To the Members of
LIBAS CONSUMER PRODUCTS LIMITED (formerly known as LIBAS DESIGNS LIMITED)
Report on the Audit of the Standalone Financial Statements
Opinion
We have audited the standalone financial statements of LIBAS CONSUMER PRODUCTS LIMITED (formerly known as LIBAS DESIGNS LIMITED) (the Company) having CIN No L18101MH2004PLC149489, which comprise the balance sheet as at 31st March, 2025, and the statement of Profit and Loss, (statement of changes in equity) and statement of cash flows for the year ended as on 31st March, 2025 , and notes to the financial statements, including a summary of significant accounting policies and other explanatory information.
In our opinion and to the best of our information and according to the explanations given to us, except for the effects of the matters described in the basis for Qualified Opinion paragraph below, the aforesaid standalone financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at 31st March, 2025, and profit (changes in equity) and its cash flows for the year ended on 31st March, 2025.
Basis for Opinion:
We conducted our audit in accordance with the Standards on Auditing (SAs) specified under section 143(10) of the Companies Act, 2013. Our responsibilities under those Standards are further described in the Auditors Responsibilities for the Audit of the Financial Statements section of our report. We are Independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India together with the ethical requirements that are relevant to our audit of the financial statements under the provisions of the Companies Act, 2013 and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified opinion on the financial statement.
Basis for Qualified Opinion on the Standalone Financial Results for the year ended March 31, 2025
Significant deficiencies in Inventory Management: During the course of our audit, we observed significant deficiencies in the Companys inventory management system. In our opinion, the inventory is overstated by 1,187.30 lakhs, comprising obsolete stock of 700.84 lakhs, overvaluation of 167.94 lakhs, and stock shortages of 318.52 lakhs. Consequently, the profit for the period is also overstated by the same amount.
Loan agreement not obtained: Loan agreements for Short Term Loans and Advances given to various parties (Asset) for a total amount of Rs 884.27 lakhs were not provided. Out of these loans given, certain parties amounting Rs, 298.59 lakhs, there have been no receipts from these parties in last 2 financial years. In the absence of any agreement and balance confirmations from these parties and in view of no receipts from these parties in past 2 years, we are of the opinion that loans and advances aggregating Rs 298.59 lakhs may not be recoverable by the company. Assets are over stated in the balance sheet to this extent.
Interest on Loans given not recognized: Interest income on the loans aggregating to Rs 632.92 lacs, given by the company has not been recognized in the books. In the absence of any loan agreement, we are unable to quantify the interest income not booked by the company. Interest income of Rs 12.71 lacs has been booked against loans amounting to 172.35 lacs, however there has not been any realization of this interest during the year and basis of income booked is not provided.
Doubtful Recoverability of Long-Outstanding Trade Receivables: As at the balance sheet date, the Company is carrying trade receivables aggregating to 198.11 lakhs which have remained outstanding without any recovery or movement for a period exceeding two financial years. In the absence of subsequent collections, corroborative evidence, or adequate impairment assessment, we are unable to obtain sufficient appropriate audit evidence regarding the recoverability of these receivables. In our view, the recoverability of these balances is doubtful, and no provision has been recognized in the financial statements. Consequently, the carrying value of trade receivables and the profit for the year are overstated to this extent.
Unsubstantiated Trade Payables: The Company has reported trade payables amounting to 176.64 lakhs, which have not exhibited any movement or settlement for over two financial years. We were not provided with sufficient documentation, including confirmations or other supporting evidence, to validate the existence and completeness of these liabilities. As a result, we are unable to determine the accuracy and completeness of the trade payables reported in the financial statements.
Discrepancy in Inventory Valuation between Financial Records and Stock Statement Submitted to Bank: During the course of audit, it was noted that the value of inventory reported in the financial statements as on 31st March 2025 amounts to 2196.99 Lacs as per the companys books (Tally and financials). However, the stock statement submitted to the bank for the same date reflects a value of 2028.00 lacs. This results in a discrepancy of 168.99 lacs between the two reported figures. In the absence of reconciliatory documentation or justification for the differential valuation, we are unable to verify the accuracy and completeness of the inventory records. Such a significant difference raises concerns over the reliability of the inventory valuation presented in the financial statements and may impact the true and fair view of the financial position of the company
Internal Control Processes are not commensurate with the size of the business.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance 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 financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have not found any such matters related to the audit of this standalone financial statement which are to be reported here.
Emphasis of Matters
1. The Company has recognized a provision towards gratuity obligations in the financial statements, which has been determined based on managements internal estimates. However, the Company has not obtained an actuarial valuation of the gratuity liability as required under the principles of Ind AS 19 Employee Benefits. In the absence of an actuarial valuation, we are unable to determine the appropriateness and completeness of the gratuity provision recognized as at the reporting date. Consequently, we are unable to assess whether any adjustments may be required to the financial statements in this regard.
2. We draw attention to Note l of the financial statements, which describes that a demand order amounting to 124.39 lakhs under the Goods and Services Tax (GST) was received by the Company on February 2, 2025. The Company has filed an appeal against the said demand; however, no provision has been recognized in the financial statements for this liability, as management believes the demand is not tenable. Our opinion is not modified in respect of this matter.
3. We draw attention to Note no m to the financial statements, which describes a fire incident that occurred at one of the Companys retail outlets subsequent to the balance sheet date. As stated in the note, the management has assessed that the incident does not affect the conditions existing as at March 31, 2025, and accordingly, no adjustments have been made to the financial statements. Our opinion is not modified in respect of this matter.
Other Matters
Other matters are those matters other than those that are presented or disclosed in the financial statements that, in our opinion is relevant to users understanding of the audit. Other matters may be noted as below: GST Annual Return 9 and 9C FY 2022-23 is not filed till date of this report.
We draw attention to the note no. f of the standalone financial results wherein the undisputed income tax liability of Rs.2.91 Lakhs for FY 2017-18 are unpaid as on date of this report. We draw attention to the note no. e of the standalone financial results wherein the undisputed tax liability in relation to TDS on purchase for the F.Y. 2022-23 unpaid as on date amounting to Rs 1.32 Lakhs. We draw attention to the note no. g to j of the standalone financial results wherein the undisputed tax liability in relation to below items are unpaid as on date of this report and overdue for more than 6 months as on 31st March 2025. o Professional Tax for Rs 2.78 lakhs o TCS Collected from parties for Rs 1.50 lakhs o GST Liability for Rs 2.79 lakhs o TDS on sales for Rs 0.82 lakhs. We draw attention to the note no. k of the standalone financial results wherein the legal cases filed against the company pending as on date of this report.
Responsibilities of Management and Those Charged with Governance for the Standalone Financial Statements
The Companys Board of Directors is responsible for the matters stated in section 134(5) of the Companies Act, 2013 (the Act) with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position, financial performance, (changes in equity) and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the accounting Standards specified under section 133 of the Act. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the Companys ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
Those Board of Directors are also responsible for overseeing the companys financial reporting process.
Auditors Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Companies Act, 2013, we are also responsible for expressing our opinion on whether the company has adequate internal financial controls system in place and the operating effectiveness of such controls.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. Conclude on the appropriateness of managements use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Companys ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors report to the related disclosures in the 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 auditors report. However, future events or conditions may cause the Company to cease to continue as a going concern. Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditors Report) Order, 2020 (the Order) issued by the Central Government in terms of Section 143(11) of the Act, we give in Annexure A a statement on the matters specified in paragraphs 3 and 4 of the Order.
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 best of 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 the Company so far as it appears from our examination of those books except for the matter stated in paragraph h) vi below on reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014 (as amended). c) The Balance Sheet, the Statement of Profit and Loss including Other Comprehensive Income, Statement of Changes in Equity and the Statement of Cash Flow Statement dealt with by this Report are in agreement with the books of account. d) In our opinion, the aforesaid standalone financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. e) According to the information and explanations given to us and based on the records of the Company, none of the directors appears to be disqualified as on 31st March, 2025 from being appointed as a director in terms of Section 164(2) of the Companies Act, 2013. f) With respect to the adequacy of the internal financial controls with reference to standalone financial statements of the Company and the operating effectiveness of such controls, refer to our separate Report in "Annexure B". Our report expresses an unmodified opinion on the adequacy and operating effectiveness of the Companys internal financial controls with reference to standalone financial statements. g) With respect to the other matters to be included in the Auditors Report in accordance 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 explanations given to us, the remuneration paid by the Company to its directors during the year is not in accordance with the provisions of section 197 of the Act. h) With respect to the other matters to be included in the Auditors Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us: i. The Company does not have any pending litigations which would impact its financial position other than those stated under Other matters. ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses. iii. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company. iv. (a) The Management has represented that, to the best of its knowledge and belief, no funds (which are material either individually or in the aggregate) have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person or entity, including foreign entity (Intermediaries), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, whether, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (Ultimate Beneficiaries) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries; (b) The Management has represented, that, to the best of its knowledge and belief, no funds (which are material either individually or in the aggregate) have been received by the Company from any person or entity, including foreign entity (Funding Parties), with the understanding, whether recorded in writing or otherwise, that the Company shall, whether, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries; (c) Based on the audit procedures that have been considered reasonable and appropriate in the circumstances, nothing has come to our notice that has caused us to believe that the representations under sub-clause (i) and (ii) of Rule 11(e), as provided under (a) and (b) above, contain any material misstatement. v. No dividend has been declared or paid during the year by the company.
Nature of exception Noted |
Details of exception |
The accounting software used by the company for maintaining its books of accounts for the financial year ended March 31, 2025 does not have a feature of recording audit trail (edit log) facility. |
Company uses Tally ERP software for maintaining its books of accounts which does not have an inbuilt edit log feature. In the absence existence of audit trail (edit log) for any direct changes made at the database level in the Independent Service Auditors Assurance Report on the description of Controls, their design and operating effectiveness (Type 2 report issued in accordance with ISAE 3402, Assurance reports on Controls at a Service Organisation), we draw attention to the same that audit trail feature with respect to database of the said software was not enabled and not operated throughout the year. |
Based on our audit procedures and the information and explanations given to us, we report that the company has not maintained accounting software having audit trail (edit log) feature, or the feature, though available, was not operated throughout the financial year for all relevant transactions. Further, we were unable to verify whether the audit trail has been preserved in accordance with the statutory record retention requirements. Accordingly, the company has not complied with the requirements of Rule 3(1) of the Companies (Accounts) Rules, 2014 read with Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014.
Alok Kumar Mishra Partner Membership No. 124184 Place: Mumbai Date: 13.06.2025 UDIN: 25124184BMIAEG8267
Annexure A to the Independent Auditors Report
(Referred to in paragraph 1 under the heading Report on Other Legal & Regulatory Requirement of our report of even date)
TO THE MEMBERS OF LIBAS CONSUMER PRODUCTS LIMITED (formerly known as LIBAS DESIGNS LIMITED) i. (a) In respect of Property, Plant and Equipment: (1) The Company has maintained proper records showing full particulars, including quantitative details and situation of property, plant and equipment and relevant details of right-of-use assets. (2) The Company does not have any intangible assets. Accordingly, clause 3(i)(a)(B) of the Order is not applicable to the Company.
(b) All Property, Plant and Equipment have not been physically verified by the management during the year but there is a regular programme of verification which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets, No material discrepancies were noticed on such verification.
(c) According to the information and explanations given to us and on the basis of our examination of the records of the Company, the title deeds of immovable properties (other than immovable properties where the Company is the lessee, and the leases agreements are duly executed in favour of the lessee) disclosed in the standalone financial statements are held in the name of the Company.
(d) According to the information and explanations provided to us, the Company has not revalued its Property, Plant and Equipment (including Right of use assets) or intangible assets during the year ended March 31, 2025. Accordingly, the reporting under Clause 3(i)(d) of the Order is not applicable to the Company
(e) According to the information and explanations provided to us, there are no proceedings initiated or are pending against the Company for holding any benami property under the Prohibition of Benami Property Transactions Act, 1988 and rules made thereunder.
ii. a) As per the information and explanations provided to us, the management has stated that inventory was physically verified during the year. However, in our opinion, the frequency and procedures of such verification were not reasonable and lacked sufficient documentation.
b) According to the information and explanations given to us and on the basis of our examination of the records of the Company, the company has been sanctioned working capital limits in excess of five crore rupees, in aggregate, from banks or financial institutions on the basis of security of current assets during any point of time of the year. The quarterly returns or statements filed by the company with such banks or financial institutions are in agreement with the books of account of the Company. c) The company valued its inventory at purchased cost. iii. a) According to the information and explanations given to us and on the basis of our examination of the records of the company, during the year the company has provided loans or provided advances in the nature of loans, or given guarantee, or provided security to other entities:
The Company has provided loans during the year, the details of which are given below:
Particulars |
Advances in nature of loans |
(Amount in Rs.) | |
A. Aggregate amount granted/provided during the year |
|
1) Subsidiaries |
0.00 |
2) Joint Ventures |
0.00 |
3) Associates |
0.00 |
4) Others |
1,49,23,552.48 |
B. Balance outstanding as at balance sheet date in respect of |
|
above cases |
|
1) Subsidiaries |
0.00 |
2) Joint Ventures |
0.00 |
3) Associates |
0.00 |
4) Others |
8,87,72,822.14 |
b) In our opinion, the investments made and the terms and conditions of the grant of loans, during the year are, prima facie, not prejudicial to the Companys interest.
c) According to the information and explanations given to us the company has granted loans and advances in the nature of loans amounting to Rs. 884.27 lacs for which Loan agreements have not been provided. Therefore, we could not review any terms or period of repayment of the said loans.
d) According to the information and explanations given to us and based on our examination of the records of the Company, no formal loan agreements were made available to us, so we could verify the amounts overdue for more than 90 days in respect of loans granted to the parties.
e) According to the information and explanations given to us and based on our examination of the records of the Company, in the absence of formal loan agreements specifying repayment terms, we are unable to comment on whether any loan or advance in the nature of loan that may have fallen due during the year has been renewed, extended, or fresh loans granted to settle the overdues of existing loans given to the same parties.
f) According to the information and explanations given to us and based on our examination of the records of the Company, in the absence of formal loan agreements specifying the terms of repayment, we are unable to comment on whether any loans or advances in the nature of loans were granted during the year either repayable on demand or without specifying any terms or period of repayment.
iv. According to the information and explanations given to us and on the basis of our examination of the records, in respect of loans, investments, guarantees, and security, provisions of section 185 and 186 of the Companies Act, 2013 have been complied with except non charging of interest on the loan. v. The Company has not accepted any deposits from the public and hence the directives issued by the Reserve Bank of India and the provisions of Sections 73 to 76 or any other relevant provisions of the Act and the Companies (Acceptance of Deposit) Rules, 2015 with regard to the deposits accepted from the public are not applicable. vi. The maintenance of cost records has not been specified by the Central Government under section 148(1) of the Companies Act, 2013, for the business activities carried out by the Company. Hence reporting under paragraph 3 (vi) of the Order is not applicable. vii. (a) According to the information and explanations given to us and on the basis of our examination of the records of the company, the company is not regular in depositing undisputed statutory dues including Goods and Services Tax, provident fund, employees state insurance, income-tax, sales-tax, service tax, duty of customs, duty of excise, value added tax, cess and any other statutory dues to the appropriate authorities. According to the information and explanation given to us, following were the outstanding statutory dues as on 31st of March, 2025 for a period of more than six months from the date they became payable.
Particulars |
Period | Amount in Rs. |
Income Tax |
F.Y 2023-24 | 1.27 Lacs |
TDS |
F.Y 2022-23 | 1.32 Lacs |
TDS |
F.Y 2023-24 | 3.29 Lacs |
Professional Tax |
F.Y 2022-23 | 2.78 Lacs |
TCS collected from parties |
F.Y 2022-23 | 1.50 Lacs |
GST Liability |
F.Y 2022-23 | 2.79 Lacs |
viii. There were no transactions relating to previously unrecorded income that have been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (43 of 1961). ix. Loans or other borrowings from any lender: (a) In our opinion, the company has not defaulted in repayment of loans or other borrowings or in the payment of interest thereon to any lender during the year; (b) Company is not declared wilful defaulter by any bank or financial institution or other lender; (c) According to the information and explanations given to us and on the basis of our audit procedures, the company has not availed any term loans during the year. Accordingly, the reporting requirements under clause 3(ix)(c) of the Order are not applicable. (d) According to the information and explanation given to us, funds raised on short term basis have not been utilized for long term purposes; (e) According to the information and explanation given to us, the company has not taken any funds from any entity or person on account of or to meet the obligations of its subsidiaries, associates or joint ventures; x. The company has not raised any money by way of initial public offer or further public offer (including debt instruments) during the year. Accordingly, clause 3(x)(a) of the Order is not applicable. xi. (a) No fraud by the Company and no material fraud on the Company has been noticed or reported during the year. (b) No report under sub-section (12) of section 143 of the Companies Act has been filed in Form ADT-4 as prescribed under rule 13 of Companies (Audit and Auditors) Rules, 2014 with the Central Government, during the year and up to the date of this report.
xii. The Company is not a Nidhi Company and hence reporting under clause (xii) of the Order is not applicable xiii. In our opinion and according to the information and explanations given to us, all transactions with the related parties are in compliance with sections 177 and 188 of Companies Act, where applicable and the details have been disclosed in the financial statements, as required by the applicable accounting standards;
xiv. a. In our opinion, the Company does not have an adequate internal control commensurate with the size and the nature of its business.
b. The company is a listed entity and covered by section 138 of the Companies Act, 2013. We have considered the internal audit reports of the Company issued till date for the period under audit. xv. According to the information and explanations provided to us, the Company has not entered into any non-cash transactions with its directors or persons connected with its directors. Accordingly, requirement to report on clause 3(xv) of the Order is not applicable to the Company and hence not commented upon. xvi. (a) In our opinion, the Company is not required to be registered under section 45-IA of the Reserve Bank of India Act, 1934. Hence, reporting under clause 3(xvi)(a), (b) and (c) of the Order is not applicable. (b) In our opinion, there is no core investment company within the Group (as defined in the Core Investment Companies (Reserve Bank) Directions, 2016) and accordingly reporting under clause 3(xvi)(d) of the Order is not applicable.
xvii. The Company has not incurred cash losses during the financial year covered by our audit and the immediately preceding financial year. xviii. There has been no resignation of the statutory auditors during the year. Accordingly, clause 3(xviii) of the Order is not applicable xix. On the basis of the financial ratios, ageing and expected dates of realization of financial assets and payment of financial liabilities, other information accompanying the financial statements and our knowledge of the Board of Directors and Management plans and based on our examination of the evidence supporting the assumptions, nothing has come to our attention, which causes us to believe that any material uncertainty exists as on the date of the audit report indicating that Company is not capable of meeting its liabilities existing at the date of balance sheet as and when they fall due within a period of one year from the balance sheet date. We, however, state that this is not an assurance as to the future viability of the Company. We further state that our reporting is based on the facts up to the date of the audit report and we neither give any guarantee nor any assurance that all liabilities falling due within a period of one year from the balance sheet date, will get discharged by the Company as and when they fall due. xx. Based on our examination, the provision of section 135 of Companies Act,2013 towards Corporate Social Responsibility are not applicable to the company. Accordingly, clauses 3(xx)(a) and 3(xx)(b) of the Order are not applicable.
xxi. The company has prepared consolidated financial statements as required under the applicable provisions of the Companies Act, 2013. However, reporting under the Companies (Auditors Report) Order (CARO), 2020 is not applicable to subsidiaries, associate companies, and joint ventures of the company and hence, this clause is not applicable.
For Choudhary Choudhary & Co. Chartered Accountants Firm Reg. No. 02910C
Alok Kumar Mishra Partner Membership No. 124184 Place: Mumbai Date: 13.06.2025 UDIN: 25124184BMIAEG8267
"Annexure B" to the Independent Auditors Report
(Referred to in paragraph 2(f) under the heading Report on Other Legal & Regulatory Requirement of our report of even date)
We have audited the internal financial controls over financial reporting of LIBAS CONSUMER PRODUCTS LIMITED (formerly known as LIBAS DESIGNS LIMITED), having CIN No L18101MH2004PLC149489 ("the Company") as of March 31, 2025 in conjunction with our audit of the standalone financial statements of the Company for the year ended on that date.
Managements Responsibility for Internal Financial Controls
The Companys management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India. These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to companys policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.
Auditors Responsibility
Our responsibility is to express an opinion on the Companys internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls over Financial Reporting (the "Guidance Note") and the Standards on Auditing, issued by ICAI and deemed to be prescribed under section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls, both applicable to an audit of Internal Financial Controls and, both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects. Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditors judgement, including the assessment of the risks of material misstatement of the standalone financial statements, whether due to fraud or error. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Companys internal financial controls system over financial reporting.
Meaning of Internal Financial Controls Over Financial Reporting
A companys internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of standalone financial statements for external purposes in accordance with generally accepted accounting principles. A companys internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company, (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of standalone financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the companys assets that could have a material effect on the standalone financial statements.
Inherent Limitations of Internal Financial Controls over Financial Reporting
Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Opinion
According to the information and explanations given to us and based on our audit, the following material weaknesses have been identified in the operating effectiveness of the Companys internal financial controls with reference to financial statements as at 31.03.2025. a) The process of inventory management adopted by the company is not satisfactory and does not facilitate inventory updation on the warehouse locations. There is no system or Software available for inventory updations at the warehouse. Also, any inward and Outward for inventory movement is not being maintained. b) During our audit visit to the Bhiwandi warehouses (Harihar and Sagar Complex), we observed that the inventory was not stored in a product-wise manner. The stocks were intermixed and not maintained in a countable or verifiable condition, which may affect the accuracy and reliability of the inventory records. c) Loan agreements for Short Term Loans and Advances given to various parties for a total amount of Rs 884.27 lakhs were not provided. A material weakness is a deficiency, or a combination of deficiencies, in internal financial controls with reference to financial statements, such that there is a reasonable possibility that a material misstatement of the companys annual or interim financial statements will not be prevented or detected on a timely basis.
In our opinion, the Company has, in all material respects, adequate internal financial controls with reference to financial statements as at 31 March 2025, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal financial controls stated in the Guidance Note issued by the ICAI, and except for the possible effects of the material weaknesses described above on the achievement of the objectives of the control criteria, the Companys internal financial controls with reference to financial statements were operating effectively as at 31 March 2025.
We have considered the material weaknesses identified and reported above in determining the nature, timing, and extent of audit tests applied in our audit of the standalone financial statements of the Company as at and for the year ended 31 March 2025, and these material weaknesses mentioned in paragraph (a) have affected our opinion on the standalone financial statements of the Company and we have issued a qualified opinion on the standalone financial statements.
For Choudhary Choudhary & Co.
Chartered Accountants Firm Reg. No. 02910C
Alok Kumar Mishra Partner
Membership No. 124184 Place: Mumbai
Date: 13.06.2025
UDIN: 25124184BMIAEG8267
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