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Lemon Tree Hotels Ltd.

BSE: 541233 Sector: Services
NSE: LEMONTREE ISIN Code: INE970X01018
BSE 10:37 | 30 Mar 23.40 0.15
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NSE 10:29 | 30 Mar 22.80 -0.40
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OPEN 23.25
PREVIOUS CLOSE 23.25
VOLUME 4548
52-Week high 90.90
52-Week low 21.35
P/E 29.62
Mkt Cap.(Rs cr) 1,854
Buy Price 22.70
Buy Qty 1088.00
Sell Price 22.85
Sell Qty 477.00
OPEN 23.25
CLOSE 23.25
VOLUME 4548
52-Week high 90.90
52-Week low 21.35
P/E 29.62
Mkt Cap.(Rs cr) 1,854
Buy Price 22.70
Buy Qty 1088.00
Sell Price 22.85
Sell Qty 477.00

Lemon Tree Hotels Ltd. (LEMONTREE) - Auditors Report

Company auditors report

To The Members of Lemon Tree Hotels Limited

Report on the Audit of the Standalone Financial Statements

Opinion

We have audited the accompanying standalone financial statements ofLemon Tree Hotels Limited ("the Company") which comprise the Balance Sheet asat March 2019 and the Statement of Profit and Loss (including Other ComprehensiveIncome) the Cash Flow Statement and the Statement of Changes in Equity for the year thenended and a summary of significant accounting policies and other explanatory information(herein referred to as "the standalone financial statements").

In our opinion and to the best of our information and according to theexplanations given to us and based on the consideration of reports of the other auditorson separate financial statements of the Trust referred to in the Other Matters sectionbelow the aforesaid standalone financial statements give the information required by theCompanies Act 2013 ("the Act") in the manner so required and give a true andfair view in conformity with the Indian Accounting Standards prescribed under section 133of the Act read with the Companies (Indian Accounting Standards) Rules 2015 as amended("Ind AS") and other accounting principles generally accepted in India of thestate of affairs of the Company as at March 31 2019 and its profit total comprehensiveincome its cash flows and the changes in equity for the year ended on that date.

Basis for Opinion

We conducted our audit of the standalone financial statements inaccordance with the Standards on Auditing specified under section 143(10) of the Act(SAs). Our responsibilities under those Standards are further described in theAuditor's Responsibility for the Audit of the Standalone Financial Statements sectionof our report. We are independent of the Company in accordance with the Code of Ethicsissued by the Institute of Chartered Accountants of India (ICAI) together with the ethicalrequirements that are relevant to our audit of the standalone financial statements underthe provisions of the Act and the Rules made thereunder and we have fulfilled our otherethical responsibilities in accordance with these requirements and the ICAI's Code ofEthics. We believe that the audit evidence obtained by us and the audit evidence obtainedby the other auditors in terms of their reports referred to in the OtherMatterssectionbelowissufficient and appropriate to provide a basis for our audit opinionon the standalone financial statements.

Key Audit Matters

Key audit matters are those matters that in our professional judgmentwere of most significance in our audit of the standalone financial statements of thecurrent period. These matters were addressed in the context of our audit of the standalonefinancial statements as a whole and in forming our opinion thereon and we do not providea separate opinion on these matters. We have determined the matters described below to bethe key audit matters to be communicated in our report.

Key Audit Matter Auditor's Response
Impairment of Investment in subsidiaries and associates (Refer Note 7 to the Standalone Financial Statements) Principal audit procedures performed:
As at 31 March 2019 the Company has investment in subsidiaries and associates with an aggregated carrying amount of र 72184 lacs (51% of the total assets of the Company) as disclosed in Note 7 to the financial statements. We assessed the Company's evaluation on the reasonableness of the indicators and impairment testing of investments in subsidiaries and associates.
Few entities had incurred losses after tax for the financial year ended March 31 2019. We inquired management about the understanding of subsidiary's business and strategies historical performance and free cash flows for the last 5 years. In case of losses of 2 subsidiaries we obtained the projected cash flows of the subsidiary.
This increased the risk that the carrying amount of the Company's investment in subsidiaries might exceed their recoverable amount. We held discussions with management to understand the basis for the assumptions used verified the mathematical accuracy of the free cash flow model and challenged the reasonableness of the discounted cash flow projections and the evidence supporting the underlying assumptions used by the Company by comparing to approved budgets considering budget accuracy cost inflation and discount rates.
We identified the carrying value of the Company's investment in subsidiaries as a key audit matter because of its significance to total assets in the Company's financial statements and it required us to exercise judgement in evaluating the appropriateness of the assumptions used in deriving the recoverable amount to assess the adequacy of management impairment loss provision.

Information Other than the Financial Statements and Auditor'sReport Thereon

The Company's Board of Directors is responsible for the otherinformation. The other information comprises the information included in the ManagementDiscussion & Analysis Board's Report Business Responsibility Report and Reporton Corporate Governance but does not include the standalone financial statements and ourauditor's report thereon. Our opinion on the standalone financial statements does notcover the other information and we do not express any form of assurance conclusionthereon.

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 during the course of our audit or otherwise appears to bematerially misstated.

If based on the work we have performed we conclude that there is amaterial misstatement of this other information we are required to report that fact. Wehave nothing to report in this regard.

Management's Responsibility for the Standalone FinancialStatements

The Company's Board of Directors is responsible for the mattersstated in section 134(5) of the Act with respect to the preparation of these standalonefinancial statements that give a true and fair view of the financial position financialperformance including other comprehensive income cash flows and changes in equity of theCompany in accordance with the Ind AS and other accounting principles generally acceptedin India. This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding the assets of the Company andfor preventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; and design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the the accounting recordsrelevant to the preparation and presentation of the standalone financial statement thatgive a true and fair view and are free from material misstatement whether due to fraud orerror. doubt on the In preparing the standalone financial statements is responsible forassessing the Company's ability to continue as a going concern disclosing asapplicable matters related to going concern and using the going concern basis ofaccounting unless management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so.

Those Board of Directors are also responsible for overseeing theCompany's financial reporting process.

Auditor's Responsibility 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 whetherdueappropriate to fraud or error and to issue an auditor's report that includes ouropinion. Reasonable assurance is a high level of assurance but is not a guarantee that anaudit conducted in accordance with SAs will always detect a material misstatement when itexists. Misstatements can arise from fraud or error and are considered material ifindividually or in the aggregate they could reasonably be expected to influence theeconomic decisions of users taken on the basis 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 thestandalone financialstatements whether due to fraud or error design and perform auditprocedures responsive to those risks and obtain audit evidence that is sufficient andappropriate to provide a basis for our opinion. The risk of not detecting a materialmisstatement resulting from fraud is higher than for one resulting from error as fraudmay involve collusion forgery intentional omissions misrepresentations or the overrideof internal control.

Obtain an understanding of internal financial control relevant to theaudit in order to design audit procedures that are appropriate in the circumstances. Undersection 143(3)(i) of the Act we are also responsible for expressing our opinion onwhether the Company has adequate internal financial controls system in place and theoperating effectiveness of such controls.

Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures made by the management. andcompleteness of 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 ability tocontinue as a going concern. If we conclude that a material uncertainty exists we arerequired to draw attention in our auditor's report to the related disclosures in thestandalone 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 ceaseto continue as a going concern.

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. audit evidence regarding Obtain the financial information ofthe Company and its trust to express an opinion on the standalone financialstatements.

We are responsible for the direction supervision and performance ofthe audit of the financial statements of such entities or business activities included inthe standalone financial statements of which we are the independent auditors. For theother entities or business activities included in the standalone financial statementswhich have been audited by the other auditors such other auditors remain responsible forthe direction supervision and performance of the audits carried out by them. We remainsolely responsible for our audit opinion.

Materiality is the magnitude of misstatements in the standalonefinancial statements that individually or in aggregate makes it probable that theeconomic decisions of a reasonably knowledgeable user of the standalone financialstatements may be influenced. We consider qualitative factors in (i) planning the scope ofour audit work and in evaluating the results of our work; and (ii) to evaluate the effectof any identified misstatements in the standalone financial statements.

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 during our audit.

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.

We describe these matters in our auditor's report unless law orregulation precludes public disclosure about the matter or when in extremely rarecircumstances we determine that a matter should not be communicated in our report becausethe adverse consequences of doing so would reasonably be expected to outweigh the publicinterest benefits of such communication.

Other Matters

We did not audit the financial statements of Krizm Hotel PrivateLimited Employee Welfare Trust (the "Trust") whose financial statements reflecttotal revenues of र Nil total assets of र 915.33 lacs and net cash inflows ofर 90.08 lacs for the year ended March 31 2019 as considered in the standalonefinancial statements. These financial statements have audited by other auditor whosereport have been furnished to us by the management and our opinion on the standalonefinancial statements in so far as it relates to the amounts and disclosures included inrespect of such trust is based solely on the report of other auditor.

Our opinion on the standalone financial statements and our report onOther Legal and Regulatory Requirements below is not modified in respect of these matters.

Report on Other Legal and Regulatory Requirements

1. As required by Section 143(3) of the Act based on our audit and onthe consideration of the reports of the other auditors on the separate financialstatements of the Trust referred to in the Other Matters section above we report to theextent applicable 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. quantitative materiality and

b) In our opinion proper books of account as required by law have beenkept by the Company so far as it appears from our examination of those books and thereports of the other auditors.

c) The Balance Sheet the Statement of Profit and Loss including OtherComprehensive Income the Cash Flow Statement and Statement of Changes in Equity dealtwith by this Report are in agreement control that we identify with the relevant books ofaccount.

d) In our opinion the aforesaid standalone financial statements complywith the Ind AS specified under Section 133 of the Act.

e) On the basis of the written representations received from thedirectors as on March 31 2019 taken on record by the Board of Directors none of thedirectors is disqualified as on March 31 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 controls overfinancial reporting of the Company and the operating effectiveness of such controls referto our separate Report in "Annexure A". Our report expresses an unmodifiedopinion on the adequacy and operating effectiveness of the Company's internalfinancial controls over financial reporting.

g) With respect to the other matters to be included in theAuditor's Report in accordance with the requirements of section 197(16) of the Actas amended:

In our opinion and to the best of our information and according to theexplanations given to us the remuneration paid by the Company to its directors during theyear is in accordance with the provisions of section 197 of the Act.

h) With respect to the other matters to be included in theAuditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors)Rules 2014 as amended in our opinion and to the best of our information and according tothe explanations given to us:

i. The Company has disclosed the impact of pending litigations on itsfinancial position in its standalone financial statements. (Refer note 31)

ii. The Company did not have any long-term contracts includingderivative contracts for which there were any material foreseeable losses.(Refer note 44)

iii. There has been no delay in transferring amounts required to betransferred to the Investor Education and Protection Fund by the Company.(Refer note 45)

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

For Deloitte Haskins & Sells LLP
Chartered Accountants
(Firm's Registration No. 117366W / W-100018)
Vijay Agarwal
Place: New Delhi (Partner)
Date: May 29 2019 (Membership No. 094468)

ANNEXURE "A" TO THE INDEPENDENT AUDITOR'S REPORT

(Referred to in paragraph 1(f) under ‘Report on Other Legal andRegulatory Requirements' section of our report of even date)

Report on the Internal Financial Controls Over Financial Reportingunder Clause (i) of Sub-section 3 of Section 143 of the Companies Act 2013 ("theAct")

We have audited the internal financial controls over financialreporting of Lemon Tree Hotels Limited ("the Company") as of March 31 2019 inconjunction with our audit of the standalone financial statements of the Company for theyear ended on that date.

Management's Responsibility for Internal Financial Controls

The Company's management is responsible for establishing andmaintaining internal financial controls based on the internal control over financialreporting criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls Over

Financial Reporting issued by the Institute of Chartered Accountants ofIndia. These responsibilities include the design implementation and maintenance ofadequate internal financial controls that were operating effectively for ensuring theorderly and efficient conduct of its business including adherence to Company'spolicies the safeguarding of its assets the prevention and detection of frauds anderrors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Companies Act 2013.

Auditor's Responsibility

Our responsibility is to express an opinion on the Company'sinternal financial controls over financial reporting of the Company based on our audit. Weconducted our audit in accordance with the Guidance Note on Audit of Internal FinancialControls Over Financial Reporting (the "Guidance Note") issued by the Instituteof Chartered Accountants of India and the Standards on Auditing prescribed under Section143(10) of the Companies Act 2013 to the extent applicable to an audit of internalfinancial controls. Those Standards and the Guidance Note require that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance aboutwhether adequate internal financial controls over financial reporting was established andmaintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence aboutthe adequacy of the internal financial controls system over financial reporting and theiroperating effectiveness. Our audit internal financial controls over financial reportingincluded obtaining an understanding of internal financial controls over financialreporting 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 ofthe risks of material misstatement of the financial statements whether due to fraud orerror.

We believe that the audit evidencewehaveobtainedissufficient andappropriate to provide a basis for our audit opinion on the Company's internalfinancial controls system over financial reporting.

Meaning of Internal Financial Controls Over Financial Reporting

A company's internal financial control over financial reporting isa process designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles. A 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 financialstatements in accordance with generally accepted accounting principles and that receiptsand expenditures 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 FinancialReporting

Because of the inherent limitations of internal financial controls overfinancial reporting including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected. Also projections of any evaluation of the internal financial controls overfinancial reporting to future periods are subject to the risk that the internal financialcontrol over financial reporting may become inadequate because of changes in conditionsor that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion to the best of our information and according to theexplanations given to us the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at March on the criteria forinternal financial control over financial reporting established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal

Financial Controls Over Financial Reporting issued by the Institute ofChartered Accountants of India.

For Deloitte Haskins & Sells LLP
Chartered Accountants
(Firm's Registration No. 117366W / W-100018)
Vijay Agarwal
Place: New Delhi (Partner)
Date: May 29 2019 (Membership No. 094468)

(Referred to in paragraph 2 under ‘Report on Other Legal andRegulatory Requirements' section of our report of even date)

(i) (a) The Company has maintained proper records showing fullparticulars including quantitative details and situation of fixed assets.

(b) The Company has a program of verification of fixed assets to coverall the items in a phased manner over a period of two years which in our opinion isreasonable having regard to the size of the Company and the nature of its assets. Pursuantto the program certain fixedassets were physically verified by the Management during theyear. According to the information and explanations given to us no discrepancies werenoticed on such verification.

(c) According to the information explanations given to us and therecords examined by us we report that: i. based on the examination of the confirmationreceived by us from Kotak Mahindra Bank Limited HDFC Bank Limited and VISTRA ITCL (India)Ltd (custodian) on behalf of Yes Bank in respect of immovable properties (freehold landand buildings disclosed as fixed asset in the financial statements) whose title have beenpledged as security for loans are held in the name of the Company. ii. based on theexamination of the registered conveyance deed of remaining immovable properties providedto us we report that the title deeds comprising all the immovable properties of landand buildings which are freehold are held in the name of the Company as at the balancesheet date. (ii) As explained to us the inventories were physically verified during theyear by the Management at reasonable intervals and no discrepancies were noticed onphysical verification.

(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 Companies Act 2013.

(iv) In our opinion and according to the information and explanationsgiven to us the Company has complied with the provisions of Section 186 of the CompaniesAct 2013 in respect of making investments. The Company has not granted any loans madeinvestments or provide guarantees under Section 185 of the Companies Act 2013.

As per Section 186 (11) read with Schedule VI provisions of Section186 with respect to grant of loans and providing guarantees would not apply to the Companyas the Company is providing infrastructural facilities.

(v) According to the information and explanations given to us theCompany has not accepted any deposit during the year.

(vi) According to the information and explanations given to us themaintenance of cost records has not been specified by the Central Government under section148(1) of the Companies Act 2013 hence reporting under clause (vi) of the Companies(Auditor's Report) Order 2016 ("CARO 2016") is not applicable.

(vii) According to the information and explanations given to us inrespect of statutory dues:

(a) The Company has been regular in depositing undisputed statutorydues including Provident Fund Employee's State Insurance Income-tax Sales TaxValue Added Tax Goods and Services Tax cess and other material statutory dues applicableto it to the appropriate authorities. Also refer to the note 31(f) in the financialstatement regarding management assessment on certain matters relating to the providentfund.

We are informed that the Excise duty and Customs duty is not applicableto the Company.

(b) There were no undisputed amounts payable in respect of ProvidentFund Employees' State Insurance Income-tax Sales Tax Value Added Tax Goods andServices Tax cess and other material statutory dues in arrears as at March 31 2019 for aperiod of more than six months from the date they became payable.

We are informed that the Excise duty and Customs duty is not applicableto the Company.

(c) There are no dues of Income tax Sales tax Customs Duty ValueAdded tax and Excise duty which have not been deposited as on March 31 2019 on account ofdisputes. Details of dues of Service Tax which have not been deposited as on March 312019 on account of disputes are given below:

Name of Statute Nature of Dues Forum where Dispute is Pending Period to which the Amount Relates Amount Unpaid
( ` in Lacs)
Service Tax Rule 1994 Service Tax Central Excise and Service Tax Appellate tribunal FY 2007-09 to 2012-13 113.55

(viii) In our opinion and according to the information and explanationsgiven to us the Company has not defaulted in the repayment of loans or borrowings tofinancial institutions and banks. The Company has not taken any loans or borrowings fromgovernment and not issued any debentures.

(ix) In our opinion and according to the information and explanationgiven to us the term loan have been applied by the Company during the year for thepurposes for which they were raised. The Company has not raised any money by way ofinitial public offeror further public offer (including debt instruments).

(x) To the best of our knowledge and according to the information andexplanations given to us no fraud by the Company and no material fraud on the Company byits officers or employees has been noticed or reported during the year.

(xi) In our opinion and according to the information and explanationsgiven to us the Company has paid / provided managerial remuneration in accordance withthe requisite approvals mandated by the provisions of Section 197 read with Schedule V tothe Companies Act 2013.

(xii) The Company is not a Nidhi Company and hence reporting underclause (xii) of the CARO 2016 Order is not applicable.

(xiii) In our opinion and according to the information and explanationsgiven to us the Company is in compliance with Section 177 and 188 of the Companies Act2013 for all transactions with the related parties entered during the year and thedetails of related party transactions have been disclosed in the financial statements asrequired by the applicable accounting standards.

(xiv) During the year the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures andhence reporting under clause (xiv) of CARO 2016 is not applicable to the Company.

(xv) In our opinion and according to the information and explanationsgiven to us during the year the Company has not entered into any non-cash transactionswith its directors or directors of its subsidiary or associate company or personsconnected with them and hence provisions of section 192 of the Companies Act 2013 are notapplicable.

(xvi) The Company is not required to be registered under section 45-IAof the Reserve Bank of India Act 1934 and hence reporting under clause (xvi) of CARO 2016is not applicable to the Company.

For Deloitte Haskins & Sells LLP
Chartered Accountants
(Firm's Registration No. 117366W / W-100018)
Vijay Agarwal
Place: New Delhi (Partner)
Date: May 29 2019 (Membership No. 094468)