To the Members of
Alchemist Realty Limited.
Report on the Financial Statements
We have audited the accompanying standalone financial statements of Alchemist RealtyLimited ("the Company") which comprise the Balance Sheet as at March 31 2016and the Statement of Profit and Loss and Cash Flow Statement for the year then ended anda summary of significant accounting policies and other explanatory information.
Managements Responsibility for the Financial Statements
The Companys Board of Directors is responsible for the matters stated in Section134(5) of the Companies act 2013 ("the Act") with respect to the preparation ofthese standalone financial statements that give a true and fair view of the financialposition financial performance and cash flows of the Company in accordance with theAccounting principles generally accepted in India including the Accounting Standardspecified under Section 133 of the Act read with the provision of the Companies(Accounts) Rules 2014. This responsibility includes the maintenance of adequateaccounting records in accordance with the provision of the Act for safeguarding of theassets of the Company and for preventing and detecting the frauds and otherirregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and design implementation andmaintenance of internal financial control that were operating effectively for ensuringthe accuracy and completeness of the accounting records relevant to the preparation andpresentations of the financial statements that give a true and fair view and free frommaterial misstatement whether due to fraud or error.
Our responsibility is to express an opinion on these Standalone financial statementsbased on our audit.
We have taken into account the provisions of the Act the accounting and auditingstandards and matters which are required to be included in the audit report under theprovisions of the Act and Rules made there under.
We conducted our audit in accordance with the Standards on Auditing specified undersection 143(10) of the Act. Those Standards require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetherthe financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures in the financial statements. The procedures selected depend on theauditors judgment including the assessment of the risks of material misstatement ofthe financial statements whether due to fraud or error. In making those risk assessmentsthe auditor considers internal control relevant to the Companys preparation and fairpresentation of the financial statements in order to design audit procedures that areappropriate in the circumstances but not for the purpose of expressing an opinion on theeffectiveness of the entitys internal control. An audit also includes evaluating theappropriateness of accounting policies used and the reasonableness of the accountingestimates made by management as well as evaluating the overall presentation of thefinancial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Standalone financial statement.
Basis of Qualified Opinion
We draw attention to :
Note 15 and 15.1 of the standalone financial statements wherein which states Tradereceivables amounting to Rs.15500.05 Lacs out of Which export debtors for merchant tradetransaction are Rs.15197.53 Lacs and other receivables are Rs.303.00 which are outstandingfor more than six months from the date they become due from payment. We are unable tocomment on the recoverability of the same for which the management has not made anyprovision in the books of accounts. Hence the financial impact of the same on financialstatements cannot be determined.
In our opinion and to the best of our information and according to the explanationsgiven to us except for the effects of the matter described in basis for Qualifiedopinion paragraph above the aforesaid standalone financial statements give theinformation required by the Act in the manner so required and give a true and fair view inconformity with the accounting principles generally accepted in India of the state ofaffairs of the Company as at March 31 2016 and its loss and its Cash Flow for the yearended on that date.
Emphasis of the Matter a. Attention is invited to note No 12.1 and 12.2 of thefinancial statements wherein amount of Rs. 5999.97 lacs has been shown under the head of longterm advances "out of which Rs. 1249.40 Lacs has been given to various partiesand the matter is Sub-Judice in various courts for acquiring properties and advancesamounting to Rs. 1842.97 lacs given to various other parties but the sale deeds forproperties have not so far been executed in favor of the company".
These advances have been considered as good by the management of the company. It isrelevant to point out that these are material advances and are pending since long morethan three years and the management has not made any provision for the same.
Attention is also invited to note No 12.3 of the financial statements for amount shownunder the head " long term advance Rs. 1887.92 Lacs given to various partieson account of franchisee fee and other expenses for acquiring rights of Realogy Corpn.Inc. USA for their brand (Century 21 ) which is recoverable from its subsidiary Century 21Properties (India) Pvt. Ltd as and when the rights will be transferred to it". It isrelevant to note that the amount has been advanced since long and rights have not beentransferred so far. b. We draw attention to note 12.4 the company has advanced as loan asum of Rs.854.67 Lacs to two parties as interest free unsecured loan the same is inviolation of sub section 7 of section 186 of the Companies Act 2013. This sub sectionrequires the "No loans shall be given under this section at a rate lower than theprevailing yield of one year three year five year or ten year Government Securityclosest to the tenure of the loan. c. During the year and amount of Rs.49.02 Lacshas been written off under the head exceptional items on account of expenditure incurredduring previous years for Lease hold Improvements of buildings which were taken on leaseas the lease has been cancelled /revoked during the year.
Our opinion is not modified in respect of these matters.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditors Report) Order 2016 ("theOrder") issued by the Central Government of India in terms of sub-section (11) ofsection 143 of the Act we give in the Annexure A a statement on the matters specified inthe paragraph 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 andobtained all the information and explanations which to the best of our knowledge andbelief were necessary for the purpose of our audit; b) In our opinion proper books ofaccount as required by law have been kept by the Company so far as appears from ourexamination of those books. c) The Balance Sheet Statement of Profit and Loss and CashFlow Statement dealt with by this Report are in agreement with the books of account. d)Except for the effects of the matter described in the basis for Qualified opinionparagraph above in our opinion the aforesaid standalone financial statements comply withthe Accounting Standards specified under Section 133 of the Companies Act 2013 read withRule 7 of the Companies(Accounts) Rules2014; e) The matters described in the basis forQualified Opinion paragraph and Emphasis of matter paragraph above in our opinion canadversely affect the functioning of the company. f) On the basis of writtenrepresentations received from the directors as on March 31 2016 and taken on record bythe Board of Directors none of the directors is disqualified as on March 31 2016 frombeing appointed as a director in terms of section 164(2) of the Companies Act 2013. g)with respect to the adequacy of the internal financial controls over financial reportingof the company and the operating effectiveness of such control refer to our separatereport in Annexure "B and h) With respect to the other matters included in theAuditors Report in accordance with Rule 11 of Companies (Audit and Auditors)Rules2014 in our opinion and to the best of our information and according to explanations givento us: i. The Company has not disclosed the impact of pending litigations in its financialstatements with respect to suits on or by the company in respect of suits filed by thecompany for acquisition of properties as referred to in note 12.1 and 12.2 of thefinancial statements. ii. The company did not have any long term contracts includingderivative contracts for which there were any material foreseeable losses. iii. There noamounts which required to be transferred to the Investor Education and Protection Fund bythe company
| ||FOR K.SINGH & ASSOCIATES |
| ||CHARTERED ACCOUNTANTS |
| ||Firm No. 012458N |
| ||Sd/- |
| ||KULTAR SINGH |
|PLACE : New Delhi ||Partner |
|DATED : 10/05/2016 ||Membership No. 091673 |
Annexure- A to the Independent Auditors Report
Referred to in paragraph 1 under Report on other Legal and RegulatoryRequirements section of our report of even date. We report that:
1. (a) The company has maintained proper records showing full particulars includingquantitative details and situation of its fixed assets.
(b) As explained to us fixed assets have been physically verified by the management atreasonable intervals; no material discrepancies were noticed on such verification.
(c) In our opinion and according to the information and explanations given to us thecompany dose not have any immovable properties in its name. Therefore para 3 (1) ( c) arenot applicable
2. As explained to us inventories have been physically verified during the year by themanagement at reasonable intervals and no material discrepancy was noticed on physicalverification of stocks by the management as compared to book records.
3. According to information and explanations given to us the company has grantedunsecured loan to two subsidiary company i.e. Alchemist Hill Resorts Private Limited andCentury 21 Properties India Private Limited (party covered under section 189 of thecompanies Act. 2013) amounting to Rs. 854.67 Lacs. a) The terms and conditions on whichthese loans have been given appears to be prejudicial to the interest of the company asthe loans are not carrying any interest . b) No Schedule for repayment of principal andinterest has been stipulated however it has been informed to us that these loans havebeen given in accordance with the agreement which intra-alia provides these loans areinterest fee in lieu of option to convert them into equity shares at valuations which willcompensate the company for the interest component. In such circumstances we are unable tocomment whether the receipt of principle and interest is regular. c) We are unable tocomment on the overdue amount of principle and interest more than ninety days as loanshave been given to companies on mutual inter-alia agreements as informed to us howevernecessary documents terms and conditions on which loans have been given have not beenmade available to us.
4. The company has not given any loans to directors or to any other persons in whom thedirector is interested or given any guarantee or provided any security in connection withany loan taken by him or such person as covered under section 185 of the Companies act2013 however the company has given loan to companies/ subsidiaries as loan a sum ofRs.854.67 lacs interest free unsecured loan the same is in violation of sub section (7)of section 186 of the Companies Act 2013.
5 The Company has not accepted deposits. Hence the provisions of Section 73 to 76 orany other relevant provisions of the Act and the rules framed there under are notapplicable to the Company.
6. The Company is not required to maintain cost records as specified by the CentralGovernment under sub section (1) of section 148 of the Act. Therefore the provisions ofpara 3(vi) of the Order is not applicable to the Company.
7. (a) Based on our audit procedures and on the information and explanations given bythe management we report that there were no undisputed statutory dues including ProvidentFund Employees State Insurance Income-tax Sales-tax Service Tax Custom DutyExcise Duty Value Added Tax Cess and any other statutory dues required to be deposited.
(b) Based on our audit procedures and on the information and explanations given by themanagement there are no dues outstanding in respect of Income Tax Sales Tax ServiceTax Customs Duty Excise Duty Value Added Tax Cess or any other Statutory dues to bedeposited on account of any dispute.
8. The Company has not obtained loans during the year and neither any dues/loans wereoutstanding from financial institution bank Government or debenture holders thereforethe provisions of para 3(viii) of the Order is not applicable to the Company.
9. The Company did not raise any money by way of initial public offer or further publicoffer (including debt instruments) and term loans during the year therefore theprovisions of para 3(ix) of the Order is not applicable to the Company.
10. According to the information and explanations given to us no fraud by the Companyor on the Company by its officers or employees has been noticed or reported during theyear.
11 The Company has paid any managerial remuneration during the financial year ending 31stMarch 2016 however the company has sought the necessary approval and mandated as per theprovisions of section 197 read with schedule V of the Companies Act 2013.
12. In our opinion and according to the information and explanations given to us theCompany is not a Nidhi company therefore the provisions of para 3(xii) of the Order isnot applicable to the Company.
13. According to the information and explanations given to us and based on ourexamination of the records of the Company transactions with the related parties are incompliance with sections 177 and 188 of the Act where applicable and details of suchtransactions have been disclosed in the financial statements as required by the applicableaccounting standards.
14. According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year.
15. According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not entered into non-cashtransactions with directors or persons connected with him therefore the provisions ofpara 3(xv) of the Order is 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 K.SINGH & ASSOCIATES |
| ||CHARTERED ACCOUNTANTS |
| ||Firm No. 012458N |
| ||Sd/- |
| ||KULTAR SINGH |
|PLACE : New Delhi ||Partner |
|DATED : 10/05/2016 ||Membership No. 091673 |
Annexure - B to the Auditors Report
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls over financial reporting of AlchemistRealty Limited ("the Company") as of 31st March 2016 in conjunctionwith our audit of the standalone financial statements of the Company for the year ended onthat date.
Managements Responsibility for Internal Financial Controls
The Companys management is responsible for establishing and maintaining internalfinancial controls based on the 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). Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to companys policies the safeguardingof its 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.
Our responsibility is to express an opinion on the Companys 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") and the Standards on Auditing issued by ICAI and deemedto be prescribed under section 143(10) of the Companies Act 2013 to the extentapplicable to an audit of internal financial controls both applicable to an audit ofInternal Financial Controls and both issued by the Institute of Chartered Accountants ofIndia. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls over financial reporting was established andmaintained and if such controls operated effectively in all material 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 auditors 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 the Companys internal financial controlssystem over financial reporting.
Meaning of Internal Financial Controls over Financial Reporting
A companys internal financial control over financial reporting is a processdesigned to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance withgenerally accepted accounting principles. A companys 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 financialstatements in accordance with generally accepted accounting principles and that receiptsand expenditures of the company are being made only in accordance with authorisations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised acquisition use or disposition of thecompanys assets that could have a material effect on the financial statements.
Inherent Limitations of Internal Financial Controls over Financial Reporting
Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.
In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at 31st March 2016based on the internal control over financial reporting criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Note onAudit of Internal Financial Controls over Financial Reporting issued by the ICAI.
|FOR K.SINGH & ASSOCIATES |
|CHARTERED ACCOUNTANTS |
|Firm No. 012458N |
|KULTAR SINGH |
|Membership No. 091673 |
|PLACE : New Delhi |
|DATED : 10/05/2016 |