TO THE MEMBERS OF
GALAXY ENTERTAINMENT CORPORATION LIMITED REPORT ON THE FINANCIAL STATEMENTS
We have audited the accompanying financial statements of Galaxy EntertainmentCorporation Limited ("the Company") which comprise the Balance Sheet as atMarch 31 2017 the Statement of Profit and Loss (including Other Comprehensive Income)the Cash Flow Statement and the statement of changes in Equity for the year thenended anda summary of significant accounting policies and other explanatory information.
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 preparation ofthese financial statements that give a true and fair view of the financial positionfinancial performance (including Other Comprehensive Income) cash flows and changes inequity of the Company in accordance with the accounting principles generally accepted inIndia including the Indian Accounting Standards specified in the Companies (IndianAccounting Standards) Rules 2015 (as amended) under Section 133 of the Act. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions 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 judgments 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.
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 thereunder. We conducted our audit in accordancewith the Standards on Auditing specified under Section 143(10) of the Act. Those Standardsrequire that we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether the financial statements are free from materialmisstatements. An audit involves performing procedures to obtain audit evidence about theamounts and 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. An audit also includes evaluating theappropriateness of 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 audit opinion on the financial statements.
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid financial statements give the information required by the Actin the manner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India of the state of affairs of the Company as at March31 2017 and its Loss (including other comprehensive income) its cash flows and changesin equity for the year ended on that date.
EMPHASIS OF MATTERS
We draw attention to Note No. 3 to the financial statement wherein the management hasrepresented that the recoverable amount of fixed assets within the meaning of Ind AS 36Impairment of Assets is less than the carrying value and as such impairment loss ofRs.652.04 Lakhs is recognized in the financial statement.
We draw attention to Note 21(iii) to the financial statement on capital goods importedunder the Export Promotion Capital Goods Scheme of the Government of India atconcessional rates of duty on an undertaking to fulfil export obligation by October 2015for which Company had sought an extension with Directorate General of Foreign Trade.Thecompany has provided for the custom duty of Rs.653.36 Lakhs (excluding interest) duringthe year.
We draw attention to Note No. 22 to the financial statement wherein the Company haswritten off fixed assets and written back the credit balance during the year based onorder passed by Hon'ble High Court of Bombay dated July 20 2016 dismissing the winding uppetition filed by the creditor. However an appeal has been filed against the said orderby the Creditor (petitioner) which is pending for admission.
Without qualifying our opinion we draw attention to the financial statement whereinthe Company has reported a net loss of Rs.1421.33/- Lakhs during the year particularly onaccount of impairment of fixed assets and provision made for contingencies in respect ofexport obligation. The accumulated losses of the company exceeded its paid-up capital andreserves and the company's current liabilities exceeded its current assets. The managementof the company has represented that the business of the company cannot be affectedmaterially on account of the aforesaid provisions and also the going concern concept.Further as informed to us the Company has entered into new business and is hopeful ofgenerating revenue. Our Opinion is not modified in respect of these matters
The financial information for the year ended March 31 2017 and the transition dateopening balance sheet as at April 1 2015 included in these financial statements arebased on previously issued statutory financial statements for the years ended March 312016 and March 31 2015 prepared in accordance with the Companies (Accounting Standards)Rules 2006 (as amended) which were audited by us on which we expressed anunmodifiedopinion dated May 19 2016 and May 29 2015 respectively. The adjustments tothose financial statements for the differences in accounting principles adopted by theCompany on transition have been audited by us.
Our Opinion is not modified in respect of these matters
REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS
1. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government of India in terms of sub-section (11) of section 143 ofthe Act and according to the information and explanation given to us we give in the "AnnexureB" a statement on the matters specified in the paragraph 3 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 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 (including other comprehensiveincome) the Cash Flow Statement and Statement of Changes in Equity dealt with by thisReport are in agreement with the books of account;
d) In our opinion the aforesaid financial statements comply with the Indian AccountingStandards specified under Section 133 of the Act
. e) On the basis of the written representations received from the directors as onMarch 31 2017 taken on record by the Board of Directors none of the directors isdisqualified as on March 31 2017 from being appointed as a director in terms of Section164 (2) of the Act.
f) With respect to the adequacy of the internal financial controls over financialreporting of the Company and operating effectiveness of such controls refer to ourseparate Report in "Annexure A".
g) With respect to the other matters to be included in Auditor's Report in accordancewith Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinion and to thebest of our knowledge and belief and according to the information and explanations givento us:
i. The Company has disclosed the impact of pending litigations as at March 31 2017 onits financial statements.
ii. The Company did not have any long-term contracts including derivative contractshence the question of making a provision for any resulting material foreseeable lossesdoes not arise; and
iii. There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company.
iv. The Company has provided requisite disclosures in the financial statements as toholding as well as dealings in Specified Bank Notes during the period from 8th November2016 to 30th December 2016 on the basis of information available with the Company. Basedon audit procedures and relying on management's representation we report thatdisclosures are in accordance with the books of accounts maintained by the Company and asproduced to us by the Management Refer Note No. 26.
Annexure A to Independent 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 GalaxyEntertainment Corporation Limited ("the Company") as of March 31 2017 inconjunction with our audit of the financial statements of the Company for the year endedon that date.
MANAGEMENT'S RESPONSIBILITY FOR INTERNAL FINANCIAL CONTROLS
The Company's management is responsible financial controls based on the internal forestablishing and maintaining 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 company's policies the safeguarding ofits assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparationofreliablefinancialinformation as required under the Act.
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 Act to the extent applicable to an audit ofinternal financial controls both applicable to an audit of Internal Financial Controlsand both issued by the Institute of Chartered Accountants of India. Those Standards andthe Guidance Note require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance about whether adequate internal financialcontrols over financial reporting was established and maintained and if such controlsoperated effectively in all material respects. Our audit involves performing procedures toobtain audit evidence about the adequacy of the internal financial controls system overfinancial reporting and their operating effectiveness. Our audit of internal financialcontrols over financial reporting included obtaining an understanding of internalfinancial controls over financial reporting assessing the risk that a material weaknessexists and testing and evaluating the design and operating effectiveness of internalcontrol based on the assessed risk. 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. We believe that the audit evidence we haveobtained is sufficientand appropriate to provide a basis for our audit opinion on theCompany's internal financial controls system over financial reporting.
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 and dispositions of theassets of the company; (2) provide reasonable assurance that transactions are recorded asnecessary to permit preparation of financial statements in accordance with generallyaccepted accounting principles and that receipts and expenditures of the company arebeing made only in accordance with authorizations of Management and directors of thecompany; and (3) provide reasonable assurance regarding prevention or timely detection ofunauthorized acquisition use or disposition of the company's assets that could have amaterial 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 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.
The Annexure referred to in our Independent Auditor's Report to the members of theCompany on the financial statements for the year ended 31st March 2017. We report that;
(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
(b) As explained to us a part of fixed assets have been physically verified by themanagement during the year in the phased periodical manner which in our opinion isreasonable having regard to the size of the company and the nature of its assets. Nomaterial discrepancies were noticed on such physical verification.
(c) Since the Company does not have any immovable properties therefore the provisionsof the Clause 3(i) (c) of the Order are not applicable to Company
. (ii) As explained to us inventory consisting of consumables and supplies has beenphysically verified by the management during the year and no material discrepancies werenoticed.
(iii) The company has not granted any loans secured or unsecured to companies firmsLimited Liability Partnership or other parties covered in the register maintained undersection 189 of the Companies Act 2013. Therefore the provisions of the Clause3(iii)(a)(b)(c) of the Order are not applicable to the Company.
(iv) In our opinion and according to the information and explanation given to us duringthe year there are no loans investment guarantees and security given by the Company.Therefore the provisions of the Clause 3(iv) of the Order are not applicable to theCompany.
(v) In our opinion and according to the information and explanation given to us thecompany has not accepted any deposit from the public. Therefore provisions of the Clause3(v) of the order are not applicable to the Company.
(vi) The Central Government has not prescribed the maintenance of cost records undersection 148(1) of the Act for any of the services rendered by the company.
(vii) (a) According to the information and explanations given to us and the records ofthe Company examined by us in our opinion the Company is generally regular in depositingthe undisputed statutory dues including provident fund employee's state insuranceincome-tax sales-tax service tax duty of customs duty of excise value added tax cessand other material statutory dues with the appropriate authorities.
(b) According to the information and explanation given to us and the records of theCompany examined by us the particulars of dues as at 31st March 2017 which has not beendeposited on account of dispute are as follows
|Name of the Statute ||Nature of Dues ||Amount (in Rs) ||Period to which the amount relates ||Forum where dispute is pending |
|Maharashtra Sales Tax ||Sales Tax ||1668316 ||F.Y. 2003-04 ||Deputy Commissioner of Sales Tax |
|West Bengal Sales Tax ||Sales Tax ||81211 ||F.Y. 2011-12 ||Joint Commissioner of Sales Tax |
|Income Tax Act 1961 ||Income Tax ||2260 ||A.Y. 2011-12 ||ITAT |
| || ||1339320 ||A.Y. 2012-13 ||ITAT |
| || ||17410 ||A.Y. 2013-14 ||Assistant Commissioner of Income Tax |
|Bangalore Sales Tax Act ||Entertainment Tax ||2004648 ||November 2006 to August 2007 ||Sales Tax |
(viii) According to the information and explanation given to us and on the basis of ourexamination of relevant records the company has not defaulted in repayment of loans orborrowings to financial institution bank government or dues to debenture holders as atthe balance sheet date.
(ix) The Company did not raised money by way of initial public offer or further publicoffer (including debt instruments) and term loans during the year.
(x) According to the information and explanations given to us no material fraud by theCompany or on the Company by its officers or employees has been noticed or reported duringcourse of our audit.
(xi) According to the information and explanation given to us and on the basis of ourexamination of relevant records no managerial remunerations were paid or provided by theCompany during the year.
(xii) In our opinion the Company is not a Nidhi Company. Accordingly the provisionsof Clause 3(xii) of the Order are not applicable to the Company.
(xiii) According to the information and explanation given to us and on the basis of ourexamination of relevant records of the Company transactions with the related parties arein compliance with section 177 and 188 of the Act wherever applicable and details of suchtransaction have been disclosed in the financial statements as required under IND AS 24Related Party Disclosures specified under section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rule 2015.
(xiv) According to the information and explanation given to us and on the basis of ourexamination of the records the Company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures during the year.Accordingly the provisions of Clause 3(xiv) of the Order are not applicable to theCompany.
(xv) According to the information and explanation given to us and on the basis of ourexamination of the records the company has not entered in to any non-cash transactionwith its directors or persons connected with him. Accordingly the provisions of Clause3(xv) of the Order are not applicable to the Company.
(xvi) The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934. Accordingly the provisions of Clause 3(xvi) of the Order are notapplicable to the Company.
For S A R A & Associates
Firm Regn No: 120927W
Membership No: 105153
Date: May 22 2017