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India Tourism Development Corporation Ltd.

BSE: 532189 Sector: Services
NSE: ITDC ISIN Code: INE353K01014
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VOLUME 3080
52-Week high 745.80
52-Week low 168.00
P/E 895.08
Mkt Cap.(Rs cr) 4,530
Buy Price 528.10
Buy Qty 13.00
Sell Price 528.40
Sell Qty 20.00
OPEN 530.70
CLOSE 524.95
VOLUME 3080
52-Week high 745.80
52-Week low 168.00
P/E 895.08
Mkt Cap.(Rs cr) 4,530
Buy Price 528.10
Buy Qty 13.00
Sell Price 528.40
Sell Qty 20.00

India Tourism Development Corporation Ltd. (ITDC) - Auditors Report

Company auditors report

TO THE MEMBERS OF INDIA TOURISM DEVELOPMENT CORPORATION LIMITED

1. Report on the Standalone Financial Statements

We have audited the accompanying financial statements of INDIA TOURISM DEVELOPMENTCORPORATION LIMITED New Delhi which comprise the Balance Sheet as at 31st March2016 the Statement of Profit and Loss the Cash Flow Statement and a Summary of theSignificant Accounting Policies and other explanatory information for the year then ended[in which are incorporated the Returns for the year ended on that date audited by thebranch auditors of the Company’s branches at locations of the branches].

2. Management’s Responsibility for the Standalone Financial Statements

The Company’s Board of Directors is responsible for the matters in Section 134(5)of the Companies Act 2013 ("the Act") with respect to the preparation andpresentation of these Standalone financial statements that give a true and fair view ofthe financial position financial performance and cash flows of the Company in accordancewith the accounting principles generally accepted in India including the AccountingStandards specified under Section 133 of the Act read with Rule 7 of the Companies(Accounts) Rules 2014. This responsibility also includes maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the Company and for preventing and detecting the frauds and otherirregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the financial statements that give a true and fair viewand are free from material misstatement whether due to fraud or error.

3. Auditors’ 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 ethicalrequirements 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 ofthe financial statements whether due to fraud or error. In making those risk assessmentsthe auditor considers internal financial control relevant to the Company’spreparation of the financial statements that give a true and fair view in order to designaudit procedures that are appropriate in the circumstances. An audit also includesevaluating the appropriateness of the accounting policies used and the reasonableness ofthe accounting estimates made by the Company’s Directors as well as evaluating theoverall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our qualified audit opinion on the financial statements.

4. Basis for Qualified Opinion

(a) The Company has dues of Rs 1668.87 lakh as at 31.03.2016 (` 1332.57 lakh upto31.03.2015) from certain subsidiaries with state governments/ their companies (withsignificant losses) for services rendered and funds advanced to them (including interestthereon) besides holding investments therein at a book value of Rs 1060.58 lakh as at31.03.2016 (Previous Year Rs 1060.58 lakh) against which the management has representedthat these investments being of long term nature the shortfall/diminution in their valueis not permanent and that the intrinsic value of the assets owned by these companies aresufficient to recover the Company’s dues and it’s cost of investments even whentwo of these companies are non-operational and the present net worth of most of thecompanies is in the negative. Further pursuant to the GoI decision the Ministry ofTourism has also initiated the proposal for sale/lease of hotel properties’ of theCompany and its subsidiaries and in view of the same there remains no doubt aboutrecoverability of the amounts invested by the Company and its other recoverable. [ReferNote no. 17(1) 14A(1) & 32 (10)].

(b) The Ashok Hotel New Delhi a unit of the Company paid on different dates duringthe year sums aggregating Rs 117.04 lakh to the Service Tax Department for the excessCENVAT Credit availed by them on their input services as per the observations in theirlast statutory audit report for the year ended 31st March 2015 dt. 21st May 2015 Para4(iii). However the Unit has neither deposited interest payable under the provisions ofservice-tax law on the said sum of Rs 117.04 lakh nor provided the liability in respectthereof in the books of accounts the impact accumulated whereof remains indeterminate onthe financial statements.

5. Qualified Opinion

In our opinion and to the best of our information and according to the explanationsgiven to us except for the effects of the matter described in the Basis for QualifiedOpinion paragraph above the aforesaid Standalone financial statements give theinformation required by the Act in the manner so required and give a true and fair view inconformity with the accounting principles generally accepted in India of the state ofaffairs of the Company as at 31st March

2016 its profit and cash flow for the year ended on that date.

6. Emphasis of Matter

a. The amount of consumption of stock of stores crockery cutlery etc has beenworked out by adding to the opening balances the purchases made during the year anddeducting them from the closing balance at the yearend based on the physical inventoriesvalued as per the accounting policy and accordingly separate impact of loss/shortage/wastage included in the consumption thereof in the financial statements of the units ofthe Company remains indeterminate [Refer Para no.32 (3 )]. Our opinion is not qualified inrespect of this matter.

b. We draw attention to the Note 31para C regarding the Company’s appeal in thematter of vacation of property dismissed by the Divisional bench of Hon’ble DelhiHigh Court on 22.04.2016 and the Company is in the process of filing SLP with theHon’ble Supreme Court of India and the management is of the view supported by thelegal opinion that the appeal will be successfully challenged and the Company’sliability will be substantially lower than the sum Rs 1314.21 lakh deposited by them.However on prudent basis the Company has made provision in the books of accounts for Rs1314.21 lakh pending finalization of the matter the 50% of the decreed amount providedis shown as Exceptional Item in the Statement of Profit & Loss and the balance amountwith interest upto 31.03.2016 has been included under contingent liabilities. Our opinionis not qualified in respect of this matter.

7. Other Matter

We did not audit the financial statements /information of 35 branches included in theStandalone financial statements of the Company whose financial statements/financialinformation reflect total assets of Rs 25369.19 lakh as at 31st March 2016 and totalrevenues of Rs 29753.06 lakh for the year ended on that date as considered in theStandalone financial statements. The financial statements/ information of these brancheshave been audited by the branch auditors whose reports have been furnished to us and ouropinion in so far as it relates to the disclosure of amounts included in respect of thesebranches is based solely on the report of such branch auditors. Our opinion is notqualified in respect of this matter.

8. Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor’s Report) Order 2016 ("theOrder") issued by the Central Government of India in terms of Sub-section (11) ofsection 143 of the Act and on the basis of such checks of the books and records of theCompany as we considered appropriate and according to the information and explanationgiven to us we give in the "Annexure A" a statement on the matters specified inparagraphs 3 and 4 of the said 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;

Except for the effects of the matter described in the Basis for Qualified Opinionparagraph above in our opinion proper books of account as required by law have beenkept by the Company so far as it appears from our examination of those books;

(b) The reports on the accounts of branch offices of the Company audited under section143(8) of the Act by branch auditors have been sent to us and have been properly dealtwith by us in preparing this report.

(c) The Balance Sheet and the

Statement of Profit and Loss and the Cash Flow Statement dealt with by this Report arein agreement with the books of account and with the returns received from the branches notvisited by us.

(d) Except for the effects of the matter described in the Basis for QualifiedOpinion paragraph above in our opinion the aforesaid financial statements complywith the Accounting Standards specified under Section 133 of the Act read with Rule 7 ofthe Companies (Accounts) Rules 2014;

(e) The matters described in the Basis for Qualified Opinion Paragraph above in ouropinion may have an adverse effect on the functioning of the Company.

(f) Being a Government Company pursuant to Notification No. GSR 29(E) dated 21stOctober 2003 issued by the Government of India provisions of Sub-section (2) of Section164 of the Companies Act 2013 are not applicable to the Company;

(g) The qualification relating to the maintenance of accounts and other mattersconnected therewith are as stated in the Basis for Qualified Opinion paragraph above;

(h) With respect to the adequacy of the internal financial control over financialreporting of the Company and the operating effectiveness of such control refer to ourseparate report in "Annexure B".

(i) 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 31 to the financial statements;

(ii). The Company did not have any long-term contracts including derivative contractsfor which there were any material foreseeable losses; and

(iii). An amount of Rs 0.10 lakh required to be transferred to the Investor Educationand Protection Fund was outstanding at the year-end was deposited on 9th May 2016.

For Kishore & Kishore
Chartered Accountants
(FRN. No. 000291N)
Anshu Gupta
Place: New Delhi (Partner)
Date: 30.05.2016 Membership No. 077891

"Annexure A" to Independent Auditor’s Report for the year ended31.03.2016

The Annexure ’A’ referred to in our report of even date on the accounts ofIndia Tourism

Development Corporation Limited New Delhi for the year ended 31st March 2016 wereport that:

i). (a) The Company has generally maintained proper records showing fullparticulars including quantitative details and situation of fixed assets except in fewunits/branches where records were incomplete in respect of quantitative detailssituation etc.

(b) As per the information & explanation given to us the fixed assets have beenphysically verified by the management generally at interval of one year. In most of theunits/ branches as well as in Head-office the book balance and physical balances have notbeen reconciled and hence the discrepancies have not been ascertained for necessaryadjustments in the books of accounts.

(c) The title deed of immovable properties in following cases are not held in the nameof the Company:

S. No. Name of the Unit Status of the Title Deed
1 The Ashok New Delhi Lease deed is in the name of Ashok Hotels Ltd. which was merged with the Company on 28.03.1970 and not been transferred in the name of the Company.
2 Hotel Jammu Ashok Jammu Lease deed expired on 11.01.2010
3 Hotel Patliputra Ashok Patna The land at B.C.P. Marg measuring 1.5 acre was donated by the Government of Bihar and is not supported by title deed.
4 ATT Delhi Title deed of leasehold land not available
5 Samrat Hotel New Delhi Title deed of leasehold land (3.19 acre) not executed

ii) As per the information & explanation provided to us the inventories havebeen physically verified by the management generally once in a year. Few of the branchauditors have reported that physical verification report was not available forverification.

The Company is generally maintaining proper record of inventory but the closinginventory is recorded in the books of accounts on the basis of physically availableinventory and no actual shortage/loss/wastage is recorded.

iii) As per the information and explanations given to us the Company has not grantedany loan secured or unsecured to companies firms limited liability partnerships orother parties covered in the register maintained under Section 189 of the Companies Act2013 therefore Clause 3(iii) (a)(b) and (c) of the Companies (Auditors Report) Order2016 are not applicable.

iv) As per the information and explanations given to us the Company has complied withthe provisions of Section 185 and 186 of the Companies Act 2013.

v) As per the information and explanation given to us the Company has not accepted anydeposit from the public in terms of Section 73 to 76 or any other relevant provisions ofthe Companies Act 2013 and the Rules framed thereunder. Thus the directives of ReserveBank of India and provisions of Clause 3 (v) of the Companies (Auditors Report) Order2016 are not applicable.

vi) As per the information and explanation given to us maintenance of cost records hasnot been prescribed by the Central Government under Sub-section (1) of Section 148 of theCompanies Act 2013.

vii) (a) In our opinion the Corporation is generally regular in depositing undisputedstatutory dues including Provident Fund Income-Tax Sales-Tax Service-Tax customs dutyexcise duty value-added tax cess and any other statutory dues to the appropriateauthorities and if not the extent of arrears of outstanding statutory dues as at the lastday of financial year concerned for a period of more than six months from the date theybecame payable are given below:

Name of the Unit Nature of Dues Amount (` in lakh) Period to which the Amount Relates
Ashok Institute of Hospitality & Tourism Management EPF 0.21 More than 6 months
Vigyan Bhawan ESI 4.78 More than 6 months
Hyderabad House ESI 1.71 More than 6 months

(b) Cess dues of income tax or sales tax or wealth tax or service tax or duty ofcustoms or duty of excise or value added tax have not been deposited on account of anydispute:

Name of the Nature of Dues Amount Period to which the Amount Relates Forum where Dispute is Pending
Statute/Unit (Rs in lakh)
Hotel Patliputra Ashok Patna Bihar VAT 3.09 Earlier Years JCCT Patna
Ashok International Trade Division Custom Duty 18478.67 2004-05 CESTAT
Ashok International Trade Division Custom Duty 42.17 2003 Committee of Dispute
Ashok International Trade Division Sales/VAT 2465.62 1995-08 Commissioner Appeals
Ashok Events Service Tax 39.65 2006-2009 Additional Commissioner of Service Tax
Kalinga Excise Duty 13.33 2002-03 High Court Odisha
Kalinga Service Tax 52.91 Earlier Years Additional Director General DGCEI Kolkata
Taj Restaurant Trade Tax 0.50 30.09.2002 Department of VAT
Taj Restaurant Trade Tax 0.79 12.02.2003 Department of VAT
Hotel Ashok Service Tax 701.93 Earlier Years CESTAT Delhi
LMPH Service Tax 16.48 29.03.2016 Commissioner of Central Excise Mysore

viii) According to the information and explanations given to us the Company has nottaken any loan from any financial institution Bank or issued any debentures till the endof financial year. Hence the provisions of Clause 3(viii) of the Companies (AuditorsReport) Order 2016 regarding reporting on default in repayment of dues to financialinstitution or bank or debenture is not applicable.

ix) According to the information provided and explanations given to us no moneys havebeen raised by way of initial public offer or further public offer (including debtinstruments) nor any term loan from any bank or financial institutions.

Thus provisions of Clause 3 (ix) of the Companies (Auditors Report) Order 2016 arenot applicable to the Company.

x) As per the information provided and explanation given to us no fraud by or on theCompany by its officers or employees has been noticed or reported during the year.

xi) As per the information and explanation given to us the provisions of Section 197read with Schedule V to the Companies Act 2013 are not applicable on Government Company.Thus the provisions of Clause 3 (xi) of the Companies (Auditors Report) Order 2016 arenot applicable to the Company.

xii) The Company is not a Nidhi Company so the provisions of Clause 3 (xii) of theCompanies (Auditors Report) Order 2016 are not applicable xiii) According to theinformation and explanations given to us all transactions with the related parties are incompliance with Section 177 and 188 of Companies Act 2013 and wherever applicable thedetails have been disclosed in the Financial Statements as required by the applicableaccounting standards.

xiv) According to the information and explanations provided to us the Company has notmade any preferential allotment or private placement of shares or fully or partlyconvertible debentures during the year under review so the requirement of Section 42 ofthe Companies Act 2013 are not applicable on it; therefore Clause 3 (xiv) of theCompanies (Auditors Report) Order 2016 are not applicable to the Company.

xv) According to information and explanations given to us the Company has not enteredinto any non-cash transactions with directors or persons connected with him thereforeClause 3 (xv) of the Companies (Auditors Report) Order 2016 are not applicable to theCompany.

xvi) According to information and explanations given to us the Company is not requiredto be registered under Section 45-IA of the Reserve Bank of India Act 1934 thereforeClause 3 (xvi) of the Companies (Auditors Report) Order 2016 are not applicable to theCompany.

For Kishore & Kishore
Chartered Accountants
Firm Regn. No. : 000291N
(CA Anshu Gupta)
Place: New Delhi Partner
Date: 30th May 2016 M.No. 077891

"Annexure B" to Independent Auditor’s Report of even date on theFinancial Statements of India Tourism Development Corporation Limited New Delhi

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 IndiaTourism Development Corporation Limited New Delhi as of March 31 2016 in conjunctionwith our audit of the financial statements of the Company for the year ended on that date.

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 Reporting (the"Guidance Note") issued by the Institute of Chartered Accountants ofIndia". These responsibilities include the design implementation and maintenance ofadequate internal financial controls that were operating effectively for ensuring theorderly and efficient conduct of its business including adherence to the Company’spolicies the safeguarding of its assets the prevention and detection of frauds anderrors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required 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 and considering the reports of thebranch auditors.

We conducted our audit in accordance with the Guidance Note on Audit of InternalFinancial Controls Over Financial Reporting (the "Guidance Note") and theStandards on Auditing issued by ICAI and deemed to be prescribed under Section 143(10) ofthe Companies Act 2013 to the extent applicable to an audit of internal financialcontrols both applicable to an audit of Internal Financial Controls and both issued bythe Institute of Chartered Accountants of India.

Those Standards and the Guidance Note require that we comply with ethical requirementsand plan and perform the audit to obtain reasonable assurance about whether adequateinternal financial controls over financial reporting was established and maintained and ifsuch 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 judgment 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 sufficientand appropriate toprovide a basis for our audit opinion on the Company’s internal financial controlssystem over financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

A Company’s internal financial control over financial reporting is a processdesigned to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance withgenerally accepted accounting principles. A Company’s internal financial control overfinancial reporting includes those policies and procedures that (1) pertain to themaintenance of records that in reasonable detail accurately and fairly reflect thetransactions and dispositions of the assets of the Company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of financialstatements in accordance with generally accepted accounting principles and that receiptsand expenditures of the Company are being made only in accordance with authorizations ofmanagement and directors of the Company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorized 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 generally has in all material respects an adequateinternal financial controls system over financial reporting and such internal financialcontrols over financial reporting were operating effectively as at March 31 2016 basedon "the internal control over financial reporting criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Note onAudit of Internal Financial Controls Over Financial Reporting issued by the Institute ofChartered Accountants of India".

For Kishore & Kishore
Chartered Accountants
Firm Regn. No. : 000291N
(CA Anshu Gupta)
Place: New Delhi Partner
Date: 30th May 2016 M.No. 077891