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Blue Coast Hotels Ltd.

BSE: 531495 Sector: Services
NSE: BLUECOAST ISIN Code: INE472B01011
BSE LIVE 10:33 | 04 Aug 142.50 -7.50
(-5.00%)
OPEN

142.50

HIGH

142.50

LOW

142.50

NSE 15:05 | 17 Aug 139.95 5.05
(3.74%)
OPEN

128.20

HIGH

139.95

LOW

128.20

OPEN 142.50
PREVIOUS CLOSE 150.00
VOLUME 20
52-Week high 151.80
52-Week low 113.00
P/E
Mkt Cap.(Rs cr) 182
Buy Price 0.00
Buy Qty 0.00
Sell Price 142.50
Sell Qty 41.00
OPEN 142.50
CLOSE 150.00
VOLUME 20
52-Week high 151.80
52-Week low 113.00
P/E
Mkt Cap.(Rs cr) 182
Buy Price 0.00
Buy Qty 0.00
Sell Price 142.50
Sell Qty 41.00

Blue Coast Hotels Ltd. (BLUECOAST) - Auditors Report

Company auditors report

To the Members of Blue Coast Hotels Limited

Report on the Standalone Financial Statements

We have audited the accompanying standalone financial statements of Blue CoastHotels Limited ('the Company') which comprise the balance sheet as at 31 March 2016the statement of profit and loss and the cash flow statement for the year then ended anda summary of significant accounting policies and other explanatory information.

Management's Responsibility for the Standalone Financial Statements

The Company's Board of Directors is responsible for the matters stated in Section134(5) of the Companies Act 2013 ("the Act") with respect to the preparationand presentation of these standalone financial statements that give a true and fair viewof the financial position financial performance and cash flows of the Company inaccordance with the accounting principles generally accepted in India including theAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014. This responsibility also includes maintenance ofadequate accounting records in accordance with the provisions of the Act for safeguardingthe assets of the Company and for preventing and detecting frauds and otherirregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the financial statements that give a true and fair viewand are free from material misstatement whether due to fraud or error.

Auditors' Responsibility

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 accountingand auditing standards and matters which are required to be included in the audit reportunder the provisions 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(s).

An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the financial statements. The procedures selected depend on theauditor's judgment including the assessment of the risks of material misstatement of thefinancial statements whether due to fraud or error. In making those risk assessments theauditor considers 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 but not for the purpose of expressing anopinion on whether the Company has in place an adequate internal financial controls systemover financial reporting and the operating effectiveness of such controls. An audit alsoincludes evaluating the appropriateness of the accounting policies used and thereasonableness of the accounting estimates made by the Company's Directors as well asevaluating the overall presentation of the financial 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 statements.

Emphasis Of Matter

Without qualifying our opinion we draw attention to the following notes on thefinancial statements:

(i) Note no. 9(B) to the financial statements regarding the secured lender IFCI Limitedhad initiated the recovery proceedings and allegedly auctioned the hotel property underthe provisions of the SARFAESI Act which was contested by the Company at Hon'ble HighCourt of Bombay. By the Judgement dated 23.3.2016 the Hon'ble Bombay High Court quashedand set aside the alleged auction sale of property and directed secured lender IFCILimited to refund the sale consideration to auction purchaser ITC Limited . subsequentlyITC Ltd & IFCI Ltd have approached the Hon'ble Supreme Court against the Bombay HighCourt judgement whereupon the grant of stay against the order was not accepted. howeverit ordered that 'Status Quo' as on 22nd April 2016 be maintained and further ordered thatthe amounts paid by ITC Limited in the auction purchase shall remain with the IFCI Ltduntil further orders. The Hotel property continues to be operated under the brand"Park Hyatt Goa Resort & Spa" maintained under management agreement withHyatt International.

(ii) Note no. 23(b) to the financial statements regarding no provision for interest orany other charges has been made during the year on debentures pending litigation andrecovery proceedings. Further Interest is provided at simple contracted rate of intereston term loan from financial institution in view of the initiation of recovery proceedingand pending litigation subject to order of the court.

(iii) The appropriateness of assumption of going concern is dependent upon realizationof the various initiatives undertaken by the company outcome of court cases and / or thecompany's ability to raise requisite finance / generate cash flows in future to meet itsobligations including financial support to its subsidiary companies.

Opinion

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone financial statements give the information requiredby the Act in the manner so required and give at rue and fair view in conformity with theaccounting principles generally accepted in India of the state of affairs of the Companyas at 31 March 2016 and its profit and its cash flows for the year ended on that date.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditors' Report) Order 2016 ("the Order")issued by the Central Government of India in terms of sub-section (11) of section 143 ofthe Act we give in the Annexure A a statement on the matters specified in the paragraph 3and 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 and obtained all the information and explanations which to the bestof 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 theCompany 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 standalone financial statements comply with theAccounting Standards specified under Section 133 of the Act read with Rule 7of theCompanies (Accounts) Rules 2014;

(e) On the basis of the written representations received from the directors as on 31March 2016 taken on record by the Board of Directors none of the directors isdisqualified as on 31 March 2016frombeingappointedasa director interms ofSection164 (2) ofthe Act;

(f) with respect to the adequacy of the internal financial controls over financialreporting of the company and the operating effectiveness of such controls refer to ourseparate report in "Annexure B".

(g) with respect to the other matters to be included in the Auditors' 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 litigationson its financialpositions in its financial statements- Refer Note no. 18to the financial statements;

(ii) the company did not have any long term contracts including derivative contractsfor which there were any material foreseeable losses;

(iii) no amount was required to be transferred to the Investor Education and protectionfund by the company.

For M Kamal Mahajan And Co.
Chartered Accountants
Firm's Regn. No. 006855N
M. Kamal Mahajan
Place : New Delhi (Partner)
Date : May 30 2016 Membership number 017418

Annexure A to the Independent Auditors' Report Blue Coast Hotels Limited

The Annexure referred to in our Independent Auditors' Report to the members of theCompany on the standalone financial statements for the year ended 31 March 2016 we reportthat: (i) (a) The Company has maintained proper records showing full particularsincluding quantitative details & situation of fixed assets.

(b) As explained to us most of the fixed assets have been physically verified by themanagement during the year and no material discrepancies were noticed on suchverification. In our opinion the frequency of physical verification is reasonable havingregard to the size of the Company and the nature of its assets.

(c) According to the information and explanations given to us and on the basis of ourexamination of the records of the company the title deeds of the immovable properties areheld in the name of the company.

(ii) As explained to us the inventory has been physically verified at reasonableintervals by the Management & no material discrepancies were noticed by themanagement.

(iii) (a) According to the information and explanations furnished to us the companyhas granted 0.75 lac unsecured fresh loan to its two wholly owned subsidiary companiescovered in the register maintained under Section 189 of the Companies Act 2013 during theyear. Also old interest free loan unsecured loan to two wholly owned subsidiary companiesamounting to Rs. 463.97 lacs are outstanding as on 31.03.2016.

(b) According to the information & explanation given to us there is no stipulatedschedule of repayment of principal so we are unable to comment on the regularity ofrepayment of principal.

(c) According to the information & explanation given to us the whole amount of Rs.464.72 lacs is overdue for more than 90 days and there is no reasonable steps taken bythe company for recovery of principal.

(iv) In our opinion and according to the information and explanations given to us thecompany has complied with the provisions of section 185 and 186 of the Companies Act2013 with respect to the loans guarantees security and investment during the year.However the company has already given a guarantee of Rs. 6500. lacs to bank/ Financialinstitutions for loan taken by associate company setting up a five star hotel project atChandigarh. Refer note no. 18(i) to the financial Institutions.

(v) The company has not accepted any deposit from the public within the meaning ofsection 73747576 of the Companies Act 2013 and the rules framed there under to theextent notified during the year.

(vi) According to the information & explanation given to us the Central Governmenthas not prescribed the maintenance of cost records for the company under section 148(1) ofthe Companies Act 2013.

(vii) (a) According to the information and explanations given to us and on the basis ofour examination of the records of the company the amount deducted /accrued in the booksof accounts in respect of undisputed statutory dues including duty of custom duty ofexcise if any cess Employees' Provident Fund Employees' State Insurance luxury taxVAT& WCT have generally been regularly deposited with the appropriate authorities howeverundisputed statutory dues including income tax (TDS) have not generally been regularlydeposited with the appropriate authorities though the delays in deposit have not beenserious.

According to the information and explanations given to us the below mentionedundisputed amount in respect of Income Tax (TDS) were in arrears as on 31st March2016 fora period of more than six months from the date they became payable:

Statement of Arrears of Statutory Dues Outstanding for more than Six months

Name of the Statue Nature of the Dues Amount (Rs) Period to which amount relates Due Date Date of payment
Income Tax Act-1961 Income tax (TDS) 464202 FY 2015-16 FY 2015-16 Not paid
Income Tax Act-1961 Income tax (TDS) 60317 FY 2014-15 FY 2014-15 Not paid

(b) According to the information and explanations given to us there is no amount duein respect of Income-tax Sales-tax VAT Employee's State Insurance Provident Fund Dutyof Excise Customs duty cess & Service Tax outstanding as at 31st March 2016 due toany dispute.

(viii) Based on our audit procedures and according to the information and explanationgiven to us by the management the company has defaulted in repayment of dues to theFinancial institution and debenture holders as under:

S.No. Name Nature of dues Principal Amount Period of default
(Rs. in lacs)
1 IFCI Ltd. Term Loan 11368.91 Up to 4years
2 IFCI Ltd. Interest on Term Loan 1967.85 Up to 2 years
3 PACL Ltd. Debentures principal amount 10000.00 Up to 3 years
4 PACL Ltd. Debentures interest 5737.13 Up to 5 years
5 PACL Ltd. Debentures redemption premium 2800.00 Up to 3 years

(ix) According to the information and explanations given to us and based on ourexamination of the records of the company the company did not raise any money by way ofinitial public offer or further public offer (including debt instruments) during the year.Accordingly the provisions of clause 3(ix) of the Order are not applicable to thecompany.

(x) 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.

(xi) According to the information and explanations given to us and on the basis of ourverification of books of accounts of the company the company has not paid/provided anyamount of Managerial remuneration during the year. Accordingly paragraph 3(xi) of theorder is not applicable.

(xii) In our opinion and according to information and explanations given to us thecompany is not a Nidhi company. Accordingly paragraph 3(xii) of the order is notapplicable.

(xiii) 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 & 188 of the Act where applicable and details of suchtransactions have been disclosed in the financial statements as required by the applicableaccounting standards.

(xiv) 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 paid convertible debentures during theyear.

(xv) 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 any non- cashtransaction with directors or person connected with them.

(xvi) The company is not required to be registered under section 45-IA of the ReserveBank of India Act1934.

For M Kamal Mahajan And Co.
Chartered Accountants
Firm's Regn. No. 006855N
M. Kamal Mahajan
Place : New Delhi (Partner)
Date : May 30 2016 Membership number 017418

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 BlueCoast Hotel Limited ("the Company") as of 31 March 2016 in conjunction withour audit of the standalone financial statements of the Company for the year ended on thatdate.

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 ('ICAI'). These responsibilitiesinclude the design implementation and maintenance of adequate internal financial controlsthat were operating effectively for ensuring the orderly and efficient conduct of itsbusiness including adherence to company's policies the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the Companies Act 2013.

Auditors' 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 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 auditinvolves performing procedures to obtain audit evidence about the adequacy of the internalfinancial controls system over financial reporting and their operating effectiveness. Ouraudit of internal financial controls over financial reporting included obtaining anunderstanding of internal financial controls over financial reporting assessing the riskthat a material weakness exists and testing and evaluating the design and operatingeffectiveness of internal control based on the assessed risk. The procedures selecteddepend on the auditor's judgment including the assessment of the risks of materialmisstatement of the financial statements whether due to fraud or error. We believe thatthe audit evidence we have obtained is sufficient and appropriate to provide a basis forour audit opinion on the Company's internal financial controls system over financialreporting.

Meaning of Internal Financial 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 authorizations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorized acquisition use or disposition of thecompany's 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.

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 31 March 2016 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 M Kamal Mahajan And Co.
Chartered Accountants
Firm's Regn. No. 006855N
M. Kamal Mahajan
Place : New Delhi (Partner)
Date : May 30 2016 Membership number 017418