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Balaji Hotels & Enterprises Ltd.

BSE: 530471 Sector: Others
NSE: BALAJHOTEL ISIN Code: INE454A01011
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Balaji Hotels & Enterprises Ltd. (BALAJHOTEL) - Auditors Report

Company auditors report

To the Members of

BALAJI HOTELS & ENTERPRISES LIMITED

I. Report on the Financial Statements

We have audited the accompanying financial statements of BALAJI HOTELS &ENTERPRISES LTD (the "Company") which comprise the Balance Sheet as at March31 2017 Statement of Profit and Loss and Cash Flow Statement for the year then endedand a summary of significant accounting policies and other explanatory information theyear then ended..

II. Management's Responsibility for the Financial Statements

The Company's Board of Directors is responsible for the matters stated in section134(5) of the Companies Act 2013 ("the Act") with respect to the preparationof these financial statements that give a true and fair view of the financial positionfinancial performance and cash flows of the Company in accordance with the accountingprinciples generally accepted in India including the Accounting Standards specified undersection 133 of the Act read with Rule 7 of the Companies (Accounts) Rules 2014. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe preparation of the Act for safeguarding the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgements and estimates that are reasonable and prudent; anddesign implementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the financial statements thatgive a true and fair view and are free from material misstatement whether due to fraud orerror.

III. Auditors' Responsibility

Our responsibility is to express an opinion on these financial statements based on ouraudit. 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 the 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 the auditor'sjudgement including the assessment of the risks of material misstatement of the financialstatements whether due to fraud or error. In making those risk assessments the auditorconsiders internal financial control relevant to the Company's preparation of thefinancial statements that give a true and fair view in order to design audit proceduresthat are appropriate in the circumstances. An audit also includes evaluating theappropriateness of the accounting policies used and the reasonableness of the accountingestimates made by the Company's Directors as well as evaluating the overall presentationof the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our qualified audit opinion on the financial statements.

IV. Basis for Qualified Opinion:

a) The Company has borrowed Rs. 15.12 crores at 12% interest per annum. For its failureto service the loan the creditor has filed suit for recovery. The Company has notprovided for the annual interest of Rs. 1.81 Crores and the accumulated interest of Rs.26.25 Crores.

Non Provision for such an enforceable liability is against fundamental accountingprinciple of accrual and prudence. An amount of Rs. 26.25 Crores would have been requiredto increase the unsecured creditors and accordingly the unsecured creditors would haveincreased by Rs.26.25 Crores the profit for the year would have been lower by Rs. 1.81Crores and the Share holders funds would have decreased by Rs. 26.25 Crores.

b) In the absence of Bank Statements / Confirmation of Balances of the Current Accountswith Oriental Bank of Commerce (A/c No.10471010000980 ) and Bank of Baroda (A/cNo:08040200000102 ) we are unable to comment on the transactions if any effected throughthese accounts.

V. Qualified Opinion:

In our opinion and to the best of our information and according to the explanationsgiven to us except for the effects of the matters as described in ‘Basis forQualified Opinion' paragraph above the accompanying 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 2017 its loss and its Cash Flows for the yearended on that date.

VI. Report on Other Legal and Regulatory Requirements

1. As required by ‘the Companies (Auditor's Report) Order 2016' (‘‘theOrder") issued by the Central Government of India in terms of sub-section (11) ofSection 143 of the Act and on the basis of such checks of the books and records of theCompany as we considered appropriate and according to the information and explanationsgiven to us we give in the Annexure A a statement on the matters specified in paragraph3 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 bestof our knowledge and belief were necessary for the purpose of our audit.

(b) Except for the effects of the matter described in the Basis for Qualified Opinionparagraph above in our opinion proper books of account as required by law have been keptby the Company so far as it appears from our examination of those books.

(c) The Balance Sheet the Statement of Profit and Loss and the Cash Flow Statementdealt with by this Report are in agreement with the books of account.

(d) In our opinion the aforesaid financial statements comply with the AccountingStandards specified under section 133 of the Act read with Rule 7 of the Companies(Accounts) Rules 2014.

(e) The matter described in the Basis for Qualified Opinion paragraph above in ouropinion may have an adverse effect on the functioning of the Company.

(f) On the basis of the written representations received from the directors as on 31stMarch 2017 taken on record by the Board of Directors none of the directors aredisqualified as on 31st March 2017 from being appointed as a director in terms of section164(2) of the Act.

(g) The qualification relating to maintenance of accounts and other matters connectedtherewith are as stated in the Basis for Qualified Opinion paragraph.

(h) With respect to the adequacy of internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate report in ‘Annexure B'; and

(i) 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 the explanations given to us::

(i) The Company has disclosed the impact of pending litigations on its financialposition in its financial statements. (Refer note nos 16 & 17 to Financial statements)

ii) The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses under the applicable law or accountingstandards.

iii) There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company.

For P A REDDY & CO For CNGSN & ASSOCIATES LLP
Chartered Accountants Chartered Accountants
Registration No: 007368S Registration No: 004915S
K R KOTHANDARAMAN C N GANGADARAN
Partner Partner
Membership No: .028022 Membership No: 011205
Place: Chennai
Date : May 27 2017

ANNEXURE - A TO THE INDEPENDENT AUDITORS' REPORT OF BALAJI HOTELS AND ENTERPRISESLIMITED

Based on the information and explanations furnished to us and the books and recordsexamined by us in the normal course of our audit we report that to the best of ourknowledge and belief:

i. In respect of fixed assets :

a) The company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.

b) We are informed that during the year the fixed assets have been physically verifiedby the management. In our opinion physical verification has been conducted at reasonableintervals having regard to the size of the company nature and value of its assets. Nomaterial discrepancies were noticed on such verification.

c) According to the information and explanation given to us and on the basis of ourexamination of records of the Company the title deeds of immovable properties are held inthe name of the company.

ii. In respect of inventories:

The Company being neither a trading nor a manufacturing concern holding of inventoriesat any point of the year does not arise.

iii. In respect of loans secured or unsecured granted to companies firms or otherparties covered in the register maintained under section 189 of the Companies Act 2013:

The Company has not granted any loans to any Company firms or other parties covered inthe register maintained under section 189 of the Companies Act 2013.

iv. In respect of loans investments guarantees and security to companies firms orother parties as per section 185 and 186 of the Companies Act 2013:

The Company has complied with the provisions of section 185 and 186 of the Act withrespect to loans and investments made.

v. In respect of deposits:

The Company has not accepted any deposits. Therefore the provisions of section 73 and76 of the Companies Act 2013 and the Companies (Acceptance of Deposits) Rules 2014 withregard to the deposits accepted from the public and from the members are not applicable tothe Company.

vi. In respect of cost records:

In our opinion and according to the information and explanations given to us therequirement for maintenance of cost records pursuant to the Companies (Cost Records andAudit) Rules 2014 specified by the Central Government of India under Section 148 of theCompanies Act 2013 are not applicable to the Company for the year under audit.

vii. In respect of statutory dues:

a) The Company has been generally regular in depositing with appropriate authoritiesundisputed statutory dues including Provident Fund Income Tax Sales Tax and otherapplicable statutory dues during the year.

b) In respect of Income Tax Sales Tax Service tax Customs duty Excise duty andCess there are no undisputed amounts outstanding as at March 31 2017 for a period ofmore than six months from the date they became payable.

c) The details of dues of income tax / wealth tax which have not been deposited due todisputes are as under:

Period to which the Demand relates (Assessment Year) Disputed Tax Rs. Lakhs Forum where the dispute is pending
2008-09 (Income tax) 1981.32 Commissioner of Income Tax Chennai
2009-10 (Income tax) 3612.08 Commissioner of Income Tax Chennai

viii. In respect of repayment of loans or borrowing to Banks Financial InstitutionsGovernment and Debenture Holders:

The Company has not borrowed from banks or financial institutions and no debentures areoutstanding as at the end of the year.

ix. In respect of utilization of monies raised by way of initial public offer orfurther public offer (including debt instruments) and term loans:

The Company is not a listed company and hence provisions of initial public offer andfurther public offer are not applicable. The Company has not obtained any term loan duringthe year.

x. In respect of frauds:

In our opinion and according to the information and explanation given to us no fraudon or by the Company has been noticed or reported during the year that causes thefinancial statements to be materially misstated.

xi. In respect of managerial remuneration:

The Company has not paid / provided for managerial remuneration and hence theprovisions of section 197 read with schedule V are not applicable.

xii. In respect of Nidhi Company:

The Company is not a nidhi company and the provisions relating to Net Owned Funds arenot applicable to the Company.

xiii. In respect of transactions with related parties and in compliance with section177 and 188 of the Companies Act 2013:

The Company has not entered in to any transactions with related parties and hence theprovisions of Section 177 and 188 of the Companies Act 2013 are not applicable.

xiv. In respect of preferential allotment or private placement of shares or fully orpartly convertible debentures:

The Company has not made any preferential allotment or private placement of shares orfully or partly convertible debentures during the year.

xv. In respect of non-cash transactions entered into with directors or personsconnected with him as per the provisions of section 192 of Companies Act 2013:

The Company has not entered non-cash transactions with directors or persons connectedwith him. xvi. In respect of provisions of Sec 45-IA of the Reserve Bank of India Act1934: The Company is not required to be registered under Section 45-IA of the Reserve Bankof India Act 1934.

For P A REDDY & CO For CNGSN & ASSOCIATES LLP
Chartered Accountants Chartered Accountants
Registration No: 007368S Registration No: 004915S
K R KOTHANDARAMAN C N GANGADARAN
Partner Partner
Membership No: .028022 Membership No: 011205
Place: Chennai
Date : May 27 2017

ANNEXURE - B TO THE INDEPENDENT AUDITORS' REPORT OF BALAJI HOTELS AND ENTERPRISESLIMITED

[Report on the Internal Financial Controls under Clause (i) of sub-section 3 of Section143 of the Companies Act 2013 ("the Act")]

I. We have audited the internal financial controls over financial reporting ofBALAJI HOTELS & ENTERPRISES LTD (the "Company") as of March 31 2017 inconjunction with our audit of the financial statements of the Company for the year endedon that date.

II. Management's Responsibility for Internal Financial Controls

The Company's 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. These responsibilities includethe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to company's policies the safeguarding of its assets the preventionand detection of frauds and errors the accuracy and completeness of the accountingrecords and the timely preparation of reliable financial information as required underthe Companies Act 2013.

III. Auditor's Responsibility

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") and the Standards on Auditing to the extent applicable toan audit of internal financial controls both issued by the Institute of CharteredAccountants of India. Those Standards and the Guidance Note require that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance aboutwhether adequate 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 auditor's judgement 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 Company's internal financial controls systemover financial reporting.

IV. Meaning of Internal Controls over Financial Reporting

A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedures that (1) pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures 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 thecompany's assets that could have a material effect on the financial statements.

V. 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.

VI. Opinion

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 March 31 2017 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls over Financial Reporting issued by the Institute of CharteredAccountants of India.

For P A REDDY & CO For CNGSN & ASSOCIATES LLP
Chartered Accountants Chartered Accountants
Registration No: 007368S Registration No: 004915S
K R KOTHANDARAMAN C N GANGADARAN
Partner Partner
Membership No: .028022 Membership No: 011205
Place: Chennai
Date : May 27 2017