To the Members of Oriental Hotels Limited
Report on the Audit of the Standalone Financial Statements
We have audited the standalone financial statements Oriental Hotels Limited ("theCompany") which comprise the standalone Balance Sheet as at 31 March 2020 and theStandalone Statement of Profit and Loss (including other comprehensive income) StandaloneStatement of Changes in Equity and standalone statement of Cash Flows for the year thenended and notes to the Standalone Financial statements including a summary ofsignificant accounting policies and other explanatory information referred to as"Standalone Financial Statements"). In our opinion and to the best of ourinformationand according to the explanations standalone financial statements give theinformation required by the Companies Act 2013 (the Act') in the manner so requiredand give a true and fair view in conformitywith statements of the accounting principlesgenerally accepted in India of the state of affairs of the Company as at 31 March 2020and loss and other comprehensive income changes in equity and its cash flows for the year
Basis for Opinion
We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder section 143(10) of the Act. Our responsibilities under those SAs are furtherdescribed in the Auditor's Responsibilities for the Audit of thestandalone
Financial Statements section of our report. We are independent of the Company inaccordance with the Code of Ethics issued by the Institute of Chartered Accountantsof India (ICAI) together with the ethical requirements that are relevant to our audit ofthe standalone financial statements under the provisions of the Act and the Rulesthereunder and we have fulfilledour other ethical responsibilities in accordance withthese requirements and the Code of Ethics. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis
Key Audit Matters
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone current period.financial These matters wereaddressed in the context of our audit of the standalone financial statements in formingour opinion thereon and we do not provide a onthatdate. separate opinion on thesematters.
We have determined the matters described below to be the key audit matters to becommunicated in our report.
|Key Audit Matter ||Description ||Our Response |
|Impairment assessment of Property Plant and Equipment (PPE) of one hotel unit. (Refer Note 2(c) of Financial Statements) ||In view of the continuing operatinglosses made by one hotel unit and due to significant management and auditor judgement involved in impairment Matter. ||Our audit procedures in relation to impairment testing of the unit were: Understanding the management's and those charged with governance (TCWG)'s process for estimating the recoverable amount of the assets. |
| || |
At the end of each year management reviews ?? the carrying amount of the assets to determine if there is any indication of impairment loss. If any such indication exists management assesses the recoverable amount of those assets.
Evaluating the reasonableness of the assumptions judgements projected cash flows and key inputs considered by the management by comparing those estimates with market data and company specific information available.
| ||Management also carries out a valuation of the ?? hotel building once in three years. The estimation of the recoverable amount of the assets at the unit involves management judgements and is dependent on certain assumptions and significant inputs including market capitalisation ?? revenue per available room which are affected by expected future market or economic conditions of the hospitality industry. ||Evaluating the historical accuracy of the management's assessment by comparing the past estimates to the current year actual performance of the company. Reading the valuation ratesandestimated report and validating assumptions used in the valuation and rationale for those assumptions. |
Emphasis of matter
We draw attentionto:
Note 2(c) to the Standalone financial statementregarding statements themanagement's impairment assessment of property plant and equipment right-of-use assetsintangible assets investments trade receivables inventories and other current assetsappearing in the financial of the Company as at 31 March 2020 being consideredunimpaired/recoverable based on its internal and external sources of information andestimates and its judgments on implication expected to arise from COVID-19 pandemic. Thisbeing an unprecedented event which is difficult estimate the actual implications couldvary. The economic/ social consequences of this event are impacting the very operation ofthe hotels and consumer demand. Our opinion is not modified in respect of the abovematter.
Information other than the Standalone Financial
Statements and Auditors' Report Thereon
The Company's management and Board of Directors are responsible for the preparation ofthe other information. The other information comprises the information included in theDirectors report / the management report but does not include the standalone financialstatements and our auditors' report thereon.
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 and in doing so consider whether the other informationis materially inconsistent with the standalone financial statements or our knowledgeobtained during the audit or otherwise appears to be materially misstated. If based onthe work we have performed we conclude that there is a material misstatement of thisother information we are required to report that fact. We have nothing to report in thisregard.
Responsibilities of the Management and Those Charged with Governance for Standalone
The Company's management and Board of Directors are responsible for the matters statedin section134(5) of the Act with respect to the preparation of these standalone financialstatements that give a true and fair view of other financial comprehensive incomechanges in equity and cash flows of the Company in accordance with the accountinggenerally accepted in India including the Indian accounting Standards (Ind AS) prescribedunder section 133 of the Act. This responsibility also includes maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the Company and for preventing and detecting frauds and other irregularities;ofappropriateaccountingpolicies; selection 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 to and presentation ofthe standalone financial statements that give a true and fair view and are free frommaterial 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 ceaseoperationsor . has norealistic alternative but to do so. The Board of Directors are also responsible foroverseeing the Company's financial reporting process.
Auditors' 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 auditors' 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 in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the standalonefinancialstatements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissionsmisrepresentationsor the override of internalcontrol.
Obtain an understanding of internal financial control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under section 143(3)(i)of the Act we are also responsible for expressing our opinion on whether the company hasadequate internal financial controls with reference to the standalone financialstatementsin place and the operating effectiveness of such controls.
Evaluate the appropriateness of accounting used and the reasonableness of accountingestimates 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 conditionsthat may cast continue as a going concern. If weconclude that a material uncertainty exists we are required to draw attention in ourauditors' report to the related disclosures in the standalone financial statements or ifsuch disclosures are inadequate to modify our opinion. Our conclusions are based on theaudit evidence obtained up to the date of our auditors' report. However future events orconditions may cause the Company to cease to continue as a going concern; and
Evaluate the overall presentation structure and content of the standalonefinancialstatements including the disclosures and whether the standalone financialstatements represent the underlying transactions events in a manner that achieves fairpresentation.
We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant any significant deficiencies inidentify during our audit.
We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall reasonably be thought to bear on our independence and where applicable relatedsafeguards.
From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the standalone financial statementsof the current period and are therefore the key audit matters. We describe these mattersin our auditors' report unless law or regulation precludes public disclosure about thematter or 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
1. As required by the Companies (Auditors' Report) Order 2016 ("the Order")issued by the Central Government of India in terms of sub-section (11) of section 143 theAct we give in the "Annexure A" a statement on the matters specified inparagraphs 3 and 4 of the Order to the extent applicable.
2. As required by Section 143(3) of the Act we report that: (a) We have sought andobtained all the information doubt on the Company's ability to and explanations which tothe best of 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 standaloneBalance Sheet the standalone Statement of Profit comprehensive income) the standaloneStatement of Changes in Equity and the standalone statement of Cash Flows dealt with bythis Report are in agreement with the books of account. (d) At this juncture we are unableto say if the matter described in the Emphasis of Matter paragraph above will have anadverse effect on the functioning of the Company. audit findingsincluding (e) In ouropinion the aforesaid standalone financial internal control that we statements complywith the Indian Accounting Standards (Ind AS) prescribed under Section 133 of the Actread with Rule 7 of the Companies (Accounts) Rules 2014.
(f) On the basisofthewrittenrepresentationsreceived from the directors as on 31 March2020 taken on record by the Board of Directors andothermatters none of thedirectors is disqualified as on 31 March 2020 from being appointed as a director in termsof Section 164 (2) of the Act.
(g) With respect to the adequacy of the internal financial controls with reference tothe standalone financial statements of the Company and the operating effectiveness of suchcontrols refer to our separate Report in "Annexure B". (h) With respect to theother matters to be included in the Auditors' Report in accordance with Rule 11 of theCompanies (Audit and Auditors) Rules 2014 in our opinion and to the best of ourinformationand according to the explanations given to us: i. The Company has disclosed theimpact of pending litigations as at 31 March 2020 on its financial position in itsstandalone financial statements Refer Note 29 to the standalone financial statements; ii.The Company did not have any long-term contracts including derivative contracts for whichthere were any material foreseeable losses. iii. There has been no delay in transferringamounts required to be transferred to the Investor
Education and Protection Fund by the Company during the year ended 31 March 2020; and
3. With respect to the matter to be included in the Auditors' Report under section197(16): In our opinion and according to the information and explanations given to us theremuneration paid by the Company to its directors during the current year is in accordancewith the provisions of Section 197 of the Act. The remuneration paid to any director isnot in excess of the limit laid down under Section 197 of the Act.
For PKF Sridhar & Santhanam LLP
Firm's Registration No. 003990S/S200018
Membership No. 024105 UDIN: 20024105AAAABC5953
Place of Signature: Chennai Date: June 3 2020
Referred to in paragraph 1 on Report on Other Legal and Regulatory Requirements'of our report of even date to the members of Oriental Hotels Limited ("theCompany") on the standalone financial statements as of and for the year ended 31March 2020.
(i) In respect of the Company's
(a) The Company has maintained proper records showing full particulars includingquantitative ed assets.xfi detailsandsituation of
(b) The Company has a regular programme of physical verification which all fixed assetsare verified in a phased manner over a period of three years. In our opinion thisperiodicity of physical verification is reasonable having regard to the size of theCompany and the nature of its assets. Pursuant to the programme certain fixed assets werephysically verified by the management during the year. In our opinion and according tothe us no information and explanations on such material discrepancies were noticedverification
(c) According to the information and explanations given to us the records examined byus and based on the examination of the conveyance deeds provided to us we report thatthe title deeds comprising all the immovable properties of the land and buildings whichare freehold are held in the name of the Company or amalgamated company as at BalanceSheet date. In respect of immovable properties of land and building that have been takenon lease and disclosed as right of use assets in the standalone financial statements thelease agreements are in the name of the Company.
(ii) As explained to us the inventories have been physically verified by themanagement during the year at reasonable intervals and the discrepancies noticed on suchverification were not material and have been appropriately dealt with in the books ofaccounts
. (iii) Based on our audit procedures & according to the information andexplanation given to us the Company has not granted any loans secured or unsecured toparties covered in the register maintained section 189 of the Act and hence 3(iii) of theOrder is not applicable to the Company.
(iv) In our opinion and according to the information and explanation given to us theCompany has complied with provisions of Section 185 and 186 of the Act in respect of grantof loans making investments and providing guarantees and securities as applicable. (v)Based on our audit procedures & according to the information and explanation given tous the Company has not accepted any deposits from the public within the meaning of theAct and the rules made there under and hence Clause 3(v) of the Order is not applicable.
(vi) The Company is not required to maintain cost records specified by the CentralGovernment under subsection (1) ofsection 148 of the Act.
(vii) (a) According to the information and explanations . given to us and the recordsof the Company examined by us the Company has generally been regular in depositingundisputed statutory dues including provident fund employees' state insuranceincome-tax duty of customs duty of excise Goods and Services Tax (GST) cess and anyother statutory dues as applicable with the appropriate authorities .
According to the information and explanation given to us and the records of the Companyexamined by us no undisputed amounts payable in respect of provident fund employees'state insurance income-tax duty of customs duty of excise Goods and Services Tax(GST) cess and any other statutory dues were in arrears as at
31 March 2020 for a period of more than six months from the date they became payable.
(b) According to the information and explanations given to us and based on ourexamination of the records of the Company there are no dues of Income-tax Sales TaxService tax Goods and Services Tax (GST) Duty of Customs Excise duty and Value AddedTax as at 31 March 2020 which under have not been deposited with the appropriateauthorities stated below:
|Nature of Statute ||Amount (Rs. in Lakhs) ||Period to which amounts relates ||Forum where dispute is pending |
|Entry Tax ||6.22 ||2007-08 and 2012-13 ||Honourable Madras High Court |
| ||30.17 ||2010-11 to 2012-13 ||Appellate Tribunal Ernakulam |
|Luxury Tax ||9.20 ||2012-13 ||Assistant Commissioner (CT) Madurai Rural (South) Assessment Circle Madurai. |
|Sub-total ||39.37 || || |
| ||16.61 ||1993-94 to 1996-97 ||Honourable Madras High Court |
| ||30.76 ||2004-05 and 2005-06 ||The assistant Commissioner Valluvarkottam Assessment circle |
|Sales Tax ||27.46 ||2008-09 to 2010-11 ||The Assistant Commissioner (Commercial Taxes) Chennai |
| ||12.61 ||2011-12 and 2013-14 ||Appellate Tribunal Ernakulam |
| ||5.74 ||2010-12 ||Honourable High Court Andhra Pradesh |
| ||10.30 ||2009-10 and 2013-14 ||Commissioner appeals Trivandrum |
|Sub-total ||103.48 || || |
|Service Tax ||88.74 ||2005-2010 ||Commissioner of Central Excise (Appeals) Mangalore |
|Sub-total ||88.74 || || |
|Grand Total ||237.81 || || |
(viii) Based on our audit procedures and as per the information management the Companyhas not defaulted in repayment of loans or borrowings to financial or dues to debentureholders. (ix) According to the information and explanations to us the Company did notraise money by way of initial public offer or further public offer debt instruments)during the year. Term loans raised during the year have been applied for the purpose forwhich they were raised.
(x) To the best of our knowledge and belief and according to the information andexplanations to us we report that no fraud by the Company or on the Company by itsofficers or employees has been noticed or reported during the year nor have we beeninformed of such case by the management. (xi) According to the information andexplanations to us the managerial remuneration has been paid/ provided in accordance withthe requisite approvals mandated by the provisions of section 197 read with Schedule V tothe Act.
(xii) The Company is not a Nidhi company in accordance with Nidhi Rules 2014.Accordingly the provisions of Clause (xii) of the Order are not applicable. (xiii) Basedon our audit procedures and according to the information and explanations given to us allthe transactions entered into with the related parties during the year are in compliancewith Section and Section the details have been disclosed in the standalonefinancialstatementsasrequiredbytheapplicable and explanations Indian AccountingStandards.
(xiv) Based on our audit procedures and according to the information and explanationsgiven to us the Company has not made any preferential allotmentofsharesallotmentorprivateplacementof shares given or fully or partly paid convertibledebentures during the year under review. Accordingly the provisions of Clause (xiv) ofthe Order are not applicable.
(xv) Based on our audit procedures and according to the information and explanationsgiven to us the Company has not entered into any non-cash transactions with directors orpersons connected given with them.
(xvi) Based on our audit procedures and according to the information and explanationsgiven to us the Company is not required to be registered under given Section 45-IA ofReserve Bank of India Act 1934.
For PKF Sridhar & Santhanam LLP
Firm's Registration No. 003990S/S200018
Membership No. 024105 UDIN: 20024105AAAABC5953
PlaceofSignature:Chennai 177 Date:June32020 188 of the Act where applicable and
Annual Report 2019-20 l 123
Referred to in paragraph 2(g) on Report on Other Legal and RegulatoryRequirements' of our report of even date Report on the Internal Financial Controls withreference to the aforesaid standalone financial statements under Clause (i) of Sub-section3 of Section 143 of the Companies Act 2013 ("the
We have audited the internal financial controls of Oriental Hotels Limited ("theCompany") as of 31 March 2020 in conjunction with our audit of the standalonefinancial statements of the Company for the year ended on that date.
Management's Responsibility for Internal
The Company's management and the Board of Directors are responsible for establishingand maintaining internal financial controls based on the internal control with referenceto financial statements criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note issued by the Institute ofChartered Accountants of India. These responsibilities include the design implementationand maintenance of adequate internal financial controls that were operating effectivelyfor ensuring the orderly and of its business including adherence to company's policiesthe safeguarding of its assets the prevention of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required Act 2013.
Our responsibility is to express an opinion on the Company's internal financialcontrols with reference to financial statements based on our audit. We conducted our auditin accordance with the Guidance Note and the Standards on Auditing prescribed undersection to the extent applicable to an audit of internal financial controls with referenceto financial statements. 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 with statements were established andmaintained and if such controls operated effectively in all material respects. Our auditinvolves performing procedures to obtain audit evidence about the adequacy of the internalfinancial financial controls with reference to financial statements and their operatingeffectiveness. Our audit of internal financial controls with reference to financialstatements included obtaining an understanding of internal financial controls assessingthe risk that a material weakness exists and testing and evaluating the design andoperating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgement including the assessment of the risks ofmaterial misstatement of the standalone financial statements whether due to fraud orerror.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinionon the Company's internal financial with reference tofinancial statements.
Meaning of Internal Financial Controls with reference to standalone financial
A Company's internal financial control with reference efficientconduct to financialstatements is a process designed to provide reasonable assurance regarding the reliabilityof financial reporting and the preparation of financial statements for anddetectionexternal purposes in accordance with generally accepted accountingprinciples.ACompany'sinternalfinancialcontrol under the with reference to financialstatements includes those Companies policies and procedures that
(1) pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactionsand dispositions of the assets of the Company;
(2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accountingprinciples and that receipts and expenditures of the Company are being made only inaccordance 143(10) of the Act with authorizations of management and directors of theCompany; and
(3) provide reasonable assurance regarding prevention or timely detection ofunauthorized acquisition use or disposition a material effect on the financialstatements.
Inherentreference toLimitationsfinancial of Internal Financial Controlswith reference to standalone financial statements
Because of the inherent limitations controlswithreferenceto including the possibilityof collusion or improper management override of controls material misstatementsdue to error or fraud may occur and not be detected. Also projections of any evaluationof the internal financial controls with reference to financial statements to futureperiods are subject to the risk that the internal financial control with reference tofinancial statements may become inadequate because of changes in conditions or that thedegree of compliance with the policies or procedures may deteriorate.
In our opinion the Company has in all material respects an adequate internal tofinancial statements with certain changes done for remote work environment and suchinternal financial controls were operating effectively as at 31 March 2020 based on theinternal control with reference to financial statements 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 Institute of Chartered Accountants of India.
For PKF Sridhar & Santhanam LLP
Firm's Registration No. 003990S/S200018 S Rajeshwari controls with reference
Membership No. 024105 UDIN: 20024105AAAABC5953
Place of Signature: Chennai Date: June 3 2020