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 Auditor’s 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 Company’s 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 company’s 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 management’s 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 Company’s 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 user’s 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 Company’s 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 Company’s 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 company’s financial reporting process.

Auditor’s 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 auditor’s 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 management’s 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 Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s 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 auditor’s 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 auditor’s 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 (Auditor’s 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 Company's internal financial controls with reference to standalone financial statements.

g) With respect to the other matters to be included in the Auditor’s 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 Auditor’s 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.

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.