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Mukta Arts Ltd.

BSE: 532357 Sector: Media
NSE: MUKTAARTS ISIN Code: INE374B01019
BSE 10:14 | 22 May 57.45 -0.05
(-0.09%)
OPEN

57.00

HIGH

57.70

LOW

56.00

NSE 10:14 | 22 May 57.80 0.40
(0.70%)
OPEN

57.05

HIGH

58.90

LOW

56.00

OPEN 57.00
PREVIOUS CLOSE 57.50
VOLUME 1009
52-Week high 120.00
52-Week low 56.00
P/E 49.53
Mkt Cap.(Rs cr) 130
Buy Price 57.50
Buy Qty 1.00
Sell Price 58.30
Sell Qty 21.00
OPEN 57.00
CLOSE 57.50
VOLUME 1009
52-Week high 120.00
52-Week low 56.00
P/E 49.53
Mkt Cap.(Rs cr) 130
Buy Price 57.50
Buy Qty 1.00
Sell Price 58.30
Sell Qty 21.00

Mukta Arts Ltd. (MUKTAARTS) - Auditors Report

Company auditors report

To the Members of

Mukta Arts Limited

Mumbai

Report on the Financial Statements

We have audited the accompanying standalone financial statements of Mukta ArtsLimited ("the Company") which comprise the Balance Sheet as at March 312017 and the Statement of Profit and Loss and Cash Flow Statement for the year thenended and a summary of significant accounting policies and other explanatory information.

Management's Responsibility for the 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 financial statements that give a true and fair view of the financial positionfinancial performance and cash flows of the Company in accordance with the accountingprinciples generally accepted in India including the Accounting Standards specified underSection 133 of the Act read with Rule 7 of the Companies (Accounts) Rules 2014.

This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding the assets of the Company andfor preventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; and 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 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 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 but not for the purpose of expressing anopinion on whether the Company has in place an adequate internal financial controls systemover financial reporting and the operating effectiveness of such controls. An audit alsoincludes evaluating the appropriateness of the accounting policies used and thereasonableness of the accounting estimates made by the Company's Directors as well asevaluating the overall presentation of 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.

Basis of Qualified Opinion

As explained in Note 3.40 to the accompanying Statement of Audited financial resultsremuneration paid to the erstwhile managing director (including as film director fees) forearlier financial years from 2005-06 to 2014-15 (total remuneration paid aggregates to Rs.131906897/-) is in excess of the limits prescribed under Schedule XIII to the CompaniesAct 2013. During the year 2011-12 the Company had received approval for part of excessremuneration paid (approval received for remuneration aggregating to Rs. 25200000/- forthe financial years 2005-06 2006-07 2007-08) and made applications to the authoritiesrequesting consideration/approval for the balance excess remuneration and for recognitionof the erstwhile managing director as professionally qualified person under the CompaniesAct 1956. Through its various communications the Ministry of Corporate Affairs hasdirected the Company to recover the excess remuneration paid during the financial years2008-09 to 2011-12. The company has requested the authorities to reconsider their Ordersin respect of the above and also for his recognition as a professionally qualified personunder this Act. Pending conclusion of this matter no adjustment has been made in thesestandalone financial statements.

As at March 31 2017 the company's investment in its subsidiary Whistling WoodsInternational Limited (WWIL) a joint venture between the company and Maharashtra FilmStage and Cultural Development Corporation Limited (MFSCDCL) aggregates to Rs.369997000/- and loans and advances Accrued interest deposits and rent receivableinclude Rs. 257126743 /- recoverable from WWIL. As fully explained in Note 3.41 to theaccompanying Audited financial statements the Order of February 9 2012 passed by theHigh Court of judicature at Bombay (‘High Court') had quashed the joint VentureAgreement (‘JVA') between the company and Maharashtra Film Stage Cultural DevelopmentCorporation (‘MFSCDCL'). Maharashtra Film Stage and Cultural Development Corporation(‘MFSCDC') raised net demand of Rs. 591966210/- and asked WWIL to vacate thepremises. WWIL's petition for special leave to appeal filed with the Supreme Court ofIndia had also been dismissed. The Company and WWIL had filed application to review thesaid order with the High Court and an Interim stay was granted on July 30 2014 whichrequired deposit of Rs.100038000/- by January 2015 against payment of arrears of rentfor the year 2000-01 to 2013-14 and payment of Rs.4500000/- per annum from FinancialYear 2014-15 till the settlement of the case to MFSCDCL. As per the terms of the saidOrder the Company paid Rs. 113538000/- by March 31 2017. The State Govt. ofMaharashtra and MFSCDCL challenged the order of the High Court in the Supreme Court whichwas dismissed by the Supreme Court on September 22 2014. The amount so paid / being paidby the Company have been treated as Deposit in the standalone financial statements to beadjusted on the settlement of the case.

Further WWIL's net worth stands fully eroded as at March 31 2017. Having regard tothe circumstances explained above and pending final outcome of the matter underlitigation the Company has not made any adjustment to the carrying value of investment inand amounts due from WWIL and the deposit paid consequent to the High Court's Orders.Accordingly the impact on the carrying value of investments recoverability of loans andadvances and consequential impact on loss for the year and reserves is not determinable.

Qualified Opinion

In our opinion and to the best of our information and according to the explanationsgiven to us except for the possible effects of the matters described in the Basis ofQualified Opinion 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

a. in the case of the Balance Sheet of the state of affairs of the Company as atMarch 31 2017;

b. in the case of the Profit and Loss Account of the Loss for the year endedon that date; and

c. in the case of the Cash Flow Statement of the cash flows for the year ended onthat date.

Report on Other Legal and Regulatory Requirements

As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government of India in terms of sub-section (11) of section 143 ofthe Companies Act 2013 we give in the Annexure A a statement on the mattersspecified in paragraphs 3 and 4 of the Order to the extent applicable.

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 dealt with by this Report arein agreement with the books of account.

(d) In our opinion the aforesaid financial statements comply with the AccountingStandards specified under Section 133 of the Act read with Rule 7 of the Companies(Accounts) Rules 2014.

(e) On the basis of the written representations received from the directors as on March31 2017 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2017 from being appointed as a director in terms of Section 164 (2) of theAct.

(f) With respect to the adequacy of the Internal Financial Controls over FinancialReporting of the Company and the operating effectiveness of such controls refer to ourseparate report in Annexure B and

(g) 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 Notes No. 3.35 and 3.41 to thestandalone financial statements.

ii. The Company does not have any long-term contracts including derivative contractsfor which there were any material foreseeable losses – Refer Note No. 3.45 tothe standalone financial statements.

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

iv. The Company has provided requisite disclosures in the standalone financialstatements as to holdings as well as dealings in Specified Bank Notes during the periodfrom November 8 2016 to December 30 2016. Based on audit procedures and relying on themanagement representation we report that the disclosures are in accordance with books ofaccount maintained by the Company and as produced to us by the Management – ReferNote 3.17 to the standalone financial statements;

For Uttam Abuwala & Co.
Chartered Accountants
Firm No. 111184W
CA. Prerak Agarwal
(Partner)
Membership No. 158844
Date: May 24 2017
Place: Mumbai

Annexure A referred to in Report on Other Legal and Regulatory Requirements Paragraphof Independent Auditor's report of even date to the members of Mukta Arts Limited on theaccounts for the year ended March 31 2017

On the basis of such checks as we considered appropriate and according to theinformation and explanation given to us during the course of our audit we report that: i)

(a) The company has maintained proper records showing full particulars includingquantitative details and situation of Fixed assets except that tagging of certain fixedassets is yet to be completed.

(b) As explained by the Management fixed assets have been physically verified by themanagement at regular intervals which in our opinion is reasonable having regard to thesize of the company and nature of its business. In our opinion there were no materialdiscrepancies between book records and physical fixed assets that were noticed during theperiod.

(c) According to the information and explanation given to us and on the basis of ourexamination of the records of the company the title deeds of immovable properties areheld in the name of the company except the following:

Number of Cases Gross Block (as at March 31 2017) Net Block (as at March 31 2017) Remarks
1. 7500000/- 6751669/- Agreement yet to be registered.

ii) The management has conducted physical verification of inventory at reasonableintervals during the year and no material discrepancies were noticed on such physicalverification. The Company does not have any inventory as at the end of the Financial Year.

iii) Based on the audit procedures applied by us and according to the information andexplanations given to us the company has not granted any loans secured or unsecured tothe firms limited liability partnerships or other parties covered in the registermaintained under section 189 of the Companies Act 2013. Accordingly the provisions ofclause (iii) (a) (b) and (c) are not applicable to the Company.

iv) In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of Section 185 and 186 of the Act with respectto the loans and investments made.

v) In our opinion and according to the information and explanation given to us theCompany has not accepted any deposit from public within the provision of section 73 to 76and other relevant provisions of the Companies Act 2013 and the rules framed there under.

vi) As informed to us by management the Central Government has not prescribed themaintenance of cost records under sub section (1) of section 148 of the Companies Act2013 for any of the food and beverage item sold/services rendered by the company.

vii) (a) According to information and explanations given to us and on the basis of ourexamination of the books of account and records the Company has been generally regularin depositing undisputed statutory dues including Sales tax Service Tax Value added TaxCess and any other statutory dues with the appropriate authorities except that there havebeen few delays in depositing Professional Tax VAT Provident Fund Service Tax andEmployees' State Insurance and significant delays in depositing dues pertaining to IncomeTax. As explained to us the company did not have any dues on account of Custom DutyExcise Duty.

According to the information and explanations given to us the following undisputedstatutory dues are outstanding as on March 31 2017 for a period of more than six monthsfrom the date they became payable.

Name of the statute Nature of dues Amount (Rs.) Period to which it relates Due Date
The Income Tax Tax Deducted at Source 2489419/- July 2016 to August 2016 August 2016 to September 2016

Except for the above there are no undisputed statutory dues payable in respect ofProvident Fund Employees' State Insurance Income Tax Value Added Tax Sales Tax andother material statutory dues which were in arrears as on March 31 2017 for a period ofmore than 6 months from the date they became payable.

(b) According to the information and explanations given to us there are no duespayable in respect of wealth tax sales tax Value Added Tax customs duty and excise dutywhich have not been deposited on account of any disputes. The following dues of ServiceTax & Income Tax have not been deposited by the company on account of dispute:

Name of the statute Nature of dues Amount (Rs.) Period to which the amount relates Forum where the dispute is pending
Chapter V of the Finance Act 1994 Service Tax 875000/-* November 1996 – November 2001 Customs Excise & Service Tax Appelate Tribunal
Income Tax Act 1961 Income Tax 15577380/- Asst year 2014-15 Commissioner of Income Tax (Appeals)
8808700/- Asst year 2013-14
1508440/- Asst year 2012-13
524938/- Asst year 2011-12
8297120/- Asst year 2010-11 Income Tax Appellate Tribunal (Appeals)
1174100/- Asst year 2009-10

*Excludes Amount deposited under protest Rs. 800000/-

viii) On the basis of verification of records and according to the information andexplanations given to us and based on the records made available to us the Company hasnot defaulted in repayment of any loans from Financial Institutions or from the Bank andhas not issued Debentures.

ix) On the basis of verification of records and according to the information andexplanations given to us and based on the records made available to us the company hasutilized the money raised by way of Term loan for the purpose for which they were raised.The Company did not raise any moneys by way of public issue/ follow-on offer includingdebt instruments.

x) Based upon the audit procedures performed and the information and explanations givento us we report that no fraud by the Company or any fraud on the company by its officersor employees has been noticed or reported during the year.

xi) According to the information and explanations given to us and based on theexaminations of the records of the company the managerial remuneration has been paid/provided in accordance with the requisite approvals mandated by the provisions of section197 read with Schedule V to the Companies Act 2013.

xii) The company is not a Nidhi Company. Accordingly the provisions of clause (xii) ofPara 3 of the order are not applicable to the company.

xiii) According to the information and explanations given to us all transactions withthe related parties are in compliance with Section 188 and 177 of Companies Act 2013 andthe details of such transactions have been disclosed in the Financial Statements asrequired by the accounting standards and Companies Act 2013.

xiv) On the basis of verification of records and according to the information andexplanations given to us and based on the records made available to us the company hasnot made any preferential allotment / private placement of shares or fully or partlyconvertible debentures during the year under review.

xv) In our opinion and according to the information and explanations given to us thecompany has not entered into non-cash transactions with directors or persons connectedwith him.

xvi) The company is not required to be registered under section 45 IA of the ReserveBank of lndia Act 1934.

For Uttam Abuwala & Co.
Chartered Accountants
Firm No. 111184W
CA. Prerak Agarwal
(Partner)
Membership No. 158844
Date: May 24 2017
Place: Mumbai

Annexure B to the Independent Auditor's Report of even date on the Financial Statementsof Mukta Arts Limited

Report on the Internal Financial Controls under Clause (i) of sub-section 3 of Section143 of the Companies Act 2013 ("the Companies Act")

We have audited the internal financial controls over financial reporting of MuktaArts Limited ("the Company") for the year ended on March 31 2017 inconjunction with our audit of the standalone financial statements of the Company for theyear period 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 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 the 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.

Auditor's 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 the Institute ofChartered Accountants of India and specified under sub-section 10 of Section 143 of theCompanies Act to the extent applicable to an audit of internal financial controls bothapplicable to an audit of Internal Financial Controls and both issued by the Institute ofChartered Accountants of India. Those Standards and the Guidance Note require that wecomply with ethical requirements and plan and perform the audit to obtain reasonableassurance about whether adequate internal financial controls over financial reporting wasestablished and maintained and if such controls operated effectively in all materialrespects.

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 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 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 March 31 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 Uttam Abuwala & Co.
Chartered Accountants
Firm No. 111184W
CA. Prerak Agarwal
(Partner)
Membership No. 158844
Date: May 24 2017
Place: Mumbai