To the Members of
LIBAS DESIGNS LIMITED
Report on the Audit of Standalone Financial Statements.
We have audited the accompanying standalone financial statements of LIBAS DESIGNSLIMITED ("the Company") which comprise the Balance Sheet as at March 312019 the Statement of Profit and Loss account ((including Other ComprehensiveIncome) the Statement of Changes in Equity and statement of Cash flow for the year endedon that date and a summary of significant accounting policies and other explanatoryinformation.
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 accounting principles generally accepted in India ofthe state of affairs of the company as at 31 March 2019 the Profit and totalcomprehensive income changes in equity and its cash flow for the year ended on that date
Basis for Opinion
We conducted our audit of the standalone financial statements in accordance with theStandards on Auditing specified under section 143(10) of the Act (SAs). Ourresponsibilities under those Standards are further described in the Auditor'sResponsibilities for the Audit of the Standalone financial statements section of ourreport. We are independent of the Company in accordance with the Code of Ethics issued bythe Institute of Chartered Accountants of India (ICAI) together with the independencerequirements that are relevant to our audit of the standalone financial statements underthe provisions of the Act and the Rules made thereunder and we have fulfilled our otherethical responsibilities in accordance with these requirements and the ICAI's Code ofEthics. We believe that the audit evidence we have obtained is sufficient and appropriateto provide a basis for our audit opinion on the financial statements.
Key Audit Matters
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone financial statements of the current period.These matters were addressed in the context of our audit of the standalone financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters. We have
determined the matters described below to be the key audit matters to be communicatedin our report.
|Sr. No ||Key Audit Matters ||How the matter was addressed in our audit |
| ||Evaluation of tax positions:- || |
|1. ||The Company as a whole operates in India and Ajman U.A.E. is subject to periodic challenges by local tax authorities on a range of tax matters during the normal course of business including direct tax transfer pricing and indirect tax matters. These involve significant management judgment to determine the possible outcome of the tax litigations consequently having an impact on related accounting and disclosures in the financial statements. ||Our audit procedures include the following substantive procedures: |
| || || Obtained an understanding of key tax litigations and potential tax exposures |
| || || We along with our internal tax experts - |
| || || read and analyzed select key correspondences and consultations carried out by management with external tax experts for key tax litigations and potential tax exposures; |
| || || discussed with appropriate senior management and evaluated management's underlying key assumptions and grounds of appeal in estimating the tax provisions; and evaluated the status of the recent and current tax assessments / inquiries results of previous tax assessments and changes in the tax environment to assess management's estimate of the possible outcome of key tax litigations and potential tax exposures. |
| ||Revenue Recognition || |
|2. ||Revenue recognition on SOR Sales. ||Our Audit procedure on revenue recognition from Sales or returnable sale included |
| || || Obtaining an understanding of the systems processes and controls implemented by management for recording such transaction |
| || || Calculating revenue from those transactions. |
| || || Reviewing the continuity of supply and the associated contract with the vendors. |
The Company's management and Board of Directors are responsible for the otherinformation. The other information comprises the information included in the Company'sannual report but does not include the standalone financial statements and our auditors'report thereon. Our opinion on the standalone financial statements does not cover theother information and we do not express any form of assurance conclusion thereon. Inconnection with our audit of the standalone financial statements our responsibility is toread the other information and in doing so consider whether the other information ismaterially inconsistent with the standalone financial statements or our knowledge obtainedin the audit or otherwise appears to be materially misstated. If based on the work wehave performed we conclude that there is a material misstatement of this otherinformation; we are required to report that fact. We have nothing to report in thisregard.
Management's Responsibility for the Standalone Financial Statements
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 standalone financial statementsthat give a true and fair view of the financial position financial performance totalcomprehensive income changes in equity and cash flows of the Company in accordance withaccounting principles generally accepted in India. This responsibility also includesmaintenance of adequate accounting records in accordance with the provisions of the Actfor safeguarding 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 standalone financial statements that give a true andfair view and are free from material 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 also responsible for overseeing the Company's financialreporting process.
Our objectives are to obtain reasonable assurance about whether the standalonefinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis 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 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 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 financial controls system in place and the operatingeffectiveness 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 standalone 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 standalonefinancial statements including the disclosures and whether the standalone financialstatements represent the underlying transactions and events in a manner that achieves fairpresentation.
Materiality is the magnitude of misstatements in the standalone financial statementsthat individually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the standalone financial statements may be influenced. Weconsider quantitative materiality and qualitative factors in (i) planning the scope of ouraudit work and in evaluating the results of our work; and (ii) to evaluate the effect ofany identified 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 standalone financial statementsof the current period and are therefore the key audit matters. We describe these mattersin our auditor's report unless law or regulation precludes public disclosure about thematter or 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
1. As required by section 143(3) of the Act we report to the extent applicable that:
a. we have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purpose 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 Statement of Profit and Loss account including othercomprehensive Income Statement of change in equity and Cash flow statement dealt with bythis report are in agreement with the books of account;
d. in our opinion the Balance Sheet Statement of Profit and Loss account and Cashflow statement comply with the Accounting Standards referred to in section (3C) of section133 of the Act read with Rule 7 of the companies (Accounts) Rules 2014;
e. on the basis of written representations received from the directors as on 31stMarch 2019 and taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2019 from being appointed as a director interms of clause (g) of sub-section (1) of section 164(2) of the Companies Act 2013.
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 unmodifiedopinion on the adequacy and operating effectiveness of the Company's internal financialcontrols over financial 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 in our opinionand to the best of our information and according to explanations given to us :
1. The Company has disclosed the impact if any of pending litigations in itsfinancial statements; Ref note No. 28
ii. The company did not have any long term contracts including derivative contractsfor which they were any material foreseeable losses.
iii. There has been no delay in transferring amounts required to be transferredto the Investor Education and Protection Fund by the Company.
2. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government 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 JAIN JAGAWAT KAMDAR & CO.
Firm Regn. No. 122530W
CA Chandrashekhar Jagawat
M. No: - 116078
ANNEXURE A' TO AUDITOR'S REPORT
(Referred to in paragraph 1(f) under Report on Other Legal and RegulatoryRequirements' section of our report to the Members of Libas Designs Limited for the yearended 31st March 2019.
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 (the Act')
1. We have audited the internal financial controls over financial reporting of LIBASDESIGNS LIMITED as of March 31 2019 in conjunction with our audit of the standalonefinancial statements of the company for the year ended on that date.
According to the information provided in our opinion to the best of the informationand explanation given to us the company has in all material respects an adequateinternal financial control system over financial reporting and such internal financialcontrol over financial reporting were effective as at March 31 2019 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control states in the Guidance Note.
Management's Responsibility for Internal Financial Controls
2. The respective Board of Directors are responsible for establishing and maintaininginternal financial controls based on 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). These responsibilitiesinclude the design implementation and maintenance of adequate internal financial controlsthat were operating effectively for ensuring the orderly and efficient conduct of itsbusiness including adherence to the respective company's policies the safeguarding ofits assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the Companies Act 2013.
3. 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") issued by the ICAI and the Standards on Auditing deemed tobe prescribed under section 143(10) of the Companies Act 2013 to the extent applicableto an audit of internal financial controls both applicable to an audit of internalfinancial controls and both issued by the ICAI. Those Standards and the Guidance Noterequire that we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether adequate internal financial controls over financialreporting 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 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 internal financial control system over financialreporting of the Company.
Meaning of Internal Financial Controls over Financial Reporting
4. A company's internal financial control over financial reporting is a processdesigned to provide reasonable assurance regarding the reliability of financial reportingand the preparation of standalone financial statements for external purposes in accordancewith generally accepted accounting principles. A company's internal financial control overfinancial reporting includes those policies and procedures that (1) pertain to themaintenance of records that in reasonable detail accurately and fairly reflect thetransactions and dispositions of the assets of the company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of standalonefinancial 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 limitation of internal financial controls over financial reporting.
5. Because of inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material statement due to error or fraud may occur and not be detected. Alsoprojections of any evaluation of internal financial controls over financial reporting tofuture periods are subject to the risk that the internal financial control over financialreporting may become inadequate because of changes in conditions or that the degree ofcompliance with the policies or procedures may deteriorate.
For JAIN JAGAWAT KAMDAR & CO.
Firm Regn. No. 122530W
CA Chandra Shekhar Jagawat
M. No:- 116078
ANNEXURE B' TO THE INDEPENDENT AUDITOR'S REPORT
As required by section 143(11) of the act we report to the extent applicable that:
1. In respect of the Company's fixed assets:
(a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
(b) The Company has a program of verification to cover all the items of fixed assets ina phased manner which in our opinion is reasonable having regard to the size of theCompany and the nature of its assets. Pursuant to the program certain fixed assets werephysically verified by the management during the year. According to the information andexplanations given to us no material discrepancies were noticed on such verification.
(c) According to the information and explanations given to us the records examined byus and based on the examination of the books of accounts Company do not have immovableproperties as at balance sheet date and hence clause for ownership of the property do notapplicable to company to that extent.
2. The Company is in the business of Garments manufacturing trading in fabric and menand women accessories and maintained inventory records. The management has conducted thephysical verification at reasonable interval and they do not found any major discrepanciesduring their verification.
3. The company has granted interest free unsecured advance /loans to the directors andrelatives of Directors of the company covered in the registration maintained under section189 of the Companies Act 2013 the terms and condition of loan is prejudicial to theinterest of the Company. The repayment schedule was not in line with prudential practice.(Refer Note no. 30 to Standalone financials.)
4. In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of Sections 185 and 186 of the Act in respect ofgrant of loans making investments and providing guarantees and securities as applicable.
5. The Company has not accepted deposits during the year and does not have anyunclaimed deposits as at March 31 2019 and therefore the provisions of the clause 3 (v)of the Order are not applicable to the Company.
6. 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.
7. According to information and explanation given to us the company is regular indepositing undisputed statutory dues including provident fund employees' stateinsurances income-tax sales tax wealth tax service tax duty of customs duty excisevalue added tax cess and any other statuary dues with the appropriate authorities whetherapplicable. As such there are no arrears of outstanding statutory sues as at the last dayof the financial year concerned for a period of more than six month from the date theybecame payable except in the case of profession Tax the amount dues exceeding 6 months ofRs. 89250/-.
8. The Company has taken loans or borrowings from Bank / financial institutions; thereis no delay repayment of loan installment.
9. The Company has raised moneys by way of term loan and applied the money raised forthe intended purpose and regular in repayment of installments.
10. To the best of our knowledge and according to the information and explanationsgiven to us no fraud by the Company or no material fraud on the Company by its officersor employees has been noticed or reported during the year.
11. The company has company has paid managerial remuneration within the limitprescribed U/s 197 read with schedule 5 of the Companies Act 2013.
12. The company is not a Nidhi company; hence the reporting under clauses 3(xii) of theOrder is not applicable to the company.
13. In our opinion and according to the information and explanations given to us theCompany is in compliance with Section 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.
14. During the year the company has not made any preferential allotment or privateplacement of shares or convertible debentures; hence the reporting under clauses 3(xiv) ofthe Order is not applicable to the company.
15. 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.
16. The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934.
For JAIN JAGAWAT KAMDAR & CO.
Firm Regn. No. 122530W
CA Chandra Shekhar Jagawat
M. No: - 116078