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Kamat Hotels (India) Ltd.

BSE: 526668 Sector: Services
NSE: KAMATHOTEL ISIN Code: INE967C01018
BSE LIVE 15:48 | 22 Sep 109.20 -0.60
(-0.55%)
OPEN

114.90

HIGH

114.90

LOW

106.35

NSE 15:53 | 22 Sep 109.60 -1.05
(-0.95%)
OPEN

109.70

HIGH

114.85

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106.00

OPEN 114.90
PREVIOUS CLOSE 109.80
VOLUME 238849
52-Week high 114.90
52-Week low 25.50
P/E 8.74
Mkt Cap.(Rs cr) 257
Buy Price 0.00
Buy Qty 0.00
Sell Price 109.20
Sell Qty 14.00
OPEN 114.90
CLOSE 109.80
VOLUME 238849
52-Week high 114.90
52-Week low 25.50
P/E 8.74
Mkt Cap.(Rs cr) 257
Buy Price 0.00
Buy Qty 0.00
Sell Price 109.20
Sell Qty 14.00

Kamat Hotels (India) Ltd. (KAMATHOTEL) - Auditors Report

Company auditors report

TO THE MEMBERS OF KAMAT HOTELS (INDIA) LIMITED

Report on the Financial Statements

We have audited the accompanying standalone financial statements of KAMAT HOTELS(INDIA) LIMITED ("the Company") which comprise of the Balance Sheet as at31st March 2016 the Statement of Profit and Loss the Cash Flow Statement forthe year then ended and a summary of significant accounting policies and other explanatoryinformation.

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 give a true and fair view of the financialposition financial performance and cash flows of the Company in accordance with theaccounting 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. 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 financialstatements that givea true and fair view and are free from material misstatement whether due to fraud orerror.

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 specifiedunderSection 143(10) of the Act. Those Standards require that we comply with the ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetherthe financialstatements are free of material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures 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 the overall presentation of thefinancial statements.

We believe that the audit evidence we have obtained is sufficientand 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 standalone 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 31stMarch 2016 and its loss and its cash flows for the year on that date.

Emphasis of Matter

Attention is invited to:

1. Note 5.5 to the financial statements with regard to non-provision of interestliability ofRs. 277.27 lakhs in respect of a lender as the same is disputed by theCompany.

2. Note 38 to the financial statement with regard to default in repayment of part ofthe secured loans dues and failure of CDR mechanism in the previous year and its impact.

3. Note 39 to the financial statements which indicate that the Company’saccumulated losses are in excess of its paid up capital and reserves & surplus. Theseconditions along with other matters set forth in Note 38 to the financial statementsindicate the existence of a material uncertainty which may cast significant doubt aboutthe Company’s ability to continue as a going concern.

Our opinion is not qualified in respect of these matters.

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 subsection (11) ofsection 143 of the Act we give in the Annexure – "A" a statement onthe matters specified in paragraphs 3 and 4 of the

Order to the extent applicable.

2. As required by section 143(3) of the Act we report that:

(i) We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purpose of our audit.

(ii) In our opinion proper books of account as required by law have been kept by theCompany so far as appears from our examination of those books.

(iii) The Balance Sheet the Statement of Profit and Loss and the Cash Flow Statementdealt with by this report are in agreement with the books of account.

(iv) In our opinion the aforesaid standalone financial statements comply with theAccounting Standards specified under Section 133 of the

Act read with Rule 7 of the Companies (Accounts) Rules 2014.

(v) On the basis of written representations received from the directors as on 31stMarch 2016 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2016 from being appointed as a director in termsof Sub-Section (2) of Section 164 of the Act.

(vi) Our report on adequacy of internal financial controls system over financialreporting of the Company and the operating effectiveness of such controls is given in Annexure"B".

(vii) 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 financial and 38to the financial statements.

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

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

For J. G. VERMA & CO.
Chartered Accountants
(Registration No.111381W)
J.G.VERMA
Partner
Mumbai: 28th May 2016 Membership No. 5005

ANNEXURE "A" TO THE INDEPENDENT AUDITORS’ REPORT

The Annexure referred to in paragraph 1 under ‘Report on Other Legal andRegulatory Requirements’ in our report of even date to the members of Kamat Hotels(India) Limited for the year ended 31st March 2016. We report that:

1. (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets installed at its various units.

(b) According to the information and explanations given to us some of the fixed assetshave been physically verified during the year by the management in accordance with aphased programme of verification which in our opinion provides for physical verificationof all the fixed assets at reasonable intervals. No material discrepancies were noticed onsuch verification

(c) According to the records of the Company examined by us and the information andexplanations given to us the title deeds of immovable properties are held in the name ofthe company

2. In our opinion physical verification of inventories has been conducted by themanagement at reasonable intervals. The discrepancies noticed on such verification by themanagement were not material and have been properly dealt with in the books of account

3. (a) In respect of the loans secured or unsecured grantedtocompaniesfirmslimitedliability partnerships or other parties covered in the Register maintained under Section189 of the Companies Act 2013 (the Act):

(A) Unsecured loan of Rs. 19646.40 lakhs to Orchid Hotels Pune Private Limited(OHPPL a wholly owned subsidiary. Due to adverse factors which have affected thefinancial position of OHPPL there were defaults in repayment of loan and interest to itslenders and accordingly the lenders of OHPPL declared it a non-productive asset inearlier year. In view of these developments the aforesaid loan and outstanding interestthereon have been classifiedby the Company as doubtful of recovery and a provision hasbeen made in the accounts for earlier year. In our opinion in view of the above theterms and conditions of the above loan were prejudicial to the interest of the Company.

(B) Unsecured loan of Rs. 827.66 lakhs to Fort Mahodadhinivas Palace PrivateLimited (FMPPL). In respect of this loan in our opinion the terms and conditions of thegrant of such loan are not prejudicial to the interest of the Company.

(b) The above loans were not due for refund during the year and accordingly ourcomments on the regularity of receipt of the principal amount of these loans are notgiven. Interest has not been charged on the OHPPL loan for the year as the same wasconsidered doubtful of recovery as mentioned above. Interest on the FMPPL loan has beencharged but not recovered.

(c) There was no overdue amount in respect of the principal amount of the OHPPL loangiven by the Company. The outstanding interest receivable on this loan was Rs. 4198.16lakhs which could not be recovered hence written off as bad debt during the year. Inrespect of FMPPL loan there was no overdue amount in respect of principal amount. Theoutstanding interest receivable on FMPPL Loan as at 31st March 2016 was Rs. 175.25 lakhs.

4. In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of section 186 of the Act in respect of loansgiven investments made guarantees given and securities provided. Section 185 of the Actis not applicable for the Company during the year.

5 According to the information and explanations given to us the Company has notaccepted any deposit during the year and accordingly the question of complying withsection 73 and 76 of the Act does not arise. We are informed that the Company Law Board orNational Company Law Tribunal or Reserve Bank of India or any court has not passed anyOrder.

6 The maintenance of cost records has not been prescribed for any of the products /services of the Company under sub-section (1) of section 148 of the Act.

7 (a) According to the records of the Company the Company is generally regular indepositing with appropriate authorities undisputed statutory dues including providentfund employees’ state insurance income-tax sales-tax service tax customs dutyexcise duty value added tax cess and other material statutory dues applicable to itthough there has been a slight delay in a few cases. According to the information andexplanations given to us there were no arrears of undisputed amounts payable in respectof above statutory dues which were outstanding as at the last day of the financial yearfor a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us there is no non-depositwith appropriate authorities of disputed dues of sales-tax service tax customs dutyexcise duty or cess except in a few cases. Details of such disputed income-tax valueadded tax and luxury tax are as under:

Name of the Stature / Nature of the dues and period Amount involved ( Rs. in lakhs) Forum where dispute is pending
Income-tax on regular assessment under Income Tax Act 1961
- Assessment year 2006-07 10.73(a) Income Tax Appellate Tribunal
Income-tax on regular assessment under Income Tax Act 1961
- Assessment year 2008-09 126.19 (b) Income Tax Appellate Tribunal
Income-tax on regular assessment under Income Tax Act 1961
- Assessment year 2008-09 (pertaining to an erstwhile Company merged with the Company in the previous year) 10.02 (c) Income Tax Appellate Tribunal
Income-tax on regular assessment under Income Tax Act 1961
- Assessment year 2010-11 10.69 (b) Commissioner of Income-tax (Appeals)
Income-tax on regular assessment under Income Tax Act 1961
- Assessment year 2010-11 (pertaining to an erstwhile Company merged with the Company in the previous year) 6.56 Commissioner of Income-tax (Appeals)
Income-tax on regular assessment under Income Tax Act 1961
- Assessment year 2011-12 8.94 (d) Commissioner of Income-tax (Appeals)
Income-tax on regular assessment under Income Tax Act 1961
- Assessment year 2012-13 105.53 Commissioner of Income-tax (Appeals)
Income-tax on regular assessment under Income Tax Act 1961
- Assessment year 2013-14 214.74 Commissioner of Income-tax (Appeals)
VAT on regular assessment under Maharashtra Value Added Tax Act 2002 – Year 2006-07 18.64 (e) Joint Commissioner of Sales-tax (Appeals)
VAT on regular assessment under Maharashtra Value Added Tax Act 2002 – Year 2007-08 15.42 (e) Joint Commissioner of Sales-tax (Appeals)
VAT on regular assessment under Maharashtra Value Added Tax Act 2002 – Year 2008-09 15.95 (e) Joint Commissioner of Sales-tax (Appeals)
VAT on regular assessment under Maharashtra Value Added Tax Act 2002 – Year 2009-10 61.71 (e) Joint Commissioner of Sales-tax (Appeals)
VAT on regular assessment under Maharashtra Value Added Tax Act 2002 – Year 2010-11 8.91 (e) Joint Commissioner of Sales-tax (Appeals)
VAT on regular assessment under Maharashtra Value Added Tax Act 2002 – Year 2011-12 279.97 (f) Joint Commissioner of Sales-tax (Appeals)
Luxury Tax on regular assessment under Maharashtra Tax on Luxury Act 1987 – Year 2011-12 1.11 Joint Commissioner of Sales-tax (Appeals)
VAT on regular assessment under Orissa Value Added Tax Act 2004 – Year 2012-13 & 2013-14 2.31(g) Joint Commissioner Appellate Unit BBSR
VAT on regular assessment under Central Sales Tax Act 1956 – Year 2012-13 & 2013-14 2.85(g) Joint Commissioner Appellate Unit BBSR

(a) A sum of Rs. 2.28 lakhs has been recovered by the Department against this demand.

(b) These demands have been fully recovered by the Department.

(c) A sum of Rs. 8.77 lakhs has been recovered by the Department against this demand.

(d) A sum of Rs. 8.69 lakhs has been recovered by the Department against this demand.

(e) A sum of Rs. 14.00 lakhs has been deposited by the company against this demandpending disposal of appeal.

(f) The company is in the process of filing the appeal with the Joint Commissioner ofSales Tax (Appeals)

(g) A sum of Rs. 0.34 lakhs has been deposited by the company against this demandpending disposal of appeal.

8. In our opinion and according to the information and explanations given to us theCompany has defaulted in payment of interest and payment of principal to financialinstitution and banks during the year under report as under:

S.No. Name of the lender Amount of default – Rs. in lakhs Period of delay Remarks
1 Canara Bank 5839.31 580 days Principal
2058.39 1 to 732 days Interest
2 Andhra Bank 4934.02 608 days Principal
1526.75 1 to 763 days Interest
3 Central Bank of India 1278.45 415 days Principal
409.71 1 to 671 days Interest
4 Bank of India 1085.67 441 days Principal
347.93 1 to 671 days Interest
5 Corporation Bank 639.70 423 days Principal
204.85 1 to 671 days Interest
6 Syndicate Bank 868.92 485 days Principal
278.41 1 to 671 days Interest
7 IL&FS Financial Services Limited 1598.78 346 days Principal

. The Company has not borrowed any money from the Government or by way of debentures.

9 According to the information and explanations given to us the Company has not raisedmoneys by way of initial public offer or further public offer (including debt instruments)and term loans during the year

10 During the course of our examination of the books of account and records of theCompany carried out in accordance with the generally accepted auditing practices in Indiaand according to the information and explanations given to us we have neither come acrossany instances of fraud by the Company or any fraud on the Company by its officers andemployees was noticed or reported during the year nor have we been informed of any suchinstance by the management.

11 According to the records of the Company examined by us and the information andexplanations given to us managerial remuneration has been paid / provided by the Companyin accordance with the requisite approvals mandated by the provisions of section 197 readwith Schedule V to the Act.

12 The Company is not a Nidhi Company hence our comments as required under clause 3(xii) of the Order is not applicable to the Company.

13 In our opinion and according to the records of the Company examined by us and theinformation and explanations given to us the transactions entered into by the Companyduring the year with related parties are in compliance with the provisions of Section 177and 188 of the Act where applicable and the details thereof have been disclosed in theFinancial Statements etc. as required by the applicable accounting standards.

14 According to the information and explanations given to us the Company has not madeany preferential allotment or private placement of shares or fully or partly convertibledebentures during the year.

15 According to the records of the Company examined by us and the information andexplanations given to us the Company has not entered into any non-cash transactionsreferred to in section 192 of the Act with directors of the Company or persons connectedwith them during the year.

16 According to the information and explanations given to us the Company is notrequired to be registered under Section 45-IA of the Reserve Bank of India Act 1934.

For J.G.VERMA & CO.
Chartered Accountants
(Registration No. 111381W)
J.G.VERMA
Partner
Mumbai: 28th May 2016 Membership No. 5005

ANNEXURE "B" TO THE INDEPENDENT AUDITORS’ REPORT

The Annexure referred to in paragraph 2 (vi) under ‘Report on Other Legal andRegulatory Requirements’ in our report of even date to the members of KAMAT HOTELS(INDIA) LIMITED for the year ended 31st March 2016. We report that:

Report on the Internal Financial Controls over Financial Reporting under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 ("the Act")

We have audited the internal financial controls over financial reporting of KamatHotels (India) Limited ("the Company") as of 31 st March 2016 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 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. These responsibilities includethe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the orderly and efficient conduct of its businessincluding 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 Act.

Auditors’ Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrolsover financial reporting based on our audit. We conducted our audit in accordance with theGuidance Note on Audit of Internal Financial Controls Over Financial Reporting (the"Guidance Note") and the Standards on Auditing issued by ICAI and deemed to beprescribed 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 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 oper -ated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over reporting and their operating effectiveness.Our audit of internal financial controls over financial reporting included obtaining anunderstanding of the risk that a material weakness exists and testing and evaluating thedesign and overfinancial internalfinancial operating effectiveness of internal controlbased 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 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 process designedto provide reasonable assurance regarding the reliability of financial reporting andthepreparationoffinancialstatements for external purposes in accordance with generallyaccepted accounting principles. Acompany'sinternalfinancialcontrol 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 andexpenditure 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 manage -ment override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the over financial reporting to future periods aresubject to the risk that the internal financial control over financial reportinginternalfinancial may become inadequate because of changes in conditions or that thedegree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion the Company has in all material respects an adequate internalfinancial controlssystemoverfinancialreporting and such internal reporting were operatingeffectively as at 31 financialcontrolsoverfinancial st March 2016 based on the internalcontrol over financial reporting criteria established by the Company considering theessential components of internal control stated in the Guidance Note on Audit of InternalFinancial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.

For J.G.VERMA & CO.
Chartered Accountants
(Registration No. 111381W)
J.G.VERMA
Partner
Mumbai: 28th May 2016 Membership No. 5005