James Hotels Ltd.
|BSE: 526558||Sector: Services|
|NSE: N.A.||ISIN Code: INE510D01014|
|BSE 00:00 | 17 Oct||James Hotels Ltd|
|NSE 05:30 | 01 Jan||James Hotels Ltd|
|BSE: 526558||Sector: Services|
|NSE: N.A.||ISIN Code: INE510D01014|
|BSE 00:00 | 17 Oct||James Hotels Ltd|
|NSE 05:30 | 01 Jan||James Hotels Ltd|
James Hotels Limited.
1. We have audited the accompanying financial statements of James Hotels Limited whichcomprise the Balance Sheet as at 31" March 2017 the Statement of Profit & Lossand the Cash Flow Statement for the year then ended and a summary of significantaccounting policies and other explanatory information.
2. The Company's Board of Directors is responsible for the matters stated in Section134(5) of the Companies Act 2013 with respect to the preparation and presentation 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. This responsibility also includes maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the Company and for preventing and detecting frauds and other irregularities;selection and application of appropriate accounting policies; making judgement andestimates that are reasonable and prudent; and design implementation and maintenance ofadequate internal financial controls that were operating effectively for ensuring theaccuracy and completeness of the accounting records relevant to the preparation andpresentation of the financial statements that give a true and fair view and are free frommaterial misstatement whether due to fraud or error.
3. Our responsibility is to express an opinion on these financial statements based onour audit. We have taken into account the provisions of the Act the accounting andauditing standards and matters which are required to be included in the audit report underthe provisions of the Act and the rules made thereunder.
4. 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.
5. An audit involves performing procedures to obtain audit evidence about the amountsand the disclosures in the financial statements. The procedures selected depend on theauditor's judgement 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. An audit also includes evaluating theappropriateness of the accounting policies used and the reasonableness of the accountingestimates made by the Company's Directors as well as evaluating the overall presentationof 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 financial statements.
6. Attention is invited to the following points of Note '4' of the financialstatements.
i) Note 4.1 - suspension of the powers of the Board of Directors and vesting ofmanagement with Interim Resolution Professional by Hon'ble NCLT Chandigarh.
ii) Note 4.2 - pending litigations/contingent liabilities against the Company.
iii) Note 4.3 - the Company has increased Authorised Share Capital from Rs.140000000/- to Rs. 520000000/- by passing a special resolution dated 14'"December 2011 by way of postal ballot; however the exact number of Equity Shares &Preference shares has not been specifically classified.
iv) Note 4.6 - defaults in repayment of dues to banks assignment of loans granted byState Bank of India to Asset Reconstruction Company (India) Limited. United Bank of IndiaPunjab National Bank and Asset Reconstruction Company (India) Limited issued notices underSection 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcementof Security Interest Act 2002 against which the Company has preferred an appeal with DebtRecovery Tribunal; the matter is subjudiced. Provision for interest accrued in absence ofconfirmation of balances by Banks has been made on accrual basis.
v) Note 4.8 - non-payment of fee for increase in Authorised Share Capital.
vi) Note 4.13 - rejection of application for approval of remuneration paid to theManaging Director by the Central Government.
7. Net-worth of the Company has completely eroded; the management is of the opinionthat the Company shall carry on its business as usual hence the financial statements ofthe Company have been prepared on going concern basis; the appropriateness of the saidbasis is inter-alia dependent upon future performance and profitability and presently weare unable to express an opinion on the same.
8. Subject to paragraph 6 & 7 above in our opinion and to the best of ourinformation and according to the explanations given to us the aforesaid financialstatements give the information required by the Act in the manner so required and give atrue and fair view inconformity with the accounting principles generally accepted inIndia of the state of affairs of the Company as at 31" March 2017 and its loss andits cash flows for the year ended on that date.
9. As required by the Companies (Auditor's Report) Order. 2016 issued by the CentralGovernment of India in terms of sub-section (11) of Section 143 of the Act we give in the"Annexure A" a statement on the matters specified in the paragraph 3 and 4 ofthe Order.
10. 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 & Loss and the Cash Flow Statementdealt with by this report are in 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;
(e) on the basis of the written representations received from the directors as on 31stMarch 2017 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March. 2017 from being appointed as a director in terms of Section164(2) of the Act;
(1) with respect to the adequacy of internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate report in "Anncxure 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 126.96.36.199 & 4.6).
ii. the Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses;
iii. there were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company; and
iv. the Company has provided requisite disclosures in its financial statements asregards its holdings and dealings in Specified Bank Notes as defined in the NotificationS.O. 3407(E) dated 08th November 2016 of the Ministry of Finance during the period from08"' November 2016 to 30"' December 2016 and these are in accordance with thebooks of accounts maintained by the Company (Refer note 4.20).
"AMNKXUKK A" TO THE INDEPENDENT AL'DITORS' REPORT
(Referred to in paragraph 9 of our report of even date on accounts of James HotelsLimited for the year ended 31" March 2017).
i. a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
b) The Company has a programme for phased physical verification of all its fixed assetswhich in our opinion is reasonable having regard to the size of the Company and thenature of its assets. As informed no material discrepancies were noticed on suchverification.
c) According to the information and explanations given by the management & on thebasis of examination of the records of the Company the Title Deed of immovable property(Land - on 99 years lease) is held in the name of the Company (Formerly Mehlll Restaurants& Hotels Ltd.)
ii. As explained to us the inventories were physically verified during the year by theManagement at reasonable intervals and no material discrepancies were noticed on physicalverification.
iii. According to the information and explanations given to us the Company has notgranted any loans secured or unsecured to Companies Firms Limited LiabilityPartnerships or other parties covered in the register maintained under Section 189 of theCompanies Act 2013. Accordingly the provisions of clause 3(iii) (a) (b) and (c) of theOrder are not applicable to the Company and hence not commented upon.
iv. According to the information and explanations given to us the Company has neithergranted loans or provided guarantees or securities nor made investments or providedguarantees or securities to the parties covered under Sections 185 & 186 of theCompanies Act 2013. Accordingly the provisions of clause 3(iv) of the Order are notapplicable to the Company.
v. The Company has not accepted any deposits from the public.
Unsecured loan taken from the Promoter in earlier years in pursuance of thestipulations of the Banks had been fully repaid by the Company without the consent of thelending Banks.
vi. The Central Government has not prescribed maintenance of cost records under Section148 of the Companies Act 2013 read with the Companies (Cost Records and Audit)Amendment Rules 2016. Accordingly the provisions of clause 3(vi) of the Order are notapplicable to the Company.
vii. a) According to the infonnation & explanations given to us and on the basis ofour examination of the records of the Company amounts deducted/accrued in the books ofaccount in respect of undisputed statutory dues including Provident Fund Employees StateInsurance Income Tax Sales Tax Service Tax Excise Duty Value Added Tax Cess andother material statutory dues have not been regularly deposited during the year by theCompany with the appropriate authorities. According to the information and explanationsgiven to us. no undisputed amounts payable in respect of Provident Fund Employees StateInsurance Income Tax Sales Tax Service Tax Excise Duty Value Added Tax Cess and othermaterial statutory dues were in arrears as at 31" March 2017 for a period of morethan six months from the date they became payable.
b) According to the information and explanations given to us there are no dues ofIncome Tax Sales Tax Service Tax Excise Duty Value Added Tax and Cess which have notbeen deposited with appropriate authorities on account of any dispute except as mentionedherein below:
viii. According to the information & explanations given to us and on the basis ofverification of records the Company has not defaulted in repayment of dues to FinancialInstitution; however the Company has defaulted in repayment of principal amount andinterest due to State Bank of India Punjab National Bank and United Bank of India;resultantly the accounts were classified as NPA; the amount of default remainedunconfirmed (refer note 4.6).
The Company has not borrowed/raised Loans from the Government and has not issued anydebentures
ix. The Company has not raised any money by way of initial public offer or furtherpublic offer (including debt instruments) during the year. Term loans availed by theCompany were prima-facie applied by the Company for the purposes for which loans wereobtained.
x. According to the information & explanations given to us no material fraud bythe Company or on the Company by its officers or employees has been noticed or reportedduring the course of our audit.
xi. According to the information and explanations given to us and based on ourexamination of the records of the Company Managerial Remuneration paid by the Company isin violation of Part II of Schedule-V of the Companies Act 2013 due to default inrepayment of dues to Banks.
The Company has not taken the prior approval of the Central Government as per theapplicable provisions of Section 197 read with Schedule-V of the Companies Act 2013 andApplication for approval of Remuneration paid to the Managing Director has been rejectedby the Central Government vide its order dated 15th March 2017 (refer note 4.13).
xii. The Company is not a Nidhi Company and hence reporting under clause 3(xii) of theOrder is not applicable.
xiii. According to the information and explanations given to us and based on ourexamination of the records of the Company transactions with the related parties are incompliance with Sections 177 and 188 of the Act where applicable and details of suchtransactions have been disclosed in the financial statements as required by the applicableaccounting standards.
xiv. According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year.
xv. According to the information and explanations given to us during the year theCompany has not entered into any non-cash transactions with its Directors or personsconnected to its Directors and hence provisions of Section 192 of the Companies Act 2013are not applicable. Accordingly the provisions of clause 3(xv) of the Order are notapplicable to the Company.
xvi. The Company is not required to be registered under Section 45-IA of the ReserveBank oflndiaAct 1934.
ANNKXI RI. B" TO THE INDEPENDENT AUDITORS' REPORT
Report on the Internal Financial Controls under Clause (i) of Sub Section 3 of Section143 of the Companies Act 2013.
We have audited the internal financial controls over financial reporting of JamesHotels Limited as of 3 Is' March 2017 in conjunction with our audit of thefinancial statements of the Company for the year ended on that date.
Management's Responsibility for Internal Financial Controls
The Company's management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls over Financial Reportingissued by the Institute of Chartered Accountants of India (ICAI). These responsibilitiesinclude the design implementation and maintenance of adequate internal financial controlsthat were operating effectively for ensuring the orderly and efficient conduct of itsbusiness including 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 Companies Act 2013.
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 Reportingand the Standards on Auditing issued by ICAI and deemed to be prescribed under Section143(10) of the Companies Act 2013 to the extent applicable to an audit of internalfinancial controls both applicable to an audit of Internal Financial Controls and bothissued by the Institute of Chartered Accountants of India. 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 controlsover financial reporting was established and maintained and if such controls operatedeffectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's 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 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 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 orprocedures may deteriorate.
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 31" March 2017 based onthe internal control over financial reporting criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Note onAudit of Internal Financial Controls Over Financial Reporting issued by the Institute ofChartered Accountants of India.