INDAGE RESTAURANTS AND LEISURE LIMITED
ANNUAL REPORT 2010-2011
THE MEMBERS OF
INDAGE RESTAURANTS AND LEISURE LIMITED
1. We have audited the attached Balance Sheet of INDAGE RESTAURANTS AND
LEISURE LIMITED ('the Company'), as at 31st March 2011, and also the Profit
and Loss Account and the Cash Flow Statement for the year ended on that
date both annexed thereto. These financial statements are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
2. We conducted our audit in accordance with the standards of audit
generally accepted in India. Those Standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by the
management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
3. As required by the Companies (Auditor's Report) order, 2003 issued by
the Central Government of India in terms of sub-section (4A) of section 227
of the Companies Act, 1956, we enclose in the Annexure, a statement on the
matters specified in paragraphs 4 & 5 of the said Order.
4. Further to our comments in the Annexure referred to in Paragraph 3
above, we report that:
a) We have obtained all the information and explanation, which to the best
of 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 the Company so far as appears from our examination of those books
and proper returns adequate for the purposes of our audit have been
received from the branches not visited by us;
c) The Balance Sheet, Profit and Loss Accounts and Cash Flow Statement
dealt with by this report are in agreement with the books of accounts;
d) In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow
Statement dealt with by this report comply with the Accounting Standards
referred to in subsection (3C) of Section 211 of the Companies Act, 1956,
except for AS-2 'Valuation of Inventories', As-13 'Accounting for
Investments', AS-15 'Employee Benefits' and AS-28 'Impairment of Assets'.
e) On the basis of written representations received from the Directors, as
on 31st March 2011 and taken on record by the Board of Directors, we report
that none of the Directors is disqualified as on 31st March 2011 from being
appointed as a director in terms of clause (g) of sub-section (1) of
section 274 of the Companies Act, 1956.
f) Attention is invited to the following :
i. Capital Work in Progress of Rs. 36,138,350 represents amounts paid for
incomplete projects of the Company carried forward since last several
years. We are unable to opine on the viability or recoverability of the
same as an amount of Rs. 33,186,800 is on account of Advances given for
Projects which are no longer in existence.
ii. During the year, an amount of Rs. 74,217,758 on account of Investment
in Subsidiary Company has been written off. However, we are unable to
ascertain the basis on which this write off was done.
In the absence of any information, we are unable to opine on the fall in
the value of Investments in subsidiary / associate companies costing Rs.
Certificates of Investments costing Rs. 34,389,442 were unavailable for our
iii. In the absence of any information / records, we are unable to opine on
the realisability of Stock valued in the books at Rs. 24,808,334. (AS-2)
iv. Sundry Debtors considered good includes Rs. 4,240,947 over 6 months
which are subject to reconciliations/confirmations. We are unable to opine
on the recoverability of the same.
v. Deposits- Long Term to companies under the same group amounting to Rs.
82,500,000, other deposits (Long Term) amounting to Rs. 6,500,000, and
other deposits (Short Term) amounting to Rs. 390,915, advances to Companies
under the same group amounting to Rs. 78,857,090 and other advances
amounting to Rs. 1,581,429 are all subject to reconciliation and
confirmation. We are unable to opine on the recoverablility of the said
vi. The balances lying with banks in Current and Deposit Accounts amounting
to Rs. 694,393 under 'Cash and Bank' have not been confirmed by the
Consequently, although the above amounts shown under clauses i to vi have
been shown as good and recoverable by the Management, no provision has been
made for the same.
vii. Secured Loans from Banks amounting to Rs. 339,760,894 have not been
confirmed by the Respective Banks. Hence we are unable to ascertain the
exact liability due to these Banks.
viii. Unsecured Loans from Companies under the same Group and from
Directors amounting to Rs. 114,216,543 is subject to reconciliation and
confirmation. Hence we are unable to ascertain the exact liability which
may arise on this account.
ix. The Company has not obtained Actuarial Valuation for the gratuity and
leave encashment liability as required under AS-15 'Employee Benefit'. No
liability for Gratuity and Leave encashment has been provided.
x. The Company has repaid to certain Existing Employees the P.F.
contribution of 2008-2009 for Employer as well as Employee amounting to Rs.
116,288 (Rs. 59,442 Employer Contribution and Rs. 56,846 Employee
Contribution) which is in Contravention of the Provident Fund Rules and
xi. In the absence of any supporting documents / vouchers we are unable to
ascertain whether expenses aggregating to Rs. 1,001,387 incurred by the
Directors/ Employees on travel etc. and debited to the Profit and Loss
Account are in the nature of Personal Expenses.
xii. Saraswat Bank has served upon the Company a Notice under Section 13(2)
of the Securitization and Reconstruction of Financial Assets and
Enforcement of Security Act, 2002 for repayment of its dues as well as
those of UCO Bank.
xiii. Legal Action has been initiated against the Company under Sec. 138 of
the Negotiable Instruments Act and other Acts by various parties, the
outcome of which cannot be currently ascertained.
xiv. During the year certain Fixed Assets of one unit at Written Down Value
have been transferred to a Partnership Firm. However, in absence of any
details, the basis on which these Assets have been transferred could not be
verified by us. Consequently, no entry for Profit/Loss on transfer of these
Assets has been booked in the Accounts. We are unable to express any
opinion on this transaction. We are informed that the books of account of
this Partnership Firm have not been finalized to date and consequently, the
company's share of profits or losses from the partnership firm have not
been accounted for while finalizing the accounts.
xv. In the absence of any valuation reports for Fixed Assets and records to
show the Cash Generating capacity of the Company's Fixed Assets, we are
unable to opine whether there is any impairment of the Fixed Assets of the
In view of the above weare unable to express an opinion on the
recoverability / realisability of the above mentioned items, the impact of
the same on the Loss for the year as well as the future viability of the
Company as a `going concern.'
g) On the basis of what has been mentioned in Paragraph (f) above and also
our comments in the Annexure referred to in Paragraph 3, we are unable to
express an opinion whether the said accounts read together with the notes
thereon give the information required by the Companies Act, 1956, in the
manner so required and also give a true and fair view in conformity with
the accounting principles generally accepted in India.
i. In the case of the Balance Sheet, of the state of affairs of the Company
as at 31st March 2011.
ii. In the case of the Profit & Loss Account, of the Loss of the Company
for the year ended on that date.
iii. In the case of the Cash Flow Statement, of the Cash Flows for the year
ended on that date.
For SORAB S. ENGINEER & CO.
Firm Regn. No. 110417W
Membership No. 7825
PLACE : Mumbai
DATE : 11th April, 2012
ANNEXURE TO THE AUDITORS' REPORT
Referred to in paragraph 3 of our Report of even date
i. a. The Company has not maintained proper records showing full
particulars including quantitative details and situation of its fixed
b. The Fixed Assets have not been physically verified by the management
during the year. Under these circumstances, we are unable to opine whether
there are any material discrepancies.
c. According to the information and explanations give to us, the Company
has not disposed off a substantial part of its fixed assets during the
ii. a. The inventory has been physically verified during the year by the
b. In our opinion and according to the informations given to us, the
procedures of physical verification of inventories followed by the
management needs improvement in relation to the size of the Company and the
nature of its business.
c. In absence of detailed stock records we are unable to ascertain whether
there were any material discrepanies between stock records and physical
iii. In absence of proper records we are unable to ascertain whether, the
Company has granted/ taken any loans, secured or unsecured to / from
companies, firms or other parties covered in the register maintained under
Section 301 of the Companies Act, 1956 and hence no disclosure is being
iv. In our opinion and according to the information and explanations given
to us, the internal control system is not adequate in relation to the size
of the Company and the nature of its business for the purchases of
inventory and fixed assets and for the sale of goods and services and other
v. The Company has not maintained the Register required to be mainted in
pursuance of Sec. 301 of the Companies Act, 1956. Hence, we are unable to
ascertain whether there were any transations entered into by the Company as
specified in clause v of the Order and if so whether the same have been
made at prices which are reasonable having regard to the prevailing market
prices at the relevant time.
vi. In our opinion and according to the information and explanations given
to us, the Company has not accepted deposits from the public.
vii. In our opinion and according to the information and explanation given
to us, the Company does not have any internal audit system.
vii. We are infored that the maintenance of cost records has not been
prescribed by the Central Government under Section 209 (1) (d) of the
Companies Act, 1956, for any of the Company's Products.
ix.a. According to the information and explanations given to us and on the
basis of our examination of the records of the Company, undisputed
statutory dues including Provident Fund, Investor Education and Protection
Fund, Employees' State Insurance, Sales Tax, Income Tax,Custom Duty, Excise
Duty, Wealth Tax, Service Tax and other statutory dues have not been
regularly deposited with the appropriate authorities. The undisputed
amounts outstanding as on 31st March 2011 for a period of more than six
months from the date they became payable as given by the Management are as
Statutory Dues Amount in Rs.
Provident Fund 962,625
Professional Tax 723,025
Luxury Tax 111,265
b. According to the information and explanations given to us and on the
basis of our examination of the records of the Company, as at 31st March
2011, the following are the particulars of disputed dues as given by the
Management on account of Income Tax matters which have not been deposited
by the Company :
Name of the Name of Amount Period to Forum where
Statute Dues (Rs.) which the dispute is
amount relates pending
Income Tax Income Tax 8,529,928 A.Y. 2006-2007 ITAT
x. The accumulated losses of the Company at the end of the financial year
are more than fifty percent of its net worth. The Company has incurred cash
losses, both in the present financial year, and in the immediately
preceding financial year.
xi. Based on our audit procedures and as per the information and
explanations given by the management, we are of the opinion that the
Company has defaulted in repayment of its dues to banks during the year.
Total amount of dues to Banks amounting to Rs. 339,760,894/- have been
recalled by the Banks, Refer Note 2.11 in Schedule 18.
xii. Based on our examination of the records and the information and
explanations given to us, the Company has not granted any loans and
advances on the basis of security by way of pledge of shares, Debentures or
any other securities.
xiii In our opinion, the Company is not a chit fund or a nidhi/mutual
benefit fund/ society. Therefore, the provisions of clause (xiii) of
Paragraph 4 of the Companies (Auditors Report) Order, 2003 are not
applicable to the company.
xiv. In our opinion and according to the information and explanations given
to us, the Company is not dealing in or trading in shares, securities,
debentures and any other investments, Accordingly, the provisions of clause
(xiv) of Paragraph 4 of the Companies (Auditors Report) Order, 2003 are not
applicable to the Company.
xv. In our opinion and according to the information and explanations given
by the management, the Company has not given any guarantee for loans taken
by others from banks or financial institutions.
xvi. During the year no fresh term loans have been taken by the Company. On
the basis of the records examined by us, and relying on the information
compiled by the Company for corelating the funds raised to the end use of
term loans, we state that the Company has, prima facie, applied the term
loans for the purpose for which they were obtained.
xvii. We are unable to opine whether funds raised on short term basis have
been used for long term investment.
xviii. According to the information and explanations given to tus, the
Company has not made any preferential allotment of shares to parties and
Companies covered in the register maintained under section 301 of the
Companies Act, 1956.
xix. The Company has not issued any debentures during the year.
Accordingly, the provisions of clause (xix) of paragraph 4 of the Companies
(Auditors Report) Order, 2003 are not applicable to the Company.
xx. According to the information and explanations given to us, the Company
has not made any public issues during the year.
xxi. Based upon the audit procedures performed and information and
explanations given by the management, we report that no fraud on or by the
Company has been noticed or reported during the year.
For SORAB S. ENGINEER & CO.
Firm Regn. No. 110417W
Membership No. 7825
PLACE : Mumbai
DATE : 11th April, 2012