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Hotel Leela Venture Ltd.

BSE: 500193 Sector: Services
NSE: HOTELEELA ISIN Code: INE102A01024
BSE LIVE 10:47 | 20 Nov 20.10 0.05
(0.25%)
OPEN

19.95

HIGH

20.15

LOW

19.70

NSE 10:37 | 20 Nov 20.05 0.10
(0.50%)
OPEN

19.90

HIGH

20.20

LOW

19.85

OPEN 19.95
PREVIOUS CLOSE 20.05
VOLUME 18570
52-Week high 27.25
52-Week low 15.00
P/E
Mkt Cap.(Rs cr) 1,267
Buy Price 20.00
Buy Qty 1250.00
Sell Price 20.10
Sell Qty 1357.00
OPEN 19.95
CLOSE 20.05
VOLUME 18570
52-Week high 27.25
52-Week low 15.00
P/E
Mkt Cap.(Rs cr) 1,267
Buy Price 20.00
Buy Qty 1250.00
Sell Price 20.10
Sell Qty 1357.00

Hotel Leela Venture Ltd. (HOTELEELA) - Auditors Report

Company auditors report

INDEPENDENT AUDITORS' REPORT 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 2017the 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 Section 134(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.

Auditor's 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 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. 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 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 2017 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 standalone financialstatements:

i. Note 29.1(c) relating to non-provision of Sacrifice amount interest and penalinterest payable to Asset Reconstruction Companies (ARCs) amounting Rs. 73327 lakhs forthe year (Previous Year Rs. 72704 lakhs) cumulatively amounting to Rs. 224272 lakhs.(Previous Year Rs. 150945 lakhs.)

ii. Note 29.2(a) relating to enhancement in rentals and unilateral termination of leaseagreement of the Mumbai Hotel by Airports Authority of India (AAI) and evictionproceedings initiated by them which the Company is contesting. No provision is made forenhanced rent amounting Rs. 1657 lakhs (Previous year Rs. 1615 lakhs) and cumulativelyamounting Rs. 3898 lakhs (Previous Year Rs. 2241 lakhs). Further the accounts areprepared on the assumption that the lease would be renewed and no provision is made forlosses on account of such eviction if any which is not ascertainable.

iii. Note 29.2(b) relating to non-provision of disputed amounts to AAI amounting to Rs.28538 lakhs towards 11000 sq. meters of land at Mumbai and the additional cost theCompany may have to incur towards restoration of FSI which is not ascertainable.

iv. If interest and other costs as notified by the Asset Reconstruction Companies anddisputed payments of AAI referred above were provided for in the books the loss for theyear would have been higher by Rs. 103522 lakhs (Previous Year Rs. 74319 lakhs)liabilities and negative net worth would have been higher by another Rs. 256708 lakhs(Previous Year Rs. 153186 lakhs). Further losses and negative net worth will increaseto the extent of cost that the Company may have to incur on account of termination oflease agreement of Mumbai Hotel and cost of vacating 11000 sq.meters of land at Mumbai

v. The above issues raises question on whether the Company can be considered as a"Going Concern". However as the Company is hopeful of a viable restructuringpackage and favourable judgement / settlement relating to AAI disputes as explained bythem in the notes 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 (hereinafterreferred 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 "Annexure A" a statement on the mattersspecified in paragraphs 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 2017 taken on record by the Board of Directors. None of the directors isdisqualified as on March 31st 2017 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 29.2 to the standalone financialstatements;

ii. The Company has made provisions as required under the applicable law or accountingstandards for material foreseeable losses if any on long-term contracts. We have beeninformed that the Company did not have any pending derivative contracts.

iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.

iv. The Company had provided requisite disclosures in its financial statements as toholdings as well as dealings in Specified Bank Notes during the period from 8th

November 2016 to 30th December 2016 and the same are in accordance with the books ofaccounts maintained by the Company. Refer Note 17 to the standalone financial statements.

For PICARDO & CO.

Chartered Accountants Registration No: 107917W

K.V. Gopalakrishnayya

Partner

Membership No. 21748 Mumbai 25th May 2017

The Annexure referred to in Independent Auditors' Report to the members of the Companyon the standalone financial statements for the year ended 31 March 2017 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 9 to the standalone financial statements are held in the name of theCompany.

Particulars Number of cases Gross value as on 31st March 2017 (Rs. in Lakhs) Written down value as on 31st March 2017 (Rs. in Lakhs) Remarks
Land-Freehold Five 1269.01 1269.01 Title deeds are under dispute.
Building constructed on leasehold Land One 30036.65 23204.63 Lease agreement not renewed since 11th January 2016 (refer note 29.2 (a) 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 29.10 to the standalone financial statements relating tooverdue receivables from two private limited Companies amounting 185.61 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 of account in respect of undisputed statutory dues including providentfund employees' state insurance income-tax sales tax value added tax duty of customsexcise duty service tax cess and other material statutory dues have been regularlydeposited during the year by the Company with the appropriate authorities except certaindelays in depositing value added tax luxury tax and service tax in one of the units.

(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 2017 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 2017 on accountof any dispute are given below:

Name of the statute Nature of Dues Amount (Rs. in Lakhs)* Period to which the amount relates Forum where dispute is pending
Karnataka VAT Act 2003 VAT with interest and penalty 133.92 F.Y 2005-06 to 2009-10 Matter remanded to joint Commissioner of Commercial Taxes (Appeals) Bangalore by High Court of Karnataka.
Finance Act 1994 Service Tax and Interest 9.72 FY 2010-11 to 2014-15 Commissioner of Service Tax and Excise (Appeals) Jaipur
Rajasthan VAT Act 2006 VAT with interest 82.24 2011-12 to 2014-15 Rajasthan Tax Board Ajmer
Goa Tax on Luxuries Act Luxury Act 5.65 2005-06 Additional Commissioner of Commercial Taxes (Appeals) Margao
Goa Tax on Luxuries Act Luxury Act 33.93 2007-08 Matter remanded back to the Assessing Officer by Additional Commissioner of Commercial Taxes (Appeals) Margo for fresh assessment.
Finance Act1994 Service Tax interest and penalty 2490.56 2006-07 to 2011-12 CESTAT Bangalore
Maharashtra VAT 2002 VAT with interest and penalty 826.35 2007-082009-10 to 2012-13 Jt. Commissioner of Appeals-VAT Mumbai
Name of the statute Nature of Dues Amount (Rs. in Lakhs)* Period to which the amount relates Forum where dispute is pending
Kerala Agriculture Income Tax Agriculture Income Tax and interest 17.30 2004-05 to 2008-09 Tribunal Kerala Agricultural and Commercial Tax
Kerala Tax on Luxury 1976 Luxury Tax interest and penalty 81.12 2010-112011-12 Deputy Commissioner of (Appeals) Thiruvananthapuram

*Net of amounts paid under protest.

viii. (a) According to the explanations and information given to us the Company hasdefaulted in repayment of dues to a debenture holder / banks / financial institutionsduring the year under review the period and amount of defaults are as under.

Name of the Lender Amount of default as at the balance sheet date Period of Default
(Rs. in Lakhs)
LIC- Debentures 2725.35 Principal and interest due since September 2016.
Bank of Baroda London 1553.20 Principal due since May 2016 and interest since February 2014
State Bank of India Paris 3228.47 Principal due since June 2016 and Interest since December 2016.
HDFC Limited 521.90 Interest for the month of February and March 2017.

(b) As per the information furnished to us the Company has not taken any loan from theGovernment.

(c) With reference to the debts assigned to Asset Restructuring Companies (ARC) refernote 29.1 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 ARCs including finance cost notrecognised in the accounts as at 31st March 2017 is Rs. 523140 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 given 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. Based on our examination of the records of the Company transactions with therelated parties are in compliance with Section 177 and 188 of the Act. The details ofrelated party transactions have been disclosed in the financial statements as required bythe applicable accounting 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 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.

Chartered Accountants

Registration No: 107917W

K.V. Gopalakrishnayya

Partner

Membership No. 21748

Mumbai 25th May 2017

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 2017 in conjunction with ouraudit of the standalone financial statements of the Company for the year ended on thatdate.

Management Responsibility for Internal Financial Controls

Company's management is responsible for establishing and maintaining internal financialcontrols based on the internal control over financial reporting criteria established bythe Company considering the essential components of internal control stated in theGuidance Note on Audit of Internal Financial Controls over Financial Reporting issued bythe 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 guarding 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 deemed to beprescribed under Section 143 (10) of the Companies Act 2013 to the extent applicable toan audit of internal financial controls both applicable to an audit of Internal FinancialControls and both issued by the Institute of Chartered Accountants of India. ThoseStandards and the Guidance Note require that we comply with ethical requirements and planand perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls over financial reporting was established and maintained and if suchcontrols 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 ratingeffectiveness. 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 of thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control and financialreporting includes those policies and procedures that (1) pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect 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.

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 31st March 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.

For PICARDO & CO.

Chartered Accountants Registration No: 107917W

K.V. Gopalakrishnayya

Partner

Membership No. 21748 Mumbai 25th May 2017