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Indian Hotels Co Ltd.

BSE: 500850 Sector: Services
NSE: INDHOTEL ISIN Code: INE053A01029
BSE 00:00 | 13 Sep 132.60 -1.65
(-1.23%)
OPEN

133.75

HIGH

135.05

LOW

131.80

NSE 00:00 | 13 Sep 132.75 -1.70
(-1.26%)
OPEN

134.90

HIGH

135.30

LOW

131.55

OPEN 133.75
PREVIOUS CLOSE 134.25
VOLUME 13554
52-Week high 164.10
52-Week low 110.00
P/E 48.22
Mkt Cap.(Rs cr) 15,770
Buy Price 132.30
Buy Qty 100.00
Sell Price 133.10
Sell Qty 17.00
OPEN 133.75
CLOSE 134.25
VOLUME 13554
52-Week high 164.10
52-Week low 110.00
P/E 48.22
Mkt Cap.(Rs cr) 15,770
Buy Price 132.30
Buy Qty 100.00
Sell Price 133.10
Sell Qty 17.00

Indian Hotels Co Ltd. (INDHOTEL) - Auditors Report

Company auditors report

To the Members of The Indian Hotels Company Limited

REPORT ON THE AUDIT OF THE STANDALONE

FINANCIAL STATEMENTS

OPINION

We have audited the standalone financial statements of The IndianHotels Company Limited ("the Company") which comprise the standalone balancesheet as at 31 March 2019 and the standalone statement of profit and loss (includingother comprehensive income) standalone statement of changes in equity and standalonestatement of cash flows for the year then ended and notes to the standalone financialstatements including a summary of significant accounting policies and other explanatoryinformation (hereinafter referred to as "standalone financial statements").

In our opinion and to the best of our information and according to theexplanations given to us the aforesaid standalone financial statements give theinformation required by the Companies Act 2013 (Rs.the ActRs.) in the manner so requiredand give a true and fair view in conformity with the accounting principles generallyaccepted in India of the state of affairs of the Company as at 31 March 2019 and profitand other comprehensive income changes in equity and its cash flows for the year ended onthat date.

BASIS OF OPINION

We conducted our audit in accordance with the Standards on Auditing(SAs) specified under section 143(10) of the Act. Our responsibilities under those SAs arefurther described in the AUDITOR'S Responsibilities for the Audit of the StandaloneFinancial Statements section of our report. We are independent of the Company inaccordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia together with the ethical requirements that are relevant to our audit of thestandalone financial statements under the provisions of the Act and the Rules thereunderand we have fulfilled our other ethical responsibilities in accordance with theserequirements and the Code of Ethics. We believe that the audit evidence we have obtainedis sufficient and appropriate to provide a basis for our opinion.

KEY AUDIT MATTERS

Key audit matters are those matters that in our professional judgmentwere of most significance in our audit of the financial statements of the current period.These matters were addressed in the context of our audit of the financial statements as awhole and in forming our opinion thereon and we do not provide a separate opinion onthese matters.

i. Valuation of Investments

The Company has investments in subsidiaries joint ventures andassociates. These investments are accounted for at cost less any provision for impairment.If an impairment exist the recoverable amounts of the above investment are estimated inorder to determine the extent of the impairment loss if any. Determination of whetherthere exists any impairment in the value of those investments is subject to a significantlevel of judgement. There is therefore a risk that the value of investments may bemisstated. Refer to Note 5(a) - "Investments" of the standalone financialstatements.

How our audit addressed the key audit matter

Our audit procedures included among others considering the impairmentrisk associated with investments in subsidiaries joint ventures and associates. Weexamined key assumptions in MANAGEMENT'S valuation models used to determine recoverableamount considering external data including assumptions of projected adjusted EBITDAgrowth rate room occupancy room rate projected capital expenditure long term growthrates discount rates and assessed the forecasts against the historical performance. Wevalidated the appropriateness of the related disclosures in Note 5(v) of the financialstatements.

ii. Contingent liabilities

The Company has significant tax and other litigations against it. Thereis a high level of judgement required in estimating the level of provisioning required andappropriateness of disclosure of those litigations as contingent liabilities.

Refer to Note 1 - "Basis of preparation" Note 17(b) -"Provisions" and Note 28 - "Contingent liabilities and Contingentassets" and Note 36 of the standalone financial statements.

How our audit addressed the key audit matter

For legal regulatory and tax matters our procedures included examiningexternal legal opinions obtained by management; meeting with regional and local managementand examining relevant Group correspondence; discussing litigations with the Company'slegal counsel and tax head; assessing MANAGEMENT'S conclusions through understandingprecedents set in similar cases; and circularization where appropriate of confirmationsto third party legal representatives regarding certain material cases.

We also involved our internal tax specialists to gain an understandingand to determine the level of exposure for direct and indirect tax litigations of theCompany.

In light of the above we examined the level of provisions recorded andassessed the adequacy of disclosures in Standalone financial statements.

OTHER INFORMATION

The Company's management and Board of Directors are responsible for theother information. The other information comprises the information included in theCompany's annual report but does not include the financial statements and our AUDITOR'Sreport thereon.

Our opinion on the financial statements does not cover the otherinformation and we do not express any form of assurance conclusion thereon.

In connection with our audit of the standalone financial statementsour responsibility is to read the other information and in doing so consider whether theother information is materially inconsistent with the standalone financial statements orour knowledge obtained in the audit or otherwise appears to be materially misstated. Ifbased on the work we have performed we conclude that there is a material misstatement ofthis other information we are required to report that fact. We have nothing to report inthis regard.

MANAGEMENT'S RESPONSIBILITY FOR THE STANDALONE FINANCIAL STATEMENTS

The Company's management and Board of Directors are responsible for thematters stated in section 134(5) of the Act with respect to the preparation of thesestandalone financial statements that give a true and fair view of the state of affairsprofit and other comprehensive income changes in equity and cash flows of the Company inaccordance with the accounting principles generally accepted in India including theIndian Accounting Standards (Ind AS) prescribed under section 133 of the Act. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding of 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 standalone financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.

In preparing the standalone financial statements management and Boardof Directors are responsible for assessing the Company's ability to continue as a goingconcern disclosing as applicable matters related to going concern and using the goingconcern basis of accounting unless management either intends to liquidate the Company orto cease operations or has no realistic alternative but to do so. Refer Note - 43.

Board of Directors is also responsible for overseeing the Company'sfinancial reporting process.

AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE STANDALONE FINANCIALSTATEMENTS

Our objectives are to obtain reasonable assurance about whether thestandalone financial statements as a whole are free from material misstatement whetherdue to fraud or error and to issue an AUDITOR'S report that includes our opinion.Reasonable assurance is a high level of assurance

but is not a guarantee that an audit conducted in accordance with SAswill always detect a material misstatement when it exists. Misstatements can arise fromfraud or error and are considered material if individually or in the aggregate theycould reasonably be expected to influence the economic decisions of users taken on thebasis of these standalone financial statements.

As part of an audit in accordance with SAs we exercise professionaljudgment and maintain professional skepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the financialstatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentional omissions misrepresentations or the override of internal control.

Obtain an understanding of internal control relevant to the audit inorder to design audit procedures that are appropriate in the circumstances. under Section143(3)

(i) of the Act we are also responsible for expressing our opinion onwhether the Company has adequate internal financial controls with reference to thefinancial statements in place and the operating effectiveness of such controls.

Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures made by management.

Conclude on the appropriateness of MANAGEMENT'S use of the goingconcern basis of accounting and based on the audit evidence obtained whether a materialuncertainty exists related to events or conditions that may cast significant doubt on theCompany's ability to continue as a going concern. If we conclude that a materialuncertainty exists we are required to draw attention in our AUDITOR'S report to therelated disclosures in the standalone financial statements or if such disclosures areinadequate to modify our opinion. Our conclusions are based on the audit evidenceobtained up to the date of our AUDITOR'S report. However future events or conditions maycause the Company to cease to continue as a going concern; and

Evaluate the overall presentation structure and content of thestandalone financial statements including the disclosures and whether the standalonefinancial statements represent the underlying transactions and events in a manner thatachieves fair presentation.

We communicate with those charged with governance regarding amongother matters the planned scope and timing of the audit and significant audit findingsincluding any significant deficiencies in internal control that we identify during ouraudit.

We also provide those charged with governance with a statement that wehave complied with relevant ethical requirements regarding independence and tocommunicate with them all relationships and other matters that may reasonably be thoughtto bear on our independence and where applicable related safeguards.

From the matters communicated with those charged with governance wedetermine those matters that were of most significance in the audit of the standalonefinancial statements of the current period and are therefore the key audit matters. Wedescribe these matters in our AUDITOR'S report unless law or regulation precludes publicdisclosure about the matter or when in extremely rare circumstances we determine that amatter should not be communicated in our report because the adverse consequences of doingso would reasonably be expected to outweigh the public interest benefits of suchcommunication.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

As required by the Companies (AUDITOR'S Report) Order 2016 (Rs.theOrderRs.) issued by the Central Government in terms of Section 143(11) of the Act wegive in "Annexure A" a statement on the matters specified in the paragraphs 3and 4 of the Order to the extent applicable.

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

(a) we have sought and obtained all the information and explanationswhich to the best of our knowledge and belief were necessary for the purposes of ouraudit;

(b) in our opinion proper books of account as required by law havebeen kept by the Company so far as it appears from our examination of those books;

(c) the standalone balance sheet the standalone statement of profitand loss (including other comprehensive income) the standalone statement of changes inequity and the standalone statement of cash flows dealt with by this report are inagreement with the books of account;

(d) in our opinion the aforesaid standalone financial statementscomply with the Indian Accounting Standards (Ind AS) prescribed under Section 133 of theAct;

(e) on the basis of the written representations received from thedirectors as on 31 March 2019 taken on record by the Board of Directors none of thedirectors is disqualified as on 31 March 2019 from being appointed as a director in termsof Section 164(2) of the Act;

(f) with respect to the adequacy of the internal financial controlswith reference to the standalone financial statements of the Company and the operatingeffectiveness of such controls refer to our separate Report in "Annexure B";

B. With respect to the other matters to be included in the AUDITOR'SReport in accordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 inour opinion and to the best of our information and according to the explanations given tous:

i. the Company has disclosed the impact of pending litigations as at 31March 2019 on its financial position in its standalone financial statements - Refer Note28 and Note 36 to the standalone financial statements;

ii. the Company has made provision as required under the applicablelaw or accounting standards for material foreseeable losses if any on long-termcontracts including derivative contracts - Refer Note 16 to the standalone financialstatements;

iii. there has been no delay in transferring amounts required to betransferred to the Investor Education and Protection Fund by the Company during the yearended 31 March 2019; and

iv. the disclosures in the standalone financial statements regardingholdings as well as dealings in specified bank notes during the period from 8 November2016 to 30 December 2016 have not been made in these financial statements since they donot pertain to the financial year ended 31 March 2019.

C. With respect to the matter to be included in the AUDITOR'S Reportunder section 197(16):

In our opinion and according to the information and explanations givento us the remuneration paid by the Company to its directors during the current year is inaccordance with the provisions of Section 197 of the Act. The remuneration paid to anydirector is not in excess of the limit laid down under Section 197 of the Act. TheMinistry of Corporate Affairs has not prescribed other details under Section 197(16) whichare required to be commented upon by us.

For B S R & Co. LLP

Chartered Accountants

FirmRs.s Registration No: 101248W/W-100022
Vijay Bhatt
Mumbai

Partner

30 April 2019 Membership No: 036647

ANNEXURE 'A' TO THE INDEPENDENT AUDITOR'S REPORT

With reference to the Annexure A referred to in the IndependentAUDITOR'S Report to the members of the Company on the standalone financial statements forthe year ended 31 March 2019 we report the following:

(i) (a) The Company has maintained proper records showing

full particulars including quantitative details and situation of fixedassets.

(b) The Company has a regular programme of physical verification of itsfixed assets by which all the fixed assets are verified in a phased manner over a periodof three years. In accordance with this programme a portion of the fixed assets has beenphysical verified by the management during the year. No material discrepancies have beennoticed on such verification. In our opinion this periodicity of physical verification isreasonable having regard to the size of the Company and the nature of its assets.

(c) According to the information and explanations given to us and onthe basis of our examination of the records of the Company the title deeds comprisingall the immovable properties of land and buildings are held in the name of the Company asat the balance sheet date except in respect of one commercial / residential buildingaggregating to Rs. 0.78 crores (Gross block Rs. 1.30 crores) constructed on the leasedland which is in the possession of the Company acquired pursuant to a scheme ofamalgamation of TIFCO Holding Limited (a wholly owned subsidiary). The lease of the saidland has expired in the year 2000. Erstwhile TIFCO Holdings Limited has filed a writPetition in High Court of Mumbai on 15 January 2013 for renewal of lease.

(ii) Inventory has been physically verified by the management duringthe year. In our opinion the frequency of such verification is reasonable. Thediscrepancies noticed on verification between the physical stocks and the book recordswere not material and have been properly dealt with in books of account.

(iii) According to the information and explanations given to us theCompany has not granted any loans secured or unsecured to companies firms limitedliability partnerships or other parties covered in the register maintained under Section189 of the Act. Accordingly paragraphs 3(iii)(a) (b) and (c) of the Order are notapplicable to the Company.

(iv) In our opinion and according to the information and explanationgiven to us the Company has not granted any loans or provided any guarantees or securityto the parties covered under section 185 of the Act. The Company has complied with theprovisions of Section 186 of the Act in respect of the investments and guarantees made.The Company has not provided any security to the parties covered under Section 186 of theAct.

(v) In our opinion and according to the information and explanationsgiven to us the Company has not accepted deposits as per the directives issued by theReserve Bank of India and the provisions of Sections 73 to 76 or any other relevantprovisions of the Act and the rules framed thereunder. Accordingly paragraph 3(v) of theOrder is not applicable to the Company.

(vi) The Central Government has not prescribed maintenance of costrecords under Section 148(1) of the Act. Accordingly paragraph 3(vi) of the Order is notapplicable to the Company.

(vii) (a) According to the information and explanations

given to us and on the basis of our examination of the records of theCompany amounts deducted / accrued in the books of account in respect of undisputedstatutory dues including provident fund employees state insurance income-tax duty ofcustoms value added tax goods and service tax cess and other material statutory dueshave been generally regularly deposited during the year with the appropriate authorities.

According to the information and explanations given to us noundisputed amounts payable in respect of provident fund employeesRs. state insuranceincome-tax duty of customs service tax goods and service tax value added tax cess andother material statutory dues were in arrears as at 31 March 2019 for a period of morethan six months from the date they became payable.

(b) According to the information and explanations given to us thereare no dues of income-tax duty of customs goods and service tax and value added tax asat 31 March 2019 which have not been deposited with the appropriate authorities onaccount of any dispute except as stated below:

Name of Act Nature of Dues Amount Demanded Amount not Deposited Under Disputes Period to which amount relates (Financial Year) Forum where dispute is pending
Sales Tax and Value Added Tax Tax Penalty and Interest 6.06 4.76 1997 - 1998 to 2004 - 2005 Joint Commissioner (Appeals)
18.71 17.01 2005 - 2006 to 2010 - 2011 Joint Commissioner
0.66 - 2011 - 2012 to 2015 - 2016 Additional Commissioner
0.35 0.35 1992 - 1993 to 1995 - 1996 Assistant /Deputy Commissioner
1.91 1.91 2005 - 2006 to 2011 - 2012 Commissioner
3.13 2.622 2011 - 2012 to 2017 - 2018 Assistant /Deputy Commissioner
2.45 2.21 2012 - 2013 to 2013-2014 Commissioner
0.56 0.52 2004-2005 to 2012-13 Commissioner
The Income Tax Act 1961 Tax and Interest 0.05 0.05 2007 - 2008 Commissioner (Appeals)
2.25 2.25 2009 - 2010 Assessing Officer
2011-2012 to 2013 - 2014
179.76 175.19 2009 - 2010 2011 - 2012 & 2013-2014 Appellate Tribunal
The Finance Act 1994 Service Tax Penalty and Interest 0.17 0.17 2011 - 2012 Joint/Additional Commissioner
0.17 0.07 2006- 2007 & 2007- 2008 Commissioner of Service Tax
0.12 0.11 2016 - 2017 Additional Commissioner
0.13 0.12 2014 - 2015
10.57 9.87 2006 - 2007 to 2018 - 2019 Commissioner
1.49 1.49 2002-2005 Tribunal

(viii) In our opinion and according to the information and explanationsgiven to us the Company has not defaulted in repayment of loans to banks and dues todebenture holders. The Company did not have any outstanding dues to financial institutionsand government during the year.

(ix) According to the information and explanations given to us andbased on our examination of the records of the Company the Company has not raised anymoneys by way of initial public offer or further public offer (including debt instruments)and has not obtained any term loans during the year. Accordingly paragraph 3 (ix) of theOrder is not applicable to the Company.

(x) According to the information and explanations given to us nomaterial fraud by the Company or on the Company by its officers or employees has beennoticed or reported during the course of our audit.

(xi) According to the information and explanations given to us andbased on our examination of the records of the Company the Company has paid / providedfor managerial remuneration in accordance with the requisite approvals mandated by theprovisions of Section 197 read with Schedule V to the Act.

(xii) In our opinion and according to the information and explanationsgiven to us the Company is not a Nidhi Company and the Nidhi Rules 2014 are notapplicable to it. Accordingly paragraph 3(xii) of the Order is not applicable to theCompany.

(xiii) According to the information and explanations given to us andbased on our examination of the records of the Company transactions with the relatedparties are in compliance with Sections 177 and 188 of the Act. The details of suchrelated party transactions have been disclosed in the financial statements as requiredunder Indian Accounting Standard (Ind AS) 24.

(xiv) According to the information and explanations given to us andbased on our examination of the records of the Company the Company has not made anypreferential allotment or private placement of shares or fully or partly convertibledebentures during the year. Accordingly paragraph 3(xiv) of the Order is not applicableto the Company.

(xv) According to the information and explanations given to us andbased on our examination of the records of the Company the Company has not entered intoany non-cash transactions with directors or persons connected with them. Accordinglyparagraph 3(xv) of the Order is not applicable to the Company.

(xvi) In our opinion and according to the information and explanationsgiven to us the Company is not required to be registered under Section 45-IA of theReserve Bank of India Act 1934. Accordingly paragraph 3(xvi) of the Order is notapplicable to the Company.

For B S R & Co. LLP

Chartered Accountants

FirmRs.s Registration No: 101248W/W-100022
Vijay Bhatt
Mumbai

Partner

30 April 2019 Membership No: 036647

ANNEXURE 'B' TO THE INDEPENDENT AUDITOR'S REPORT

(Referred to in our report of even date)

REPORT ON THE INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THEAFORESAID STANDALONE FINANCIAL STATEMENTS UNDER CLAUSE (I) OF SUB-SECTION 3 OF SECTION 143OF The cOMpANIES AcT 2013 OPINION

We have audited the internal financial controls with reference tofinancial statements of The Indian Hotels Company Limited ("the Company") as of31 March 2019 in conjunction with our audit of the standalone financial statements of theCompany for the year ended on that date.

In our opinion the Company has in all material respects adequateinternal financial controls with reference to financial statements and such internalfinancial controls were operating effectively as at 31 March 2019 based on the internalfinancial controls with reference to financial statements criteria established by theCompany considering the essential components of internal control stated in the GuidanceNote on Audit of Internal Financial Controls Over Financial Reporting issued by theInstitute of Chartered Accountants of India (the "Guidance Note").

MANAGEMENT'S RESPONSIBILITY FOR INTERNAL FINANCIAL CONTROLS

The Company's management and the Board of Directors are responsible forestablishing and maintaining internal financial controls based on the internal financialcontrols with reference to financial statements criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Note.These responsibilities include the design implementation and maintenance of adequateinternal financial controls that were operating effectively for ensuring the orderly andefficient conduct of its business including adherence to Company's policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information as required under the Companies Act 2013 (hereinafterreferred to as "the Act").

AUDITOR'S RESPONSIBILITY

Our responsibility is to express an opinion on the Company's internalfinancial controls with reference to financial statements based on our audit. We conductedour audit in accordance with the Guidance Note and the Standards on Auditing prescribedunder section 143(10) of the Act to the extent applicable to an audit of internalfinancial controls with reference to financial statements. Those Standards and theGuidance Note require that we comply with ethical requirements and plan and perform theaudit to obtain reasonable assurance about whether adequate internal financial controlswith reference to financial statements were established and maintained and whether suchcontrols operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence aboutthe adequacy of the internal financial controls with reference to financial statements andtheir operating effectiveness. Our audit of internal financial controls with reference tofinancial statements included obtaining an understanding of such internal financialcontrols assessing the risk that a material weakness exists and testing and evaluatingthe design and operating effectiveness of internal control based on the assessed risk. Theprocedures selected depend on the AUDITOR'S judgement including the assessment of therisks of material misstatement of the standalone financial statements whether due tofraud or error.

We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the Company's internal financialcontrols with reference to financial statements.

MEANING OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO STANDALONEFINANCIAL STATEMENTS

A Company's internal financial controls with reference to financialstatements is a process designed to provide reasonable assurance regarding the reliabilityof financial reporting and the preparation of financial statements for external purposesin accordance with generally accepted accounting principles. A Company's internalfinancial controls with reference to financial statements include those policies andprocedures that (1) pertain to the maintenance of records that in reasonable detailaccurately and fairly reflect the transactions and dispositions of the assets of theCompany; (2) provide reasonable assurance that transactions are recorded as necessary topermit preparation of financial statements in accordance with generally acceptedaccounting principles and that receipts and expenditures of the Company are being madeonly in accordance with authorisations of management and directors of the Company; and (3)provide reasonable assurance regarding prevention or timely detection of unauthorisedacquisition use or disposition of the Company's assets that could have a material effecton the financial statements.

INHERENT LIMITATIONS OF INTERNAL FINANGAL CONTROLS WITH REFERENCE TOSTANDALONE FINANCIAL STATEMENTS

Because of the inherent limitations of internal financial controls withreference to financial statements including the possibility of collusion or impropermanagement override of controls material misstatements due to error or fraud may occurand not be detected. Also projections of any evaluation of the internal financialcontrols with reference to financial statements to future periods are subject to the riskthat the internal financial controls with reference to financial statements may becomeinadequate because of changes in conditions or that the degree of compliance with thepolicies or procedures may deteriorate.

For B S R & Co. LLP

Chartered Accountants

FirmRs.s Registration No: 101248W/W-100022
Vijay Bhatt
Mumbai

Partner

30 April 2019 Membership No: 036647