ON THE STANDALONE FINANCIAL STATEMENTS
To the Members of Hotel Leelaventure Limited Report on the Standalone FinancialStatements
We have audited the accompanying standalone financial statements of Hotel LeelaventureLimited ("the Company") which comprise the Balance Sheet as at 31 March 2016the Statement of Profit and Loss and Cash Flow Statement for the year then ended and asummary of the 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 preparation ofthese standalone financial statements that shall give a true and fair view of thefinancial position financial performance and cash flows of the Company in accordance withthe accounting principles generally accepted in India including the Accounting Standardsspecified under Section 133 of the Act read with Rule 7 of the Companies (Accounts)Rules 2014. This responsibility also includes maintenance of adequate accounting recordsin accordance with provisions of the Act for safeguarding of the assets of the Company andpreventing and detecting frauds and other irregularities; the selection and application ofappropriate accounting policies; making judgements and estimates that are reasonable andprudent; and the design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the accuracy and completeness ofthe accounting records relevant to the preparation and presentation of the financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.
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 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 accordance with the Standards on Auditing specified underSection 143(10) of the Act. Those Standards require that we comply with ethicalrequirement 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 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. 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 audit opinion on the standalone financial statements.
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 a true and fair view in conformity with theaccounting principles generally accepted in India of the state of affairs of the Companyas at 31st March 2016 and its loss and its cash flows for the year ended on that date.
Emphasis of Matter
We draw attention to the following matters in the Notes to the financial statements:
Note 32.1 regarding the Company's liabilities net worth and interest provision. Thenegative net worth as on 31st March 2016 was ' 27338 lakhs. The loss for the year wouldhave been higher by ' 72704 lakhs (Previous year ' 78241 lakhs) and negative net worthwould have been higher by another ' 150945 lakhs if interest and other finance cost asnotified by the Asset Reconstruction Companies were provided for in the books. This raisesquestion on whether the Company can be considered as a "Going Concern". Howeveras the Company is hopeful of a viable restructuring package as explained by them in thenote it has prepared the financial statements on a going concern basis.
Report on Other Legal and Regulatory Requirements
1 As required by the Companies (Auditor's Report) Order 2016 issued by the CentralGovernment of India in terms of subsection (11) of Section 143 of the Act (herein afterreferred to as the "Order") and on the basis of such checks of the books andrecords of the Company as we considered appropriate and according to the information andexplanations given to us we give in the Annexure a statement on the matters specified inparagraphs 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 and the Cash Flow Statementdealt with by this Report are in agreement with 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 7 of theCompanies (Accounts) Rules 2014;
(e) The going concern matter described under the Emphasis of Matters paragraph abovein our opinion 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 March31st 2016 taken on record by the Board of Directors none of the directors isdisqualified as on March 31st 2016 from being appointed as a director in terms of Section164(2) of the Act.
(g) With respect to the adequacy of the internal finance controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate report in " Annexure B" and
(h) 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 32.2 to the financial statements;
(II) The Company has made provisions as required under the applicable law oraccounting standards for material foreseeable losses if any on long-term contacts. Wehave been informed that the Company did not have any pending derivative contacts.
(III) There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.
For PICARDO & CO.
Registration No: 107917W
Mumbai 26th May 2016
ANNEXURE - A TO THE AUDITORS' REPORT
The Annexure referred to in Independent Auditors' Report to the members of the Companyon the standalone financial statements for the year ended 31 March 2016 we report that:
(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
(b) The Company has a regular programme of physical verification of its fixed assets bywhich fixed assets are verified in a phased manner over a period of three years. Inaccordance with this programme certain fixed assets were verified during the year and nomaterial discrepancies were noticed on such verification. In our opinion this periodicityof physical verification is reasonable having regard to the size of the Company and thenature of its assets.
(c) Except disputes relating to the title deeds /renewal of lease agreement as detailedhereunder according to the information and explanations given to us and on the basis ofour examination of the records of the Company the title deeds of immovable propertiesdisclosed in Note 12 to the standalone financial statements are held in the name of theCompany.
|Particulars ||Number of cases ||Gross value as on 31st March 2016. (' in Lakhs) ||Written down value as on 31st March 2016. (' in Lakhs) ||Remarks |
|Land -Freehold ||Five ||1269.01 ||1269.01 ||Title deeds are under dispute. |
|Building Constructed on leasehold land ||One ||30054.76 ||23968.61 ||Lease agreement not renewed since 11th January 2016 (Refer Note 32.2(f) to the standalone financial statements |
(ii) As explained to us inventories were physically verified during the year by theManagement at reasonable intervals. In our opinion the frequency of such verification isreasonable. We have been informed that discrepancies noticed on such verification betweenthe physical stock and book records are not material and have been properly dealt in thebooks of account.
(iii) In our opinion and according to the information and explanations given to us theCompany has not granted secured/unsecured loans to Companies firms Limited LiabilityPartnerships or parties covered in the register maintained under Section 189 of theCompanies Act 2013 ('the Act'). Accordingly paragraph 3(iii) of the Order is notapplicable to the Company.
(iv) Attention is drawn to Note 32.9 to the standalone financial statements relating tooverdue receivables from two private limited Companies amounting ' 171.72 lakhs in whichdirectors are interested. Other than these two receivables the Company has not grantedany loans or provided any guarantees or security to the parties covered in Section 185 ofthe Act. The Company has complied with the provisions of Section 186 of the Act in respectof investments.
(v) The Company has not accepted any deposits from the public in accordance with theprovisions of Section 73 to 76 of the Act and the rules framed thereunder.
(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 on the basis ofour examination of the records of the Company amounts deducted / accrued in the books ofaccount in respect of undisputed statutory dues including provident fund employees' stateinsurance income-tax sales tax value added tax duty of customs excise duty servicetax cess and other material statutory dues have been regularly deposited during the yearby the Company with the appropriate authorities except certain delays in depositing valueadded tax luxury tax and service tax.
(b) According to the information and explanations given to us no undisputed amountspayable in respect of provident fund employees state insurance income tax sales taxvalue added tax duty of customs duty of excise service tax cess and other materialstatutory dues were in arrears as at 31 March 2016 for a period of more than six monthsfrom the date they became payable.
(c) According to the information and explanations given to us details of disputedsales tax income tax customs duty wealth tax service tax excise duty and cess whichhave not been deposited with the appropriate authorities as on 31st March 2016 on accountof any dispute are given below:
|Name of the Statute ||Nature of Dues ||Amount ' in Lakhs* ||Period to which the amount relates ||Forum where dispute is pending |
|Karnataka VAT Act 2003 ||VAT with interest and penalty ||133.92 ||Financial Year 2005-06 to 2009-10 ||Matter remanded to Joint Commissioner of Commercial Taxes (Appeals) Bangalore by High Court of Karnataka. |
|Customs Act ||Customs Duty and penalty ||75.09 ||1989-90 and 2000-01 ||CESTAT Mumbai |
|Customs Act ||Customs Duty and penalty ||2.00 ||1990-91 ||Commissioner of Customs Mumbai. |
|Goa Tax on Luxuries Act ||Luxury Tax ||5.65 ||2005-06 ||Additional Commissioner of Commercial Taxes (Appeals) Margao |
|Goa Tax on Luxuries Act ||Luxury Tax ||33.93 ||2007-08 ||Matter remanded back to the Assessing Officer by Additional Commissioner of Commercial Taxes (Appeals) Margao for fresh assessment |
|Finance Act 1994 ||Service Tax interest and penalty ||2490.56 ||2007-12 ||CESTAT Bangalore |
|Kerala Government Sales Tax Act. ||Sales Tax interest and penalty ||27.57 ||2011-12 ||Deputy Commissioner of (Appeals) Thiruvananthapuram |
|Kerala Agricultural Income Tax ||Agricultural Income Tax and interest ||17.30 ||2004-09 ||Tribunal Kerala Agricultural and Commercial Tax |
|Kerala Tax on Luxury 1976 ||Luxury Tax interest and penalty ||81.12 ||2010-11 2011-12 ||Deputy Commissioner of (Appeals) Thiruvananthapuram |
|Maharashtra VAT 2002 ||VAT with interest and penalty. ||300.70 ||2009-10 & 2010-11 ||Jt. Commissioner of Appeals -VAT Mumbai |
|Maharashtra VAT 2002 ||VAT with interest and penalty. ||234.62 ||2011-12 ||** Jt. Commissioner of Appeals -VAT Mumbai |
|Central Excise Act1944 ||Penalty ||3.12 ||2003-05 ||CESTAT -Mumbai |
* Net of amounts paid under protest.
** The Company is in the process of filing an appeal before the Joint Commissioner ofAppeals-VAT Mumbai.
(viii) According to the explanations and information given to us the Company hasdefaulted in repayment of dues to banks/financial institutions/debenture holders duringthe year under review the period and amount of defaults are as under.
a. There are delays in repayment of principal and payment of interest to the soledebenture holder during the year under review. Interest due on 19th March 2016 amounting '143.73 lakhs was not paid as on 31st March 2016.
b. The Company has defaulted in repayment of principal and interest to other banks andfinancial institutions. The details are as under:
|Name of the Lender ||Amount of default as at the Balance Sheet date (' in Lakhs) ||Period of Default |
|Bank of Baroda ||722.05 ||Principal due since February 2016 and interest since February 2014 |
|State Bank of India ||131.90 ||Interest for the month of March 2016 |
|HDFC Limited ||927.42 ||Interest for the month of February and March 2016 and Principal due as on 31st March 2016 |
c. As per the information furnished to us the Company has not taken any loan from theGovernment.
d. With reference to the debts assigned to Asset Restructuring Companies (ARC) refernote 32.1 to the standalone financial statements relating to debt restructuring whereinit is stated that the Company is pursuing with ARCs for certain concessions in interestand repayment terms. Total amount outstanding to ARC including finance cost not recognisedin the accounts as at 31st March 2016 is ' 460696 lakhs.
(ix) The Company did not raise any money by way of initial public offer or furtherpublic offer (including debt instruments) and term loans during the year. Accordinglyparagraph 3 (ix) of the Order is not applicable.
(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 duringthe course of our audit.
(xi) According to the information and explanations give to us and based on ourexamination of the records of the Company the Company has paid/provided for managerialremuneration in accordance with the requisite approvals mandated by the provisions ofSection 197 read with Schedule V to the Act.
(xii) In our opinion and according to the information and explanations given to us theCompany is not a nidhi company. Accordingly paragraph 3(xii) of the Order is notapplicable.
(xiii) As per the information furnished to us two transactions entered by the Companyduring the year under review amounting ' 96.60 lakhs with the related parties wereratified subsequently by the Board of Directors under Section 188(3) of the Act. Based onour examination of the records of the Company other transactions with the related partiesare in compliance with Section 177 and 188 of the Act. The details of related partytransactions have been disclosed in the financial statements as required by the applicableaccounting standards.
(xiv) According to the information and explanations give 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 or partly convertible debentures duringthe year.
(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 noncashtransactions with directors or persons connected with them. Accordingly paragraph 3(xv)of the Order is not applicable.
(xvi) The Company is not required to be registered under Section 45-IA of the ReserveBank of India Act 1934.
For PICARDO & CO.
Registration No: 107917W
Membership No. 21748
Mumbai 26th May 2016
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 HotelLeelaventure Limited ("the Company") as of 31 March 2016 in conjunction with ouraudit 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.
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 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.
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 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.
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 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 PICARDO & CO.
Registration No: 107917W
Membership No. 21748
Mumbai 26th May 2016