of initial public offer or further publicoffer (including debt instruments). However during the year the Company has availed termloans which were applied for the purpose it was obtained.
(x) During the course of our examination of the books and records of the Companycarried out in accordance with the generally accepted auditing practices in India andaccording to the information and explanations given to us we have neither come across anyinstance of material fraud by the Company or on the Company by its officers or employeesnoticed or reported during the year nor have we been informed of any such instance by themanagement.
(xi) In our opinion and according to the information and explanations given to us theCompany has paid / provided managerial remuneration in accordance with the provisions ofSection 197 read with Schedule V to the Act.
(xii) In our opinion and according to the information and explanations given to us theCompany is not a Nidhi Company and accordingly the provision of the clause 3(xii) of theOrder is not applicable.
(xiii) In our opinion and according to the information and explanations given to us andbased on our examination of the records of the Company transactions entered into by theCompany with the related parties are in compliance with Sections 177 and 188 of the Actwhere applicable. The details of related party transactions as required under Ind AS 24Related Party Disclosures specified under Section 133 of the Act have been disclosed inthe financial statements.
(xiv) In our opinion and according to the information and explanation given to usduring the year the Company has made preferential allotment of Compulsorily ConvertibleDebentures in accordance with the provisions and requirements of Section 42 of the Act andthe Rules framed thereunder. The Company has not made private placement of equity sharesor fully or partly convertible Preference Shares during the year.
(xv) In our opinion and according to the information and explanations given to usduring the year the Company has not entered into any noncash transactions with itsDirectors or persons connected to its Directors.
(xvi) In our opinion and according to the information and explanation given to us theCompany is not required to be registered under Section 45-IA of the Reserve Bank of IndiaAct 1934.
Annexure 'B' to the Independent Auditors'
Report of even date on the financial statements of Praxis Home Retail Limited (Referredto in paragraph 2 (g) under 'Report on Other Legal and Regulatory Requirements' of ourreport of even date)
Report on the Internal Financial Controls with reference to financial statements underClause (i) of Sub-section 3 of Section 143 of the Companies Act 2013 ("theAct")
We have audited the Internal Financial Control with reference to financial statementsof Praxis Home Retail Limited ("the Company") as of March 31 2020 inconjunction with our audit of the financial statements of the Company for the year endedon that date.
Management Responsibility for the Internal Financial Controls
The Company's management is responsible for establishing and maintaining internalfinancial controls based on the internal control with reference to financial statementscriteria established by the Company considering the essential components of internalcontrol stated in the Guidance Note on Audit of Internal Financial Controls with referenceto financial statements (the "Guidance Note") issued by the Institute ofChartered Accountants of India ("ICAI"). These responsibilities include thedesign implementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to Company's policies the safeguarding of its assets the preventionand detection of frauds and errors the accuracy and completeness of the accountingrecords and the timely preparation of reliable financial information as required underthe Act.
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 Guidance Note and the Standards on Auditing prescribed undersection 143(10) of the Act to the extent applicable to an audit of internal financialcontrols both issued by ICAI. Those Standards and the Guidance Note require that wecomply with ethical requirements and plan and perform the audit to obtain reasonableassurance about whether adequate internal financial controls with reference to financialstatements was established and maintained and if such controls operated effectively in allmaterial respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system with reference to financial statements and theiroperating effectiveness. Our audit of internal financial controls with reference tofinancial statements included obtaining an understanding of internal financial controlswith reference to financial statements assessing the risk that a material weaknessexists and testing and evaluating the design and operating effectiveness of internalcontrol based on the assessed risk. The procedures selected depend on the auditor'sjudgment including the assessment of the risks of material misstatement of the financialstatements 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 systemwith reference to financial statements.
Meaning of Internal Financial Controls with reference to financial statements
A Company's internal financial control 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 control withreference to financial statements includes those policies and procedures that (1) pertainto the maintenance of records that in reasonable detail accurately and fairly reflectthe transactions and dispositions of the assets of the company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of financialstatements in accordance with generally accepted accounting principles and that receiptsand expenditures of the company are being made only in accordance with authorisations
of management and directors of the company; and (3) provide reasonable assuranceregarding prevention or timely detection of unauthorised acquisition use or dispositionof the company's assets that could have a material effect on the financial statements.
Inherent Limitations of Internal Financial Controls with reference to financialstatements
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 control with reference to financial statements may become inadequatebecause of changes in conditions or that the degree of compliance with the policies orprocedures 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 with reference to financial statements and such internal financial controls withreference to financial statements were operating effectively as at March 31 2020 basedon the internal control with reference to financial statements criteria established by theCompany considering the essential components of internal control stated in the GuidanceNote.
For Pathak H. D. & Associates LLP
Chartered Accountants Firm Registration No. 107783W/W100593
Vishal D. Shah
Membership No. 119303 UDIN: 20119303AAAADM3342
Place: Mumbai Date: June 29 2020