ANNUAL REPORT 1997-98
EMPIRE HOTELS AND RESORTS IMITED
The Members of
Empire Hotels and Resorts Limited.
We have audited the attached Balance Sheet of Empire Hotels & Resorts Ltd.
as at 30th September,1998 and also the annexed Profit & Loss Account of the
Company for the year ended on that date and further report that :-
1. We have obtained all the information and explanations which to the best
of our knowledge and belief were necessary for the purpose of our audit.
2. In our oplnion, proper Books of Account as required by law have been
kept by the Company so far as it appears from our examination of the books.
3. The Balance Sheet and Profit & Loss Account dealt with by the report are
in agreement with the books of account.
4. In our opinion and to the best ot our information and according to the
explanations given to us the accounts subject to the following:-
i) Note No. 3 regarding the change in accounting policy for treatment of
expenditure of revenue nature incurred for Delhi Project being capitalised
which was earlier written off to Profit and Loss Account.
ii) Note No. 4 regarding non-provision for Loss In respect of advances
given for Delhi Project.
iii) Note No. 7 regarding granting of loan to other Company under the same
iv) Note No. 8 regarding non confirmation of the balances of Sundry
Debtors,Sundry Creditors,loans received and loans granted.
v) Note No. 9 regarding write back of interest and other charges amounting
to Rs. 40,48,951.00 payable to Financial Institutions as per the proposed
reschedulement scheme for which the approval of the Financial Institutions
Give the information required by the Companies Act, 1956 in the manner so
required and give true and fair view:
i) In the case of Balance Sheet, of the state of affairs of the Company as
at 30th September,1998.
ii) In the case of Profit & Loss Account, of the loss for the period ended
on that date.
5. As required by the Manufacturing and other Companies (Auditor's Report)
Order 1988 issued by the Company Law Board in terms of Section 227 (4A) of
the Companies Act, 1956 and on the basis of such checks as we considered
appropriate and as per information and explanations given to us we further
i. The Company was in the process of updating records showing full
particulars including quantitative detail and situation of fixed assets.
However till this date Company has not updated the said records. The Fixed
Assets have not been physically verified.
ii. None of the fixed assets have been revalued during the year.
iii. As explained to us, stocks of stores and operating supplies, food and
beverages have been physically verified by the management at the end of its
iv. According to the information and explanations given to us, in our
opinion the procedures of physical verification of stocks followed by the
management are reasonable and adequate in relation to the size of the
Company and nature of its business.
v. The discrepancies noticed on verification between the physical stocks
and the book records were not material, having regard to the size of the
operations of the Company.
vi. In our opinion, on the basis of our examination of stock records the
valuation of stocks is fair and proper in accordance with the normally
accepted accounting principles.
vii. The Company has taken interest free loans from Companies, firms and
other parties listed in the register maintained under section 370 (1B) and
Section 370 (B) of the Companies Act,1956. The terms and conditions of such
loans are not prejudicial to the interest of the Company.
viii. The Company has given interest free unsecured loans repayable on
demand to Companies and other bodies listed in the register maintained
under Section 301 of the Companies Act,1956 or to the Companies under the
same management as defined under section 370(1B) of the Companies Act,1956.
Such loans have been given to associate Companies / firms and others on
account of business relations and in the opinion of the management they are
not considered prejudicial to the interest of the Company.
ix. The Company has granted Interest free loans to employees. Such loans
are being repaid as stipulated. The Company has given Inter-Corporate Loan,
without any stipulation for repayment, where interest is charged regularly.
x. In our opinion and according to the information and the explanations
given to us, generally there are adequate internal control procedures
commensurate with the size of the Company and the nature of its business
with regard to purchase of stores and operating supplies, food and
beverages, plant and machinery, equipment and other assets and for the sale
xi. In our opinion and according to the information and explanations given
to us, the transactions of the purchase of stores, operating supplies, food
and beverages and other materials for repairs and maintenance and sale of
goods and services made in pursuance of contracts or arrangements entered
in the register maintained under Section 301 of the Companies Act,1956 and
aggregating during the year to Rs. 50,000 or more in respect of each party
have been made at prices which are reasonable having regard to prevailing
market prices for such goods, materials or services, where such market
prices are available with the Company or prices at which transactions for
similar goods or services have been made with other parties.
xii. Unserviceable and damaged stores, operating supplies, food and
beverages have been determined and written off in the account.
xiii. In our opinion and according to the information and explanations
given to us the Company has complied with provisions of Section 58(A) of
the Companies Act, 1956 and the Companies (Acceptance of Deposits)Rules,
xiv. As explained to us no scrap was generated during the year and hence
the question of maintenance of records for the sale of scrap does not
xv. In our opinion,the Company has an Internal Audit System commensurate
with the size of the Company.
xvi. To the best of our knowledge, maintenance ot cost records have not
been prescribed by the Central Government under Section 209(1)(D) of the
Companies Act, 1956 in respect of any of the activities of the Company.
xvii. Provident Fund and Employees State Insurance dues have been regularly
deposited in generally. Total outstanding and due as on 30th September,
1998 was Provident Fund Rs. 36006 and Employees State Insurance Rs.31502
which has not been since paid.
xviii. According to the information and explanations given to us,there were
no undisputed amounts payable in respect of Income Tax, Sales Tax, Customs
Duty and Excise Duty which have remained outstanding as at 30th September,
1998 for a period of more than six months from the date they became
xix. According to the information and explanations given to us and the
records of the Company examined by us, no personal expenses have been
charged to revenue account, other than those payable under contractual
obligations or in accordance with generally accepted business practice.
xx. The Company is not a Sick Industrial Company within the meaning of
clause (O) of Sub Section (1) of Section 3 of the Sick Industrial Companies
(Special Provisions) Act, 1985.
xxi. In our opinion, the Company has a reasonable system of recording
receipts, issues and consumption of materials and stores, commensurate with
the size and nature of its business.
xxii. As explained to us it is not necessary for the Company to have a
system of allocating man hours utilised to a relative job as the Company is
operating a hotel where accounting is not required to be done by allocating
xxiii. There is a reasonable system of authorisation at proper levels with
necessary control on the issue of stores and the allocation of the same to
the operating departments. The system of internal control is, in our
opinion, commensurate with the size of the Company and the nature of its
For Dhirubhai Shah & Associates
Harish B. Patel
Place : Ahmedabad.
Date : 15/11/99.