The Members of
Kamat Hotels (India) Limited
Report on the standalone financial statements
We have audited the accompanying standalone financial statements of Kamat Hotels(India) Limited (the Company') which comprise the standalone balance sheet as at31st March 2021 the standalone statement of profit and loss (including othercomprehensive income) the standalone statement of changes in equity and the standalonestatement of cash flows for the year then ended and a summary of the significantaccounting policies and other explanatory information (hereinafter referred to as"the standalone financial statements"). In our opinion and to the best of ourinformation and according to the explanations given to us the aforesaid standalonefinancial statements give the information required by the Companies Act 2013 ("theAct") in the manner so required and give a true and fair view in conformity with theaccounting principles generally accepted in India of the state of affairsof the Companyas at 31st March 2021 and loss and other comprehensive income changes inequity and its cash flows for the year ended on that date.
Basis for 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 Standards 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 ("ICAI") together with the ethical requirements that are relevant to ouraudit of the standalone financial statements under the provisions of the Act and the Rulesmade thereunder and we have fulfilled our ethical responsibilities in accordance withthese requirements and the Code of Ethics. We believe the audit evidence we have obtainedis sufficient and appropriate to provide a basis for our
Material uncertainty related to going concern
Reference is invited to note 55 of the standalone financial statements. Company'saccumulated losses are in excess of its paid up capital and reserves as at 31st March 2021and its current liabilities are significantly greater than the current assets as on 31stMarch 2021 and 31st March 2020. Further in respect of loans there are non-payment ofstipulated instalments comprising of principal and interest. In the opinion of themanagement considering management's action to mitigate the impact of COVID-19 asdescribed in note 56 of the standalone financial statements which is also demonstratedthrough positive earning before interest taxes and depreciation (EBITDA) restructuringwhich are approved by the lenders and management's request for seeking extension of theloan dues as stated in note 27.4(d) of the standalone financial refer para (a) in emphasisof matter paragraph below) the future business prospects from prime hotel propertiessituated nearby domestic and international airports in Mumbai the fact that the fairvalues of the assets of the Company are significantly higher than the borrowings/debts andthat the Company has been exploring possibilities to divest/liquidate some of itsproperties these standalone financial statements have been prepared on a going concernbasis which contemplates realisation of assets and settlement of liabilities in the normalcourse of Company's business.
Our opinion is not modified in respect of this matter. Further the materialuncertainty related to going concern para was also reported in our independent auditor'sreport for financial year 2019-2020 dated 30th July 2020 and financial year 2018-2019dated 27th May 2019 and our opinion was not modified inthe . previous years also
Emphasis of matter
(a) Attention is invited to note 27.4(d) of the standalone financial statements. As on31st March 2021 there are non-payment of stipulated instalments comprising of principaland interest due to the lenders. The cumulative unpaid instalments amounts to Rs. 9679.96lakhs. Considering COVID-19 pandemic the Company had sent signed letters by e-mails inthe month of March 2020 and June 2020 to various lenders (except Kotak Bank) and had sentan e-mail in September 2020 to Kotak Bank for extension of the dues upto December 2020.In-principle approval was received in writing from one of the lenders for extension ofthree EMI's amounting to Rs. 143 lakhs each. In respect of further restructuring proposalssubmitted by the Company with certain lenders in-principal approval was received inwriting from two lenders and the Kotak Bank restructured the outstanding loan whereby itsanctioned Funded Interest Term Loan (FITL) and additional finance by way of WorkingCapital Term Loan (WCTL) of Rs. 360 lakhs under Emergency Credit Line Guarantee Scheme2.0. The Company has executed necessaryloandocumentswithKotakBankafterthecloseofthefinancialyear. In respect of balance threelenders though written confirmation from lenders are awaited all lenders have verballyagreed for the extension whenever sought. In the absence of written communication from thelenders approving the extension we are unable to validate the extension granted to theCompany by the lenders. In view of the above in the opinion of the management event ofdefault is not triggered and therefore there is no other accounting implications andreclassification of non-current borrowings to current liabilities is not required theperiod in which the Company and the lenders agree on the revised terms.
(b) Reference is invited to note 56 of the standalone financial statements in respectof the possible effect of uncertainties relating to COVID-19 pandemic on the Company'sfinancial performance as assessed by the management. Our opinion is not modified inrespect of above matters. In respect of above matters we had also reported the emphasisof matter in independent auditor's report for financial year 2019-2020 dated 30th July2020 and financial year 2018-2019 dated 27th May 2019 and our opinion was not modified inthe previous years also.
Key Audit Matters
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone of the current year. These matters wereaddressed in the context of our audit of the standalone financial statements as a wholeand in forming our opinion thereon and we do not provide a separate opinion on thesematters. In addition to the matter described in the Material Uncertainty Related toGoing Concern' and Emphasis of matter' paragraph section above we have determinedthe matters described below to be the key audit matters to be communicated in our report:
|Key Audit Matter ||How our audit addressed the Key Audit Matter |
|Corporate guarantee given on behalf of wholly owned subsidiary and joint venture entity - accounting treatment ||This matter is discussed with the management |
|Refer note 2.5(x) and note 10.1 of notes to standalone financial statement. ||We have relied on the explanations given by the management that |
|The Company has given corporate guarantee on behalf of subsidiary and joint venture entity towards loan facilities from banks. The subsidiary and joint venture have been incurring losses. Net-worth of subsidiary company is fully eroded. ||- with respect to wholly owned subsidiary company in view of the financial condition of the Company based on settlement arrangement between the subsidiary lender and holding company the modalities of which are being worked out in view of the management estimate no liability would arise on the Company on account of this guarantee. |
|Assessment of obligation towards the corporate guarantee and consequential recoverability has been identified as a key audit matter due to: ||- with respect to the joint venture entity (JV) considering settlement of loan of the lender and expected improvement in financial position of the JV it would be able to refinance the |
|- Significance of the carrying amount of balances. ||outstanding debt and meet the debt obligations as and when they fall due out of its own operations. |
|The assessment requires management to make significant estimates concerning the estimated future cash flows qualitative assessments of the viability of the business carried out by the subsidiary and joint venture including any possible impact arising out of the COVID-19 pandemic on these estimates. ||We assessed the conclusions reached by management and those charged with governance on account of various estimates and judgements including possible impact of COVID-19 pandemic as well as the disclosures made in the financial statements as per Ind AS 109 Financial Instruments. |
|- Changes to any of these assumptions could lead to material changes in the estimated obligation and recoverable amounts. || |
Due to COVID-19 outbreak and related lockdown in various states where the properties ofthe Company are located we could not be present at such properties during the physicalverification of inventories carried out by the management. We have relied on the same andperformed alternate procedures to audit the existence of inventory as at year end.
Our opinion is not modified in respect of the above matter.
Information other than the standalone financial statements and auditor's report thereon
The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Management Discussion and AnalysisBoard's Report including Annexures to Board's Report Corporate Governance andShareholder's Information but does not include the standalone financialstatements and ourauditor's report thereon. These reports are expected to be made available to us after thedate of this auditor's report.
Our opinion on the standalone financial statements does not cover the other informationand we do not express any form of assurance conclusion thereon.
In connection with our audit of the standalone financial statements our responsibilityis to read the other information identified above when it becomes available and in doingso consider whether the other information is materially inconsistent with the standalonefinancialstatements or our knowledge obtained in the audit or otherwise appears to bematerially misstated.
When we read the other information if we conclude that there is a materialmisstatement therein we are required to communicate the matter to those charged withgovernance and make other appropriate reporting as prescribed.
Management's Responsibilities for the standalone financial statements
The Company's Board of Directors is responsible for the matters stated in Section134(5) of the Act with respect to the preparation of these standalone financial statementsthat give a true and fair view of the financial position financial performance totalcomprehensive income changes in equity and cash flows of the Company in accordance withthe accounting principles generally accepted in India including the Ind AS prescribedunder Section 133 of the Act read with the Companies (Indian Accounting Standard) Rules2015 as amended from time to time. This responsibility also includes maintenance ofadequate accounting records in accordance with the provisions of the Act for safeguardingthe assets of the Company and for preventing and detecting frauds and otherirregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the standalone financial statement that give a true andfair view and are free from material misstatement whether due to fraud or error.
In preparing the standalone financial statements management is responsible forassessing the Company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessmanagement either intends to liquidate the Company or to cease operations or has norealistic alternative but to do so.
The Board of Directors are also responsible for overseeing the Company's financialreporting process.
Auditor's responsibilities for the audit of the standalone financial statements
Our objectives are to obtain reasonable assurance about whether the standalonefinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these standalone financial statements As part of an audit inaccordance with SAs we exercise professional judgment and maintain professionalskepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the standalone financialstatements whether due to fraud or perform audit procedures responsive to those risksand obtain audit evidence that is sufficient and appropriate to provide a basis for ouropinion. The risk of not detecting a material misstatement resulting from fraud is higherthan for one resulting from error as fraud may involve collusion forgery intentionalomissions misrepresentations or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to designaudit procedures that are appropriate in the circumstances. Under section 143(3)(i) of theAct we are also responsible for expressing our opinion on whether the Company hasadequate internal financial controls system in place and the operating effectiveness ofsuch controls.
Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basis ofaccounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe standalone financial statements or if such disclosures are inadequate to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor's report. However future events or conditions may cause the Company to cease tocontinue as a going concern.
Evaluate the overall presentation structure and content of the standalone financialstatements including the disclosures and whether the standalone financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation Materiality is the magnitude of misstatements in the standalone financialstatements that individually or in aggregate makes economic decisions of a reasonablyknowledgeable user of the standalone financial statements may be influenced. We considerquantitative materiality and qualitative factors in (i) planning the scope of our auditwork and in evaluating the results of our work; and (ii) to evaluate the effect of anyidentified misstatements in the standalone financial statements.
We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our We also providethose charged with governance with a statement that we have complied with relevant ethicalrequirements regarding independence and to communicate with them all relationships andother matters that may reasonably be thought to bear on our independence and whereapplicable related safeguards.
From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of standalone financial statements ofthe current period and are therefore the key audit matters. We describe these matters inour auditor's report unless law or regulation precludes public disclosure about the matteror when in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.
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 andobtained all the information and explanations which to the best of our knowledge andbelief 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 including Other ComprehensiveIncome Statement of Changes in Equity and the Statement of Cash Flows dealt with by thisReport are in agreement with the books of account.
d) In our opinion the aforesaid standalone financial statements comply with the Ind ASprescribed under section 133 of the Act read with relevant Rules made thereunder.
e) The matter described in Material uncertainty related to going concern' andmatters described in para (a) and (b) in Emphasis of matter paragraph in ouropinion 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 2021 taken on record by the Board of Directors none of the directors aredisqualified as on 31 st March 2021 from being appointed as a director in terms ofSection 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". Our report expresses an unmodified opinion onthe adequacy and operating effectiveness of the Company's internal financial controls overfinancial
h) With respect to other matters to be includes in the Auditors Report in accordancewith the requirements of section 197(16) of the Act as amended:
Further to note 47.3(c) of the standalone financial statements and considering thesubsequent recovery of excess remuneration the Company has complied with the requirementsof managerial remuneration as prescribed in section 197 of the Act.
i) 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 - Refer note 15.1 and 45.3(i) of the 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.
Annexure A to the Independent Auditor's Report for the year ended 31st March 2021
[Referred to in paragraph 2(f) under the heading "Report on other legal andregulatory requirements" of our report of even date] 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 by the management which in our opinionprovides for physical verification of all the fixed assets at reasonable intervals.According to the information and explanation given to us no material discrepancies werenoticed 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 Rs. 134.40 lakhs same is in the name of the Executive Chairman and ManagingDirector of the Company. In respect of title deeds which are deposited with lenders wehave verified the title from photocopies of those agreements and we have relied oncertificate provided by the trustees/lenders.
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 except the leaseagreement of property located in Konark India having gross block of Rs. Nil lakhs isexpired and we are informed that the application made for its renewal is pending for finalapproval from the government authorities
. ii. In our opinion physical verificationof 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 had granted unsecured loan to companies covered in the registermaintained under section 189 of the Act in earlier years. 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) (Also refer note 10.1) and MahodadhiPalace Private Limited (MPPL)] due to adverse factors which have affected the financialposition of these entities interest is waived off by the Company till the financialposition of these entities improves in view of these developments the aforesaid loans andoutstanding interest thereon had been classified by the Company as doubtful of recoveryand provision had been made in the accounts in earlier years. In our opinion in view ofthe above and as reported earlier terms and conditions of the above loans areprejudicial to the interest of the 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 availability of fundswith the borrower question of our comment on regularity of receipt of principal does notarise.
(c) As stated above interest is waived off by the Company and considering the terms ofrepayment of principal no amounts were due. Therefore the question of our comment on theoverdue amount for more than ninety 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 income tax salestax service tax duty of customs duty of excise cess and any other material statutorydues as applicable to the Company during the period with the appropriate authoritiesexcept minor delays in payment of professional tax Maharashtra Value Added Tax (MVAT) andsignificantdelays in tax deducted at source and Goods and Services Tax (GST). According tothe information and explanation given to us and based on our examination there are noundisputed amounts payable in respect of statutory dues outstanding for more than sixmonths from the date they become payable except interest on GST amounting to Rs. 23.94lakhs which is provided by the Company on estimated basis on excess utilization of inputtax credit.
(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:
| ||the dues ||(Rupees in lakhs)* ||which it pertains || |
|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 ||0.67 ||2012-13 ||Commissioner of Service Tax (Appeals) |
| ||Service Tax ||0.43 ||2013-14 ||Commissioner of Service Tax (Appeals) |
| ||Service Tax ||77.54 ||2014-15 ||CESTAT West Zonal Bench Mumbai |
| ||Service Tax ||2.68 ||2014-15 ||CESTAT West Zonal Bench Mumbai |
| ||Service Tax ||28.98 ||2015-16 ||Deputy Commissioner Service Tax |
| ||Service Tax ||30.40 ||2016-17 ||Assistant Commissioner Service Tax |
| ||Service Tax ||3.41 ||2017-18 ||Assistant Commissioner Service Tax |
|Income-tax Act 1961 ||Income Tax ||214.74 ||2012-13 ||Commissioner of Income Tax Appeal |
| ||Income Tax ||5453.27 ||2016-17 ||Commissioner of Income Tax Appeal |
* Net of amount paid under protest of Rs. 22.22 lakhs. viii. In our opinion andaccording to the information and explanations given to us the Company has defaulted inpayment of interest and repayment of principal to banks and financial institution duringthe year(before considering the restructuring / extensions) as tabulated below:
|Sr. No. Name of the lender (**) ||Amount of default- (Rs. in lakhs) ||Period of delay ||Remarks |
|1 Phoenix ARC Private Limited (Assigned by Allahabad Bank) ||1120.00 ||1 to 398 Days ||Principal |
| ||352.77 ||1 to 398 Days ||Interest |
|2 Asset Reconstruction Company Enterprise Limited (Assigned by Andhra Bank) ||2200.72 ||1 to 457 Days ||Principal |
| ||434.28 ||1 to 457 Days ||Interest |
|3 India SME Asset Reconstruction Company Limited (Assigned by Dena Bank) ||263.50 ||1 to 366 Days ||Principal |
|4 Edelweiss Asset Reconstruction Limited (Assigned by Larsen & Toubro Infrastructure Finance Company Limited) ||809.00 ||1 to 366 Days ||Principal |
|5 Asset Reconstruction Company Enterprise Limited (Assigned by State Bank of India) ||1483.28 ||1 to 457 Days ||Principal |
| ||1866.72 ||1 to 457 Days ||Interest |
|6 India SME Asset Reconstruction Company Limited (Assigned by Syndicate Bank) ||451.50 ||1 to 366 Days ||Principal |
|7 Asset Reconstruction Company Enterprise Limited (Assigned by Tourism ||262.81 ||1 to 457 Days ||Principal |
|Finance Corporation of India) ||487.19 ||1 to 457 Days ||Interest |
|8 Invent Assets Securitization & Reconstruction Private Limited (Assigned by Vijaya Bank) ||85.00 ||1 to 412 Days ||Principal |
|9 Kotak Mahindra Bank ||240.43 ||12 to 193 Days ||Principal |
| ||140.32 ||12 to 132 Days ||Interest |
| ||19.56 ||12 Days ||Interest |
(**) The Company has requested all the lenders in the previous year for the extensionof the dues considering the impact on account of COVID-19. Refer para (a) in emphasis ofmatters section above.
The Company has not borrowed any money from the Government or by way of issue ofdebentures.
ix. The Company has not raised any moneys by way of initial public offer or furtherpublic offer (including debt instruments). According to the information and explanationgiven to us the monies raised by way of term loans have been applied on an overallbasis for the purpose for which they are obtained. x. During the course of ourexamination of the books of account and records of the Company carried out in accordancewith generally accepted auditing practices in India and according to the information andexplanations given to us we have neither come across any incidence of fraud by theCompany or any fraud on the Company by its employees / officers nor have been informed ofany such case by the management. xi. In our opinion and according to information andexplanation given to us and as stated in note 47.3(c) of the standalone financialstatements and considering the subsequent recovery of excess remuneration the Company hascomplied with the requirements of managerial remuneration as prescribed in section 197read with schedule V of the Act. xii. In our opinion the Company is not a Nidhi company.Therefore clause (xii) of paragraph 3 of the Order is not applicable. xiii. According tothe information and explanations given to us and on the basis of our examination ofrecords of the Company transaction with related parties are in compliance with Section177 and 188 of the Act and details have been disclosed in the standalone financialstatements as required under Ind AS 24 Related Party Disclosure specified under section133 of the Act [Also refer note 47 of standalone financial statements] read with Rule 7of the Companies (Accounts) Rules 2014. xiv. The Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year. Therefore question of our comment on compliance with provisions of Section 42of the Act does not arise. xv. In our opinion and according to the information andexplanations given to us the Company has not entered into any non-cash transaction withdirectors or person connected with director. Therefore question of our comment oncompliance with provisions of Section 192 of the Act does not arise. xvi. In our opinionand according to the information and explanations given to us the Company is not requiredto be registered under Section 45-IA of the Reserve Bank of India Act 1934.
Annexure B to the Independent Auditor's Report for the year ended 31stMarch 2021
[Referred to in paragraph 2(f) under the heading "Report on other legal andregulatory requirements" of our report of even date]
Report on the Internal Financial Controls under section 143(3)(i) of theCompanies Act 2013 (the Act')
We have audited the internal financial controls over financial reporting of KamatHotels (India) Limited ("the Company") as of 31st March 2021 inconjunction with our audit of the standalone financial statements of the Company for theyear ended on that date.
Operating effectiveness of processes Information Technology and General ControlsDirect and Indirect Taxation Book Closure Treasury and Property Plant & Equipment'sfor current year have been tested and complied by the internal auditors based ondiscussion with concerned process owners past experience and verification of detailswherever possible. Due to the pandemic situation and limited access auditors were unableto conduct full-fledged review. In this respect we have performed alternate proceduresfor the In our opinion read with our comments above to the best of our information andaccording to the explanations given to us the Company has in all material respects anadequate internal financial controls system over financial reporting and such internalfinancial controls over financial reporting were operating effectively as at 31st March2021 based on the internalcontroloverfinancialreporting 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 the ICAI.
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 Reporting (the"Guidance Note") issued by the Institute of Chartered Accountants of India.These responsibilities include the design implementation and maintenance of adequateinternal financial controls that were operating effectively for ensuring the orderly andconduct of its business including adherence to Company's policies the safeguarding ofits assets the prevention and detection of frauds and efficient errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the Act.
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 and the Standards on Auditing issued by ICAI and deemed to beprescribed under section 143(10) of the Act to the extent applicable to an audit ofinternal financial controls both applicable to an audit of Internal Financial Controlsand both issued by the 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 the design and internalfinancial operating effectiveness ofinternal control based on the assessed risk. The procedures selected depend on theauditor's judgment including the assessment of the risks of material misstatement of thestandalone financial statements whether due to fraud or .
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide internal financial controls system over financial reporting.
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 financial statements for external purposes in accordance withgenerally accepted accounting principles. The Company's internal financial control overfinancial reporting includes those policies and 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 standalone financialstatements in accordance with generally accepted accounting principles and that receiptsand expenditures 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 standalone financial statements.
Inherent Limitations of Internal Financial Controls Over Financial Reporting controlsover financial reporting including the possibility of collusion or improper managementBecauseoftheinherentlimitationsofinternalfinancial override of controls materialmisstatements due to error or fraud may occur and not be detected. Also projections ofany evaluation of the internal periods are subject to the risk that the internal financialcontrol over financial reporting may financial become inadequate because of changes inconditions or that the degree of compliance with the policies or procedures maydeteriorate.
For N. A. Shah Associates LLP
Firm Registration No.116560W/W100149
Membership No. 37381
Place: Mumbai Date: 29th June 2021