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Empire Hotels & Resorts Ltd.

BSE: 509001 Sector: Services
NSE: N.A. ISIN Code: N.A.
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Empire Hotels & Resorts Ltd. (EMPIREHOTELS) - Auditors Report

Company auditors report

ANNUAL REPORT 1997-98 EMPIRE HOTELS AND RESORTS IMITED AUDITORS' REPORT To, 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 management. 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 is pending. 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 report that: 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 business. 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 of goods. 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, 1975. 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 arise. 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 payable. 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 man hours. 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 business. For Dhirubhai Shah & Associates Chartered Accountants Harish B. Patel Partner Place : Ahmedabad. Date : 15/11/99.