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TajGVK Hotels & Resorts Ltd.

BSE: 532390 Sector: Services
NSE: TAJGVK ISIN Code: INE586B01026
BSE 12:28 | 19 Oct 157.65 2.15
(1.38%)
OPEN

159.05

HIGH

161.15

LOW

152.25

NSE 12:19 | 19 Oct 157.70 2.10
(1.35%)
OPEN

160.00

HIGH

161.55

LOW

152.15

OPEN 159.05
PREVIOUS CLOSE 155.50
VOLUME 75475
52-Week high 161.15
52-Week low 102.20
P/E
Mkt Cap.(Rs cr) 988
Buy Price 157.40
Buy Qty 100.00
Sell Price 157.70
Sell Qty 16.00
OPEN 159.05
CLOSE 155.50
VOLUME 75475
52-Week high 161.15
52-Week low 102.20
P/E
Mkt Cap.(Rs cr) 988
Buy Price 157.40
Buy Qty 100.00
Sell Price 157.70
Sell Qty 16.00

TajGVK Hotels & Resorts Ltd. (TAJGVK) - Auditors Report

Company auditors report

To The Members of

TAJGVK Hotels & Resorts Limited

Report on the Audit of the Standalone Financial Statements

Opinion

We have audited the accompanying standalone financial statements of TAJGVK Hotels &Resorts Limited ("the Company") which comprise the Balance Sheet as at March31 2020 the Statement of Profit and Loss (including Other Comprehensive Income) theStatement of Changes in Equity and the Statement of Cash Flows for the year ended on thatdate and a summary of the significant accounting policies and other explanatoryinformation (hereinafter referred to as "the standalone financial statements").In our opinion and to the best of our information and according to the explanations givento us 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 accounting principles generally accepted in India of thestate of a_airs of the Company as at March 31 2020 the profit and total comprehensiveincome changes in equity and its cash flows for the year ended on that date.

Basis for Opinion

We conducted our audit of the standalone financial statements in accordance with theStandards on Auditing specified under section 143(10) of the Act (SAs). Ourresponsibilities under those Standards are further described in the Auditor'sResponsibilities for the Audit of the Standalone Financial Statements section of ourreport. We are independent of the Company in accordance with the Code of Ethics issued bythe Institute of Chartered Accountants of India (ICAI) together with the independencerequirements 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 we have obtained is su_cient and appropriate toprovide a basis for our audit opinion on the standalone financial statements.

Emphasis of matter

We draw attention to the following Notes to the Financial Statements: Note 23

Regarding the Management's impairment assessment of property plant and equipmentright-of-use assets intangible assets investments trade receivables inventories andother current assets of the Company as at 31 March 2020 being considered unimpaired/recoverable based on its internal and external sources of information and estimates andits judgments on implication expected to arise from COVID-19 pandemic which being anunprecedented event and the consequences of which are di_cult to estimate and the actualoutcome could vary from the said estimates. Note 26 Regarding non-provision of Managementfees and expenses reimbursable to the Operator for one of the Company's Hotels for thereasons stated therein. Our opinion is not modified in respect of the above matters.

Key Audit Matters

Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone financial statements of the current period.These matters were addressed in the context of our audit of the standalone financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters. We have determined the matters described below to bethe key audit matters to be communicated in our report.

S. No Key Audit Matter Auditor's Response
1 Revenue Recognition Principal Audit Procedures
To ensure accuracy of recognition measurement presentation and disclosures of revenues and related accounts • We have assessed the Company's internal controls surrounding its revenue transactions;
• We tested the key controls identified
• We performed substantive detail testing by selecting a sample of revenue transactions that we considered appropriate to test the evidence of e_ectiveness of the internal controls and adherence to accounting policies in recognising the revenue and the rebates and discounts there against.
2 Fees and reimbursements to the Operating Company Principal Audit Procedures
Our audit approach was as follows:
To ensure accounting of the expenses comprising the Basic Fee Incentive Fee and reimbursement of expenses based on the terms of the Agreements entered into with the Operating Company and on the operating results of the respective Hotel properties under Agreement • Review of each of the Hotel operating agreements entered into.
• Validation of the Gross Income the Gross Operating profit of each of the property from the books and records of the property.
• Verification of the calculation of the Fees and reimbursement of expenses as per the terms of the aforesaid Agreements.
S. No Key Audit Matter Auditor's Response
3 Lease Accounting -Under Ind AS 116 Principal Audit Procedures
TheCompanyhasadoptedIndAS116-Leasesfrom the date of its initial application on 1st April 2019 which resulted in changes to accounting policies. Our audit approach included understanding the Company's adoption of the Standard and identification of leases Measurement of the lease liability and right to use asset for accounting.
Our substantive tests included:
The Standard was adopted retrospectively from 1st April 2019 and recognised the cumulative e_ect of initially applying the Standard as an adjustment to the opening balance of retained earnings as disclosed in Note 24. • Verifying the underlying lease contracts for identifying the leases to which the said Standard applies;
• Verifying the borrowing rates used for discounting future lease payments
We identified Leases as a key audit matter because adoption of the standard resulted in significant changes to the financial statements along with changes to the processes systems and controls and the estimates made in determining the impact. • Verifying the accuracy of recognition of Right to Use Asset and lease Liabilities as on the Transition date and Reporting Date
• Verifying the correctness and completeness of the annual / periodic charge to the Profit & Loss Account in respect of Lease Liability and Right to Use Asset mentioned above
Adoption of the standard lead to recognition of Right to use Asset of Rs.3197 Lakhs and Corresponding Lease Liability of Rs.4335 Lakhs and Company has operating Leases in 4 of the 6 properties its Operates. • Verifying whether the disclosures are in accordance with the Standard.
4 Impact of COVID-19 pandemic -Refer Note 23: On 11 March 2020 the World Health Organisation declared the Novel Coronavirus (COVID-19) outbreak to be a pandemic. The Indian Government has imposed lock-downs across the country from 22 March 2020 up to 30 Our audit procedures included the following:
• Obtained an understanding of key assumptions adopted by the Company in assessing the Impact based on our understanding of the Company's business
• Performed the following procedures:
June 2020. These lockdowns and restrictions due to COVID-19 pandemic have posed significant challenges to the businesses of the Company. • Reviewed the status of long-term borrowings and company's availment of moratorium to the repayment;
• Reviewed the receivables position as at 31st March 2020 on the date of report
This required the Company to assess impact of COVID-19 on its operations. The Company has assessed the impact of COVID-19 on the future cash flow projections. The Company has also prepared a range of scenarios to estimate financing requirements. In view of the above we identified impact of COVID-19 on going concern as a key audit matter.
• Assessed impact of Government's announcement to lift the lockdown restrictions and Company's plan to re-open hotels in a phased manner;
• Assessed disclosures made in the standalone financial statements with regard to the above. Refer to note 23.

Information Other than the Standalone Financial Statements and Auditor's Report Thereon

The Company's Board of Directors is responsible for the preparation of the otherinformation. The other information comprises the information included in the ManagementDiscussion and Analysis Board's Report including Annexures to Board's Report BusinessResponsibility Report Corporate Governance and Shareholder's Information. It does notinclude the standalone financial statements and our report thereon.

Our opinion herein on the standalone financial statements does not cover the otherinformation and we do not express any form of assurance conclusion thereon. In connectionwith our audit of the financial statements our responsibility is to read the otherinformation identified above when it becomes available and in doing so consider whetherthe other information is materially inconsistent with the financial statements or ourknowledge obtained in the audit or otherwise appears to be materially misstated.

The said other information is expected to be made available to us after the date ofthis audit report. When we read the other information when furnished to us if weconclude that there is a material misstatement therein we are required to communicate thematter to those charged with governance and the shareholders.

Management's Responsibility 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 Ind AS and other accounting principles generally accepted in India. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; anddesign implementation and maintenance of adequate internal financial controls that wereoperating e_ectively for ensuring the accuracy and completeness of the accounting recordsrelevant to the preparation and presentation of the standalone financial statements thatgive a true and fair view and are free from material misstatement whether due to fraud orerror. In preparing the standalone financial statements the 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 unlessthe Management either intends to liquidate the Company or to cease operations or has norealistic alternative but to do so. The Board of Directors are responsible for overseeingthe Company's financial reporting 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 standalonefinancial statements whether due to fraud or error; design and perform audit proceduresresponsive to those risks and obtain audit evidence that is su_cient 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 omissions misrepresentations or the override of internalcontrol.

• Obtain an understanding of internal financial controls relevant to the audit inorder to design audit procedures that are appropriate in the circumstances. Under section143(3)(i) of the Act we are also responsible for expressing our opinion on whether theCompany has an adequate internal financial controls system in place and the operatinge_ectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by the Management.

• Conclude on the appropriateness of the Management's use of the going concernbasis of accounting and based on the audit evidence obtained whether a materialuncertainty exists related to events or conditions that may cast significant doubt on theCompany's ability to continue as a going concern. If we conclude that a materialuncertainty exists we are required to draw attention in our auditor's report to therelated disclosures in the standalone financial statements or if such disclosures areinadequate to modify our opinion. Our conclusions are based on the audit evidenceobtained up to the date of our auditor's report. However future events or conditions maycause the Company to cease to continue as a going concern.

• Evaluate the overall presentation structure and content of the standalonefinancial statements including the disclosures and whether the standalone financialstatements represent the underlying transactions and events in a manner that achieves fairpresentation. We communicate with those charged with governance regarding among othermatters the planned scope and timing of the audit and significant audit findingsincluding any significant deficiencies in internal control that we identify during ouraudit. We also provide those charged with governance with a statement that we havecomplied with relevant ethical requirements regarding independence and to communicatewith them all relationships and other matters that may reasonably be thought to bear onour independence and where applicable related safeguards. From the matters communicatedwith those charged with governance we determine those matters that were of mostsignificance in the audit of the standalone financial statements of the current period andare therefore the key audit matters. We describe these matters in our auditor's reportunless law or regulation precludes public disclosure about the matter or when inextremely rare circumstances we determine that a matter should not be communicated in ourreport because the adverse consequences of doing so would reasonably be expected tooutweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

1. As required by Section 143(3) of the Act based on our audit we report that: a) Wehave sought and obtained all the information and explanations which to the best of ourknowledge and belief were necessary for the purposes of our audit. b) In our opinionproper books of account as required by law have been kept by the Company so far as itappears from our examination of those books. c) The Balance Sheet the Statement of Profitand Loss including Other Comprehensive Income Statement of Changes in Equity and theStatement of Cash Flow dealt with by this Report are in agreement with the relevant booksof account. d) In our opinion the aforesaid standalone financial statements comply withthe Ind AS specified under Section 133 of the Act read with Rules made thereunder and inforce for the time being. e) On the basis of the written representations received from theDirectors as on March 31 2020 taken on record by the Board of Directors of the Companynone of the directors is disqualified as on March 31 2020 from being appointed as adirector in terms of Section 164 (2) of the Act. f) With respect to the adequacy of theinternal financial controls over financial reporting of the Company and the operatinge_ectiveness of such controls refer to our separate Report in "Annexure A". Ourreport expresses an unmodified opinion on the adequacy and operating e_ectiveness of theCompany's internal financial controls over financial reporting. g) With respect to theother matters to be included in the Auditor's Report in accordance with the requirementsof section 197(16) of the Act as amended: In our opinion and to the best of ourinformation and according to the explanations given to us We report that the excess overminimum remuneration paid to the Managerial Personnel for the year 2019-20 is beingpresented to the ensuing AGM for its approval in accordance with the provisions of theSection 197 (16) of Companies Act 2013. h) With respect to the other matters to beincluded in the Auditor's Report in accordance with Rule 11 of the Companies (Audit andAuditors) Rules 2014 as amended in our opinion and to the best of our information andaccording to the explanations given to us: i. The Company has disclosed the impact ofpending litigations on its financial position in its standalone financial statements.(Refer Note 22) ii. The Company has made provision as required under the applicable lawor accounting standards for material foreseeable losses if any on long-term contractsincluding derivative contracts. iii. There has been no delay in transferring amountsrequired to be transferred to the Investor Education and Protection Fund by the Company.

2. 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 B" a statement on the matters specified in paragraphs 3 and 4 of theOrder.

For M BHASKARA RAO & Co
Chartered Accountants
(Firm's Registration No. 000459S)
M. BHASKARA RAO
Place: Hyderabad Partner
Date: June 25 2020 (Membership No.5176)

Annexure "A"

to the Independent Auditor's Report

(Referred to in paragraph 1(f) under ‘Report on Other Legal and RegulatoryRequirements' section of our report to the Members of TAJGVK Hotels & Resorts Limitedof even date) Report on the Internal Financial Controls Over Financial Reporting underClause (i) of Sub-section 3 of Section 143 of the Companies Act 2013 ("theAct") We have audited the internal financial controls over financial reporting of TAJGVKHotels & Resorts Limited ("the Company") as of March 31 2020 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 Board of Directors of the Company is responsible for establishing and maintaininginternal financial controls based on the internal control over financial reportingcriteria established by the Company considering the essential components of internalcontrol stated in the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting issued by the Institute of Chartered Accountants of India. Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating e_ectively for ensuring the orderly and e_cientconduct of its business including adherence to respective company's policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information as required under the Companies Act 2013

Auditor's Responsibility

Our responsibility is to express an opinion on the internal financial controls overfinancial reporting of the Company based on our audit. We conducted our audit inaccordance with the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting (the "Guidance Note") issued by the Institute of Chartered Accountantsof India and the Standards on Auditing prescribed under Section 143(10) of the CompaniesAct 2013 to the extent applicable to an audit of internal financial controls. ThoseStandards and the Guidance Note require that we comply with ethical requirements and planand perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls over financial reporting was established and maintained and if suchcontrols operated e_ectively in all material respects. Our audit involves performingprocedures to obtain audit evidence about the adequacy of the internal financial controlssystem over financial reporting and their operating e_ectiveness. Our audit of internalfinancial controls over financial reporting included obtaining an understanding ofinternal financial controls over financial reporting assessing the risk that a materialweakness exists and testing and evaluating the design and operating e_ectiveness ofinternal control based on the assessed risk. The procedures selected depend on theauditor's judgement including the assessment of the risks of material misstatement of thefinancial statements whether due to fraud or error.

We believe that the audit evidence we have obtained is su_cient and appropriate toprovide a basis for our audit opinion on the internal financial controls system overfinancial reporting of the Company.

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 authorisations of theManagement 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 e_ect on the financial statements.

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 to the best of our information and according to the explanations givento us the Company has in all material respects an adequate internal financial controlssystem over financial reporting and such internal financial controls over financialreporting were operating e_ectively as at March 31 2020 based on the internal controlover financial reporting criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note on Audit of Internal FinancialControls Over Financial Reporting issued by the Institute of Chartered Accountants ofIndia.

For M BHASKARA RAO & Co
Chartered Accountants
(Firm's Registration No. 000459S)
M. Bhaskara Rao
Place: Hyderabad Partner
Date: June 25 2020 (Membership No.5176)

Annexure "B"

to the Independent Auditor's Report

(Referred to in paragraph 2 under ‘Report on Other Legal and RegulatoryRequirements' section of our report to the Members of TAJGVK Hotels & Resorts Limitedof even date)

i. In respect of the Company's fixed assets:

(a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets. (b) The Company has a program ofverification to cover all the items of fixed assets in a phased manner which in ouropinion is reasonable having regard to the size of the Company and the nature of itsassets. Pursuant to the program some of the fixed assets were physically verified by theManagement during the year. According to the information and explanations given to us nomaterial discrepancies were noticed on such verification. (c) According to the informationand explanations furnished to us and based on the records examined by us the title deedsof immovable properties included in the fixed assets register are held in the name of theCompany. ii. According to the information and explanations furnished to us the Company'sManagement has physically verified its inventories of stores consumables and spares as at28th February 2020. As at 31st March 2020 due to outbreak of Covid-19 Pandemic and theconsequential lockdown imposed by Government of India the Hotels were not in operationand hence no physical verification and reconciliation was carried out. In our opinionhaving regard to the nature of its business and location & size of its stocks thefrequency of verification is reasonable. As per the information and explanations furnishedto us the discrepancies noticed on such verification were not material and have beenproperly dealt with in the books of account. iii. According to the information andexplanations given to us the Company has not granted any loans secured or unsecured tocompanies firms Limited Liability Partnerships or other parties covered in the Registermaintained under Section 189 of the Companies Act 2013. Accordingly the provisions ofClause 3 (iii) (iii) (a) (iii) (b) and (iii) (c) of the said Order are not applicable tothe Company. iv. In our opinion and according to the information and explanationsfurnished to us the Company has not granted any loans or made any investments orprovided any guarantees or security during the year to any of the parties specified inSections 185 and 186 of the Companies Act 2013. Accordingly the provisions of Clause 3(iv) of the said Order are not applicable to the Company. v. In our opinion and accordingto the information and explanations given to us the Company has not accepted any depositsfrom public within the meaning of Sections 73 74 75 and 76 of the Act and the Rulesframed thereunder to the extent notified. Accordingly reporting under provisions ofparagraph 3(v) of the Order does not arise. vi. According to the information furnished tous maintenance of Cost Records has not been specified by the Central Government underSection 148(1) of the Companies Act 2013 for the business carried out by the company.Thus reporting under Clause 3(vi) of the Order does not arise. vii. According to theinformation and explanations furnished to us (a) The Company has generally been regularin depositing undisputed statutory dues including Provident Fund Employees' StateInsurance Income-tax Sales Tax Wealth Tax Service Tax Customs Duty Excise DutyValue Added Tax Cess and other al statutory dues applicable to it with the appropriateauthorities and there were no such dues on the date of the Balance Sheet (b) Details ofdisputed dues of Income Tax Sales Tax Service Tax Customs Duty Excise Duty Valueadded Tax which have not been deposited as on March 31 2020 are as below:

Name of the Statute Nature of Dues Amount Rs. In Lakhs Period to which the amount relates Forum where the dispute is pending
Income Tax Act 1961 Income Tax 7.60 2009-10 Assessing o_cer
51.57 2006-07 CIT (Appeals)
151.08 2012-13 ITAT Hyderabad
AP VAT Act VAT 294.04 2008-09 to 2010-11 Hon'ble High Court of Telangana
13.36 2008-09 Sales Tax Tribunal
Service Tax Service Tax 2477.10 2006 to 2011 CESTAT Hyderabad

viii. According to the information and explanations given to us and based on therecords examined by us the Company has not defaulted in respect of repayment of loans orborrowings to financial institutions banks and government. However as at the date of theBalance Sheet the Company has availed moratorium for repayment of Principal and Interestfrom March 01 2020 as per as per RBI circular RBI/2019-20/186DOR.No.BP.BC.47/21.04.048/2019-20 dated March 27 2020. Refer Note 10. The Company has notissued any debentures ix. According to the information furnished to us during the yearunder report the company did not have any moneys raised from Initial Public O_ering orFurther Public O_ering that remained to be applied for the purposes for which they wereraised. Thus reporting under Clause 3(ix) of the Order does not arise.

x. To the best of our knowledge and according to the information and explanationsfurnished to us no fraud by the Company and no material fraud on the Company by itso_cers or employees has been noticed or reported during the year. xi. According to theinformation and explanations given to us and based on the records examined by us wereport that Excess over Minimum Remuneration paid to the Managerial Personnel for the year2019-20 is being presented to the ensuing AGM for its approval in accordance with theprovisions of Section 197 read with Schedule V of the Companies Act 2013. xii. The Companyis not a Nidhi Company and hence reporting under clause 3 (xii) of the Order does notarise. xiii. In our opinion and according to the information and explanations given to usthe Company is in compliance with Section 177 and 188 of the Companies Act 2013 whereapplicable for all transactions with the related parties and the details of related partytransactions have been disclosed in the Standalone Ind AS Financial Statements as requiredby the applicable Accounting Standards. xiv. During the year the Company has not made anypreferential allotment or private placement of shares or fully or partly paid convertibledebentures and hence reporting under clause 3 (xiv) of the Order does not arise. xv. Inour opinion and according to the information and explanations furnished to us during theyear the Company has not entered into any non-cash transactions to which the provisionsof Section 192 0f the Companies Act 2013 apply with its directors or persons connectedwith them. xvi. In our opinion based on the information and explanations furnished to usthe Company is not required to be registered under section 45-IA of the Reserve Bank ofIndia Act 1934.

For M BHASKARA RAO & Co
Chartered Accountants
(Firm's Registration No. 000459S)
M. Bhaskara Rao
Partner
(Membership No.5176)
Place: Hyderabad
Date: June 25 2020

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