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Kamat Hotels (India) Ltd.

BSE: 526668 Sector: Services
NSE: KAMATHOTEL ISIN Code: INE967C01018
BSE 00:00 | 12 Nov 40.80 -0.10
(-0.24%)
OPEN

42.00

HIGH

42.00

LOW

40.70

NSE 00:00 | 12 Nov 40.85 -0.70
(-1.68%)
OPEN

41.55

HIGH

42.00

LOW

40.50

OPEN 42.00
PREVIOUS CLOSE 40.90
VOLUME 8410
52-Week high 158.85
52-Week low 38.05
P/E 4.20
Mkt Cap.(Rs cr) 96
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 42.00
CLOSE 40.90
VOLUME 8410
52-Week high 158.85
52-Week low 38.05
P/E 4.20
Mkt Cap.(Rs cr) 96
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

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

Company auditors report

To

The Members of

Kamat Hotels (India) Limited

Report on the standalone Ind AS financial statements

We have audited the accompanying standalone Ind AS financial statements of KamatHotels (India) Limited(‘the Company') which comprise the Balance Sheet as at 31stMarch 2018 the Statement of Profit and Loss (including other comprehensive income) theCash Flow Statement and the Statement of Changes in Equity for the year then ended and asummary of the significant accounting policies and other explanatory information (togetherreferred to as standalone Ind AS financial statements).

Management's responsibility for the standalone Ind AS 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 Ind AS financial statements that give a true and fair view of thefinancial position financial performance including other comprehensive income cash flowsand changes in equity of the Company in accordance with the accounting principlesgenerally accepted in India including the Indian Accounting Standards (Ind AS) prescribedunder section 133 of the Act read with relevant rules issued thereunder. 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 standalone Ind AS 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 Ind AS financialstatements based on our audit. We have taken into account the provisions of the Act theaccounting and auditing standards and matters which are required to be included in theaudit report under the provisions of the Act and the Rules made thereunder. We conductedour audit of the standalone Ind AS financial statements in accordance with the Standardson Auditing specified under Section 143(10) of the Act. Those Standards require that wecomply with ethical requirements and plan and perform the audit to obtain reasonableassurance about whether the standalone Ind AS financial statements are free from materialmisstatement. An audit involves performing procedures to obtain audit evidence about theamounts and the disclosures in the standalone Ind AS financial statements. The proceduresselected depend on the auditor's judgment including the assessment of the risks ofmaterial misstatement of the standalone Ind AS financial statements whether due to fraudor error. In making those risk assessments the auditor considers internal financialcontrol relevant to the Company's preparation of the standalone Ind AS financialstatements that give a true and fair view in order to design audit procedures that areappropriate in the circumstances. An audit also includes evaluating the appropriateness ofthe accounting policies used and the reasonableness of the accounting estimates made bythe Company's Directors as well as evaluating the overall presentation of the standaloneInd AS 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 Ind AS financial statements.

Opinion

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone Ind AS financial statements give the informationrequired by the Act in the manner so required and give a true and fair view in conformitywith the accounting principles generally accepted in India including the Ind AS of thefinancial position of the Company as at 31st March 2018 and its profitincluding other comprehensive income its cash flows and the changes in equity for theyear ended on that date.

Material uncertainty related to going concern

Reference is invited to note 51 to the standalone Ind AS financial statements.Company's accumulated losses are in excess of its paid up capital and reserves and itscurrent liabilities exceeds its current assets as on 31st March 2018. Theseevents or conditions indicate that a material uncertainty exists that may cast significantdoubt on the Company's ability to continue as a going concern. We are informed thatCompany's management is taking appropriate steps to mitigate the impact of accumulatedlosses and improve cash flows and in the opinion of management the fair values of theassets of the Company are significantly higher than the debts. In view of the above andconsidering management's opinion the standalone Ind AS financial statements have beenprepared on a going concern basis for the reasons stated in the said note.

Our opinion is not qualified in respect of above matter. Further the note on goingconcern was also given under emphasis of matter by previous auditor in its independentaudit report for financial year 2016-2017 dated 26th May 2017.

Other matters

The comparative financial statement of the Company for the year ended 31stMarch 2017 and the transition date opening balance sheet as at 1st April 2016included in these standalone Ind AS financial statements are based on the previouslyissued statutory standalone financial statements prepared in accordance with the Companies(Accounting Standards) Rules 2006 audited by the predecessor auditor whose report for theyear ended 31st March 2017 and 31st March 2016 dated 26thMay 2017 and 28th May 2016 respectively expressed an unmodified opinion onthose standalone financial statements as adjusted for the differences in the accountingprinciples adopted by the Company on transition to the Ind AS which have been audited byus.

Our opinion is not modified in respect of above matter.

Report on other legal and regulatory requirements

1. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government in terms of Section 143(11) of the Act we give in"Annexure A" a statement on the matters specified in paragraphs 3 and 4 of theOrder.

2. 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 and proper returnsadequate for the purposes of our audit have been received from the branches not visited byus.

c) The Balance Sheet the Statement of Profit and Loss (Including other comprehensiveincome) the Cash Flow Statement and Statement of Changes in Equity dealt with by thisReport are in agreement with the books of account.

d) In our opinion the aforesaid standalone Ind AS financial statements comply with theIndian Accounting Standards prescribed under section 133 of the Act read with relevantrules issued thereunder.

e) The matter described in ‘Material Uncertainty related to Going Concern'paragraph in our opinion may have an adverse impact on the functioning of the Company.

f) On the basis of the written representations received from the directors as on 31stMarch 2018 taken on record by the Board of Directors none of the directors aredisqualified as on 31st March 2018 from being appointed as a director in termsof Section 164(2) of the Act.

g) 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".

h) 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 (as amended) 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 if any on itsfinancial position in its standalone financial statements- Refer note 15.2 and 41.3(i) tothe standalone financial statements.

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.

For N. A. Shah Associates LLP

Chartered Accountants Firm Registration No.: 116560W/W100149

Sandeep Shah

Partner

Membership No. 37381

Place: Mumbai Date: 28th May 2018

Annexure A to the Independent Auditor's Report for the year ended 31st March2018 Referred to in ‘Other legal and regulatory requirements' of our report of evendate

i. In respect to fixed assets:

a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.

b) The fixed assets were physically verified during the year by the Management whichin our opinion provides for physical verification of all the fixed assets at reasonableintervals. According to the information and explanation given to us no materialdiscrepancies were noticed on such physical verification.

c) According to the information and explanations given to us and the records examinedby us and based on the examination of the registered sale deed / transfer deed andconveyance deed we report that the title deeds comprising all the immovable propertiesof land and building which are free hold are held in the name of the Company as at thebalance sheet date except with respect to freehold land situated at Nagpur having grossblock of ' 134.40 lakhs same is in the name of the Executive Chairman andManaging Director of the Company.

The Company also holds immovable properties ("buildings") that have beenbuilt on land taken on lease which are disclosed as a part of the property plant andequipment and investment property of the Company in the standalone financial statements.The lease agreements in these cases are in the name of the Company.

ii. 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.

iii. According to the information and explanation given to us the Company has notgranted loans secured or unsecured to firms limited liability partnership and otherparties. The Company has granted unsecured loan to companies covered in the registermaintained under section 189 of the Act. In respect of such loans

(a) With respect to terms and conditions for loans granted to wholly owned subsidiarycompanies [Orchid Hotels Pune Private Limited (OHPPL) and Mahodadhi Palace Private Limited(MPPL)] due to adverse factors which have affected the financial position of theseentities interest is waived off by the Company till the financial position of theseentities improves. Further in view of these developments the aforesaid loan andoutstanding interest thereon have been classified by the Company as doubtful of recoveryand a provision has been made in the accounts for earlier year. In our opinion in view ofthe above the terms and conditions of the above loans are prejudicial to the interest ofthe Company.

(b) As mentioned above interest is waived off by the Company. The terms of thearrangements stipulate that the principal is refundable as and when funds are availablewith the borrowers. Since the refund of principal is dependent on borrower question ofour comment on regularity of receipt of principal does not arise.

(c) As stated above interest is waived off by the Company and considering the terms ofrepayment of principal the question of our comment on the overdue amount for more thanninety days does not arise.

iv. According to the information and explanation given to us the Company has notgranted any loan or given any guarantee or provided any security to any of its directorsor any person connected to directors which attracts the provisions of section 185 of theAct from the date when it became effective. The Company has not granted any loan madeinvestment given any guarantee or provided securities from the date when this sectionbecome effective for which compliance u/s 186 of the Act is required. In view of theabove our comment on compliance of Section 185 and 186 of the Act is not required.

v. In our opinion and according to the information and explanation given to us theCompany has not accepted any deposits from the public within the meaning of provisions ofSection 73 to 76 of the Act and the rules framed there under. We have been informed thatno order relating to Company has been passed by the Company Law Board or National CompanyLaw Tribunal or Reserve Bank of India or any Court or any other Tribunal.

vi. The Central Government has not prescribed maintenance of cost records under section148(1) of the Act. Accordingly clause (vi) of paragraph 3 the Order is not applicable tothe Company.

vii. In respect of statutory dues:

(a) According to the information and explanations given to us and on the basis of ourexamination of records of the Company in respect of amounts deducted / accrued in thebooks of accounts the Company has been generally regular in depositing undisputedstatutory dues including provident fund employees' state insurance professional taxincome tax sales tax service tax duty of customs duty of excise value added tax cessand any other material statutory dues as applicable to the Company during the periodwith the appropriate authorities except few delays in payment of goods and service tax(GST). According to the information and explanation given to us there are no undisputedamounts payable in respect of statutory dues outstanding for more than six months from thedate they become payable except goods and service tax of ' 1.14 lakhspertaining to period July to August 2017.

(b) According to the records of the Company and information and explanations given tous there are no dues of income tax sales tax service tax GST customs duty exciseduty or cess which have not been deposited with appropriate authorities on account of anydispute except as tabulated under:

Name of the Statute Nature of the dues Amount (' in lakhs)* Period to which it pertains Forum where dispute is pending
Maharashtra Value Added Tax Act 2002 MVAT 15.64 2006-07 Joint Commissioner of Sales Tax (Appeals)
MVAT 12.42 2007-08 Joint Commissioner of Sales Tax (Appeals)
MVAT 13.95 2008-09 Joint Commissioner of Sales Tax (Appeals)
MVAT 6.91 2010-11 Joint Commissioner of Sales Tax (Appeals)
MVAT 274.97 2011-12 Joint Commissioner of Sales Tax (Appeals)
MVAT 37.09 2012-13 Joint Commissioner of Sales Tax (Appeals)
MVAT 5.01 2013-14 Joint Commissioner of Sales Tax (Appeals)
Maharashtra Tax on Luxuries Act 1987 Luxury Tax 1.11 2011-12 Joint Commissioner of Sales Tax (Appeals)
Luxury Tax 13.90 2012-13 Joint Commissioner of Sales Tax (LTU 4)
Luxury Tax 14.58 2013-14 Joint Commissioner of Sales Tax (LTU 4)
Finance Act 1994 Service Tax 0.68 2012-13 Commissioner of Service Tax (Appeals) IV
Service Tax 0.52 2013-14 Commissioner of Service Tax (Appeals) IV
Service Tax 2.72 2013-14 Commissioner of Service Tax (Appeals) IV

* Net of amount paid under protest of ' 22.00 lakhs.

viii. In our opinion and according to the information and explanations given to us theCompany has defaulted in payment of interest and repayment of principal to banks andfinancial institution during the year as tabulated below:

Sr.No. Name of the lender Amount of default- (' in lakhs) Period of delay Remarks
1 Canara bank (*) 5839.31 1124 days Principal
3572.80 180 to 1276 days Interest
2 Central Bank of India (**) 1278.45 868 days Principal
676.73 89 to 1124 days Interest
3 Asset Reconstruction Company Enterprise Limited (Assigned by Tourism Finance Corporation of India) 258.00 1 to 25 days Principal
4 Edelweiss Asset Reconstruction Limited (Assigned by Larsen & Toubro Infrastructure Finance Company Limited) 143.00 4 to 11 days Principal
5 Asset Reconstruction Company Enterprise Limited (Assigned by State Bank of India) 1000.00 1 to 73 days Principal
6 Asset Reconstruction Company Enterprise Limited (Assigned by Andhra Bank) 300.00 1 to 54 days Principal

Notes:

(*) This loan is settled and repaid fully during the year.

(**) This loan is settled during the year and repayment schedule has been revised.Accordingly there is no continuing default at the year end.

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

ix. The Company has not raised money by way of initial public offer or further publicoffer [including debt instruments] & term loans during the year nor does it haveopening unutilized term loan balance hence clause (ix) of paragraph 3 of the Order is notapplicable.

x. During the course of our examination of the books of account and records of theCompany carried out in accordance with generally accepted auditing practices in India andaccording to the information and explanations given to us we have neither come across anyincidence of fraud by the Company or any fraud on the Company by its employees / officersnor have been informed of any such case by the management.

xi. In our opinion and accordingly information and explanation given to us managerialremuneration has been paid / provided by the Company in accordance with the requisiteapprovals mandated by the provisions of section 197 read with Schedule V to the Act.

xii. In our opinion the Company is not a Nidhi company. Therefore clause (xii) ofparagraph 3 the Order is not applicable.

xiii. According to the information and explanations given to us and on the basis of ourexamination of records of the Company transaction with related parties are in compliancewith Section 188 of Act and have been disclosed in the standalone Ind AS financialstatements as required under IndAS24 Related Party Disclosure specified under section 133of the Act [Also refer note 43 of standalone Ind AS financial statements] read with Rule7 of the Companies (Accounts) Rules 2014.

xiv. The Company has not made any preferential allotment or private placement of sharesor fully or partly convertible debentures during the year. Therefore question of ourcomment on compliance with provisions of Section 42 of the Act does not arise.

xv. In our opinion and according to the information and explanations given to us theCompany has not entered into any non-cash transaction with directors or person connectedwith Director. Therefore question of our comment on compliance with provisions of Section192 of the Act does not arise.

xvi. In our opinion and according to the information and explanations given to us theCompany is not required to be registered under Section 45-IA of the Reserve Bank of IndiaAct 1934.

For N. A. Shah Associates LLP

Chartered Accountants Firm Registration No.116560W/W100149

Sandeep Shah

Place: Mumbai Partner

Date: 28th May 2018

Membership No. 37381

Annexure B to the Independent Auditor's Report

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 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 31st March 2018 inconjunction with our audit of the standalone Ind AS financial statements of the Companyfor 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'). Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to Company's policies the safeguarding ofits assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the Act.

Auditors' 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 ICAI and deemedto be prescribed 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 ICAI. Those Standards and the Guidance Note require that we complywith ethical requirements and plan and perform the audit to obtain reasonable assuranceabout 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 judgment including the assessment of the risks ofmaterial misstatement of the standalone Ind AS financial statements whether due to fraudor error.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the standalone Ind AS financial statements.

Meaning of Internal Financial Controls over Financial Reporting

The Company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of standalone Ind AS financial statements for external purposes in accordancewith generally accepted accounting principles. The Company's internal financial controlover financial reporting includes those policies and procedures that (1) pertain to themaintenance of records that in reasonable detail accurately and fairly reflect thetransactions and dispositions of the assets of the Company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of standaloneInd AS financial statements in accordance with generally accepted accounting principlesand that receipts and expenditures of the Company are being made only in accordance withauthorizations of management and directors of the Company; and (3) provide reasonableassurance regarding prevention or timely detection of unauthorized acquisition use ordisposition of the Company's assets that could have a material effect on the standaloneInd AS 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 31st March 2018based on the 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 ICAI.

For N. A. Shah Associates LLP

Chartered Accountants Firm

Registration No.116560W/W100149

Sandeep Shah

Partner

Membership No. 37381

Place: Mumbai Date: 28th May 2018