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Mukta Arts Ltd.

BSE: 532357 Sector: Media
NSE: MUKTAARTS ISIN Code: INE374B01019
BSE 00:00 | 22 Feb 38.75 3.25
(9.15%)
OPEN

36.90

HIGH

41.95

LOW

36.90

NSE 00:00 | 22 Feb 39.10 3.25
(9.07%)
OPEN

38.70

HIGH

40.55

LOW

38.10

OPEN 36.90
PREVIOUS CLOSE 35.50
VOLUME 26224
52-Week high 81.00
52-Week low 32.10
P/E
Mkt Cap.(Rs cr) 88
Buy Price 39.10
Buy Qty 100.00
Sell Price 39.50
Sell Qty 470.00
OPEN 36.90
CLOSE 35.50
VOLUME 26224
52-Week high 81.00
52-Week low 32.10
P/E
Mkt Cap.(Rs cr) 88
Buy Price 39.10
Buy Qty 100.00
Sell Price 39.50
Sell Qty 470.00

Mukta Arts Ltd. (MUKTAARTS) - Auditors Report

Company auditors report

Independent Auditors’ Report

To the Members of

Mukta Arts Limited Mumbai

Report on the Standalone Indian Accounting Standards (Ind AS) Financial Statements

We have audited the accompanying Standalone Ind AS financial statements of MuktaArts Limited ("the Company") which comprise the Balance Sheet as at March312018 and 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 significant accounting policies and other explanatory information.

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 Ind AS financial statements that give a true and fair view of the financialposition financial performance including other comprehensive income cash flows andchanges in equity of the Company in accordance with accounting principles generallyaccepted in India including the Indian Accounting Standards prescribed under Section 133of the Act. This responsibility also includes maintenance of adequate accounting recordsin accordance with the provisions of the Act for safeguarding the assets of the Companyand for preventing and detecting frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; and design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe Ind AS financial statements that give a true and fair view and are free from materialmisstatement whether due 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 the accounting and auditingstandards and matters which are required to be included in the audit report under theprovisions of the Act and the Rules made thereunder.

We conducted our audit of the Standalone Ind AS financial statements in accordance withthe Standards on Auditing issued by the Institute of Chartered Accountants of Indiaspecified under Section 143(10) of the Act. Those Standards require that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance aboutwhether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the financial statements. The procedures selected depend on theauditor's judgment including the assessment of the risks of material misstatement of theStandalone Ind AS financial statements whether due to fraud or error. In making thoserisk assessments the auditor considers internal financial control relevant to theCompany's preparation of the Standalone Ind AS financial statements that give a true andfair view in order to design audit procedures that are appropriate in the circumstancesbut not for the purpose of expressing an opinion on whether the Company has in place anadequate internal financial controls system over financial reporting and the operatingeffectiveness of such controls. 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 Ind ASfinancial 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.

Basis of Qualified Opinion

/4s at March 31 2018 the company’s investment in its subsidiary (includingdeemed investment) Whistling woods International Limited (WWIL) a joint venture betweenthe company and Maharashtra Film Stage and Cultural Development Corporation Limited(MFSCDCL) aggregates to Rs. 399511218 /- and loans and advances deposits and rentreceivable aggregate to Rs. 246116550/- recoverable from WWIL. /4s fullyexplained in Note 46 to the accompanying audited financial statements the Order ofFebruary 9 2012 passed by the High Court of judicature at Bombay (‘HighCourt’) had quashed the joint Venture Agreement (‘JVA’) between thecompany and Maharashtra Film Stage Cultural Development Corporation (‘MFSCDCL’).Maharashtra Film Stage and Cultural Development Corporation (‘MFSCDC’) raisednet demand of Rs. 591966210/- and asked WWIL to vacate the premises. WWIL’spetition for special leave to appeal filed with the Supreme Court of India had also beendismissed. The Company and WWIL had filed application to review the said order with theHigh Court and an Interim stay was granted on July 30 2014 which required deposit ofRs.100038000/- by January

2015 against payment of arrears of rent for the year 2000-01 to 2013-14 and payment ofRs.4500000/- per annum from Financial Year 2014-15 till the settlement of the case toMFSCDCL. /4s per the terms of the said Order till 31 March 2018 Rs 113538000/-has been paid by the Holding Company and Rs 4500000/- has been paid by WWIL. The StateGovt. of Maharashtra and MFSCDCL challenged the order of the High Court in the SupremeCourt which was dismissed by the Supreme Court on September 22 2014. The amount so paid /being paid by the Company have been accounted under Non - Current Other Financial Assetsin the Standalone Financial Statements to be adjusted on the settlement of the case.

Further WWIL’s net worth stands fully eroded as at March 31 2018. Having regardto the circumstances explained above and pending final outcome of the matter underlitigation the Company has not made any adjustment to the carrying value of investment inand amounts due from WWIL and the deposit paid consequent to the High Court’s Orders.Accordingly the impact on the carrying value of investments recoverability of loans andadvances and consequential impact on loss for the year and reserves is not determinable.

/4s explained in Note 45 to the accompanying audited financial statementsremuneration paid to the erstwhile managing director (including as film director fees) forearlier financial years from 2005-06 to 2014-15 (total remuneration paid aggregates toRs.131906897/-) is in excess of the limits prescribed under Schedule XIII to theCompanies Act 2013. During the year 2011-12 the Company had received approval for partof excess remuneration paid (approval received for remuneration aggregating to Rs.25200000/- for the financial years 2005-06 2006-07 2007-08) and made applications tothe authorities requesting consideration/approval for the balance excess remuneration andfor recognition of the erstwhile managing director as professionally qualified personunder the Companies Act 1956. Through its various communications the Ministry ofCorporate Affairs has directed the Company to recover the excess remuneration paid duringthe financial years 2008-09 to 2011-12. The company has requested the authorities toreconsider their Orders in respect of the above and also for his recognition as aprofessionally qualified person under this Act. Pending conclusion of this matter noadjustment has been made in these standalone financial statements.

Qualified Opinion In our opinion and to the best of our information andaccording to the explanations given to us except for the possible effects of the mattersdescribed in the Basis of Qualified Opinion paragraph above the aforesaid s Ind ASfinancial statements give the information required by the Act in the manner so requiredand give a true and fair view in conformity with the accounting principles generallyaccepted in India of the state of affairs of the Company as at March 31 2018 its profitincluding other comprehensive income its cash flows and the changes in equity for theyear ended on that date.

Report on Other Legal and Regulatory Requirements

As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government of India in terms of sub-section (11) of section 143 ofthe Companies Act 2013 we give in the Annexure A a statement on the mattersspecified in paragraphs 3 and 4 of the Order to the extent applicable.

As required by Section 143 (3) of the Act we report that:

(a) We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit.

(b) In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books.

(c) The Standalone Balance Sheet Standalone Statement of Profit and Loss including theStatement of Other Comprehensive Income the Standalone Cash Flow Statement and theStandalone Statement of Changes in Equity dealt with by this Report are in agreement withthe books of account;

(d) In our opinion the aforesaid Ind AS financial statements comply with the IndianAccounting Standards specified under Section 133 of the Act ;

(e) On the basis of the written representations received from the directors as on March312018 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2018 from being appointed as a director in terms of Section 164 (2) of theAct.

(f) 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 and

(g) With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies

(Audit and Auditors) Rules 2014 in our opinion and to the best of our information andaccording to the explanations

given to us:

i. The Company has disclosed the impact of pending litigations on its financialposition in its standalone Ind AS financial statements - Refer Notes No. 42.

ii. The Company does not have any long-term contracts including derivative contractsfor which there were any material foreseeable losses - Refer Note No. 49.

iii. There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company during the year ended March 312018.

iv. The reporting on disclosures relating to Specified Bank Notes is not applicable tothe Company for the year ended March 312018.

For Uttam Abuwala & Co.
Chartered Accountants
Firm No. 111184W
CA. Prerak Agarwal
(Partner)
Date: May 24 2018 Membership No. 158844
Place: Mumbai

Annexure A referred to in Report on Other Legal and Regulatory Requirements Paragraphof Independent Auditor’s report of even date to the members of Mukta Arts Limited onthe accounts for the year ended March 31 2018

On the basis of such checks as we considered appropriate and according to theinformation and explanation given to us during the course of our audit we report that:

i) (a) The company has maintained proper records showing full particulars includingquantitative details and situation of Fixed assets except that tagging of certain fixedassets is yet to be completed.

(b) As explained by the Management fixed assets have been physically verified by themanagement at regular intervals which in our opinion is reasonable having regard to thesize of the company and nature of its business. In our opinion there were no materialdiscrepancies between book records and physical fixed assets that were noticed during theperiod.

(c) According to the information and explanation given to us and on the basis of ourexamination of the records of the company the title deeds of immovable properties areheld in the name of the company except the following:

Number of Gross Block Net Block Remarks
Cases (as at March 31 2018) (as at March 31 2018)
1 7500000/- 6412002/- Agreement yet to be registered.

ii) As explained by the Management Company does not have any inventory henceinformation under this clause is not required.

iii) Based on the audit procedures applied by us and according to the informationand explanations given to us the company has not granted any loans secured or unsecuredto the firms limited liability partnerships or other parties covered in the registermaintained under section 189 of the Companies Act 2013. Accordingly the provisions ofclause

(iii) (a) (b) and (c) are not applicable to the Company.

iv) In our opinion and according to the information and explanations given to usthe Company has complied with the

provisions of Section 185 and 186 of the Act with respect to the loans and investmentsmade.

v) In our opinion and according to the information and explanation given to us theCompany has not accepted any deposit from public within the provision of section 73 to 76and other relevant provisions of the Companies Act 2013 and the rules framed there under.

vi) As informed to us by management the Central Government has not prescribed themaintenance of cost records under sub section (1) of section 148 of the Companies Act2013 for any of services rendered by the company.

vii) (a) According to information and explanations given to us and on the basis ofour examination of the books of

account and records the Company has been generally regular in depositing undisputedstatutory dues including Service Tax Value added Tax Goods and Services Tax (‘GST')and any other statutory dues with the appropriate authorities except that there have beenfew delays in depositing Professional Tax VAT and Employees' State Insurance andsignificant delays in depositing dues pertaining to Income Tax. As explained to us thecompany did not have any dues on account of Custom Duty Excise Duty.

According to information and explanations given to us there are no undisputedstatutory dues payable in respect of Provident Fund Employees' State Insurance IncomeTax Value Added Tax GST and other material statutory dues were in arrears as on March31 2018 for a period of more than 6 months from the date they became payable.

(b) According to the information and explanations given to us there are no duespayable in respect of value added tax GST customs duty and excise duty which have notbeen deposited with appropriate authorities on account of any disputes. The following duesof Service Tax & Income Tax have not been deposited by the company on

account of dispute:

Name of the statute Nature of dues Amount (Rs.) Period to which the amount relates Forum where the dispute is pending
Chapter V of the Finance Act 1994 Service Tax 875000/-* November 1996 - November 2001 Customs Excise & Service Tax Appelate Tribunal
Income Tax Act 1961 Income Tax 1953900/- Asst year 2015-16 Commissioner of Income Tax (Appeals)
15577380/- Asst year 2014-15
1508440/- Asst year 2012-13
524938/- Asst year 2011-12
1522033/- Asst year 2010-11 Income Tax Appellate Tribunal (Appeals)
514804/- Asst year 2009-10

*Excludes Amount deposited under protest Rs. 800000/-

viii) On the basis of verification of records and according to the information andexplanations given to us and based on the records made available to us the Company hasnot defaulted in repayment of any loans from Financial Institutions or from the Bank andhas not issued Debentures.

ix) On the basis of verification of records and according to the information andexplanations given to us and based on the records made available to us the company hasutilized the money raised by way of Term loan for the purpose for which they were raised.The Company did not raise any moneys by way of public issue/ follow-on offer includingdebt instruments.

x) Based upon the audit procedures performed and the information and explanationsgiven to us we report that no fraud by the Company or any fraud on the company by itsofficers or employees has been noticed or reported during the year.

xi) According to the information and explanations given to us and based on theexaminations of the records of the company the managerial remuneration has been paid/provided in accordance with the requisite approvals mandated by the provisions of section197 read with Schedule V to the Companies Act 2013.

xii) The company is not a Nidhi Company. Accordingly the provisions of clause(xii) of Para 3 of the order are not applicable to the company.

xiii) According to the information and explanations given to us all transactionswith the related parties are in compliance with Section 188 and 177 of Companies Act 2013and the details of such transactions have been disclosed in the Financial Statements asrequired by the accounting standards and Companies Act 2013.

xiv) On the basis of verification of records and according to the information andexplanations given to us and based on the records made available to us the company hasnot made any preferential allotment / private placement of shares or fully or partlyconvertible debentures during the year under review.

xv) In our opinion and according to the information and explanations given to usthe company has not entered into noncash transactions with directors or persons connectedwith him.

xvi) The company is not required to be registered under section 45 IA of theReserve Bank of lndia Act 1934.

For Uttam Abuwala & Co
Chartered Accountants
Firm No. 111184W
CA. Prerak Agarwal
(Partner)
Membership No. 158844
Date: May 24 2018
Place: Mumbai

Annexure B to the Independent Auditor’s Report of even date on the FinancialStatements of Mukta Arts Limited

Report on the Internal Financial Controls under Clause (i) of sub-section 3 of Section143 of the Companies Act 2013 ("the Companies Act")

We have audited the internal financial controls over financial reporting of MuktaArts Limited ("the Company") for the year ended on March 312018 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. These responsibilities includethe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to the Company's policies the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the Companies Act.

Auditor’s 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 the Institute ofChartered Accountants of India and specified under sub-section 10 of Section 143 of theCompanies Act to the extent applicable to an audit of internal financial controls bothapplicable to an audit of Internal Financial Controls and both issued by the Institute ofChartered Accountants of India. Those Standards and the Guidance Note require that wecomply with ethical requirements and plan and perform the audit to obtain reasonableassurance about 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 financial statements whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls systemover financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

A Company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A Company's internal financial control over financialreporting includes those policies and procedures that (1) pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the Company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures of the Company are being made only in accordance with 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 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 March 312018 based on theinternal control over financial reporting criteria 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 of CharteredAccountants of India.

For Uttam Abuwala & Co
Chartered Accountants
Firm No. 111184W
CA. Prerak Agarwal
(Partner)
Membership No. 158844
Date: May 24 2018
Place: Mumbai