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Tree House Education & Accessories Ltd.

BSE: 533540 Sector: Others
NSE: TREEHOUSE ISIN Code: INE040M01013
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NSE 09:44 | 30 Sep 7.10 0.10
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OPEN 6.65
PREVIOUS CLOSE 7.08
VOLUME 5453
52-Week high 10.02
52-Week low 3.14
P/E
Mkt Cap.(Rs cr) 30
Buy Price 6.86
Buy Qty 2367.00
Sell Price 6.91
Sell Qty 200.00
OPEN 6.65
CLOSE 7.08
VOLUME 5453
52-Week high 10.02
52-Week low 3.14
P/E
Mkt Cap.(Rs cr) 30
Buy Price 6.86
Buy Qty 2367.00
Sell Price 6.91
Sell Qty 200.00

Tree House Education & Accessories Ltd. (TREEHOUSE) - Auditors Report

Company auditors report

TO ALL THE MEMBERS OF

TREE HOUSE EDUCATION & ACCESSORIES LIMITED

Report on the Standalone Indian AS Financial Statements

We have audited the accompanying standalone Ind AS financial statements of TREEHOUSE EDUCATION & ACCESSORIES LIMITED ("the Company") which comprisethe Balance Sheet as at March 31 2019 the Statement of Profit and Loss (includingOther Comprehensive Income) the Cash Flow Statement and the Statement of Changes inEquity for the year then ended and a summary of significant accounting policies and otherexplanatory information.

Management's Responsibility for the Standalone 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 preparation ofthese standalone Ind AS financial statements to 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 the accounting principles generallyaccepted in India including the Indian Accounting standards specified in the Companies(Indian Accounting Standards) Rules 2015 (as amended) under Section 133 of the Act. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding of 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 effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the standalone Ind As financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.

Auditors' 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 and the Rules made thereunderincluding the accounting and auditing standards and matters which are required to beincluded in the audit report under the provisions of the Act and the Rules madethereunder.

We conducted our audit of the standalone Ind AS financial statements in accordance withthe Standards on Auditing specified under Section 143(10) of the Act and other applicableauthoritative pronouncements issued by the Institute of Chartered Accountants of India.Those standards and pronouncements require that we comply with ethical requirements andplan and perform the audit to obtain reasonable assurance about whether the standalone IndAS financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures in the standalone Ind AS financial statements. The procedures selected dependon the auditor's judgment including the assessment of the risks of material misstatementof the standalone Ind AS financial statements whether due to fraud or error. In makingthose risk 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 circumstances.An audit also includes evaluating the appropriateness of accounting policies used and thereasonableness of the accounting estimates made by the Company's Directors as well asevaluating the overall presentation of the standalone Ind AS financial 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 Forming an Opinion

1. We draw your attention to the Standalone Ind AS Financial Statements with regard toFixed Assets. The Company has discontinued most of the centres operated by the Companyduring F.Y. 2016-17 and have converted some of them into franchisee during F.Y. 2016-17& 2017-18. The Company has informed us that it has identified Furniture & Fixturesand Leasehold Improvements into those lying at closed centres franchise centres and owncentres in a phased manner.

2. During the year the company has allotted new franchises to 18 centres. There were inall 133 centres operative during the year 2018-19.

3. We draw attention to the Standalone Ind AS Financial Statements with regards toTrade Receivables. In our opinon the deliverables and receipts are outstanding for alonger period of time.

4. The Company has defaulted in repayment of loans availed from financial institutionsdue to which these borrowings have been classified as short term borrowings. Themanagement has informed us that the Company has received notices from financialinstitutions under "SARFAESI Act". The amount classified as short termborrowings is at Rs. 7065.91 lakhs.

5. The Company has disposed off its investment held in M T Infrastructure Pvt. Ltd. Thepart payment of Rs 30.00 lakhs received against the said sale has been held in separateaccount by HDFC Bank. Similarly the Company has received advance of Rs. 260.00 lakhsagainst sale of school building at Baroda which is also held by HDFC Bank in separateaccount since the company's accounts are classified as NPA. The HDFC Bank has informedthe Company that the said amount of Rs. 290.00 lakhs shall be adjusted against principaloutstanding. The Company has therefore classified the said separate account with HDFC Bankunder the grouping of Loans Liabilities. Also the Company has received advance of Rs.300.00 lakhs against land at goregaon which is also held by HDFC Bank in the saidseparate account.

6. The policies procedures and overall internal controls needs to be strengthen inorder to provide proper evidences regarding recover ability of receivables valuations offinancial assets including deposits write off of fixed assets including impairments andaccounting for direct & indirect taxes including other statutory compliances.

7. The management has conducted physical verification of inventory at reasonableintervals during the year and no material discrepancies were noticed on physicalverification of stocks as compared to book records. However during the year under auditthe company has bifurcated the inventory into non-moving obsolete redundant.

3. Confirmation letters have been sent by the Company to sundry creditors and partiesto whom loans & advances deposits have been granted for confirming the balances lyingin their ledger accounts in books of the Company. In view of confirmations having beenreceived from only few of the parties the balance under these heads have been shown asper books of accounts and are subject to reconciliation and adjustment if any.

4. SEBI has appointed Forensic Auditor for conducting Forensic Audit of the Company forthe period beginning from F.Y. 2011-12 to 2017-18. In the process Company has filed anappeal before Securities Appellate Tribunal and the decision thereof is awaited.

5. Some landlords and creditors have initiated legal proceedings against the Companywhich may result in compensation interest and other penalties.

Opinion

In our opinion and to the best of our information and according to the explanationsgiven to us the a fore said standalone Ind AS financial statements give the informationrequired by the Act in the manner so required and give a true and fair view in conformitywith the accounting principles generally accepted in India of the standalone state ofaffairs of the Company as at March 31 2019 and its loss (including other comprehensiveincome) its cash flows and the changes in Equity for the year ended on that date.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order 2016 issued by the CentralGovernment of India in terms of section 143(11) of the Act ("The Order") andon the basis of such checks of the books and records of the Company as we consideredappropriate and according to the information and explanations given to us we give in theAnnexure B statement on the matters specified in paragraphs 3 and 4 of the Order.

2. 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 purpose of our audit.

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

c) The Balance Sheet the Statement of Profit and Loss(including other comprehensiveincome) and the Cash Flow Statementand the Statement of Changes in Equity dealt with bythis Report are in agreement with the books of account.

d) In our opinion the aforesaid standalone financial statements comply with theAccounting Standards specified under Section 133 of the Act.

e) On the basis of written representations received from the directors of the Companyas on March 31 2019 and taken on record by the Board of Directors of the Company noneof the directors of the Company are disqualified as on March 31 2019 from being appointedas a director in terms of section 164(2) of the Act.

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 A". Our report expresses an unmodified opinion onthe adequacy and operating effectiveness of the company's financial controls overfinancial reporting.

g) With respect to other matters to be included in the Auditor's Report in accordancewith Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinion and to thebest of our information and according to the explanations given to us:

i The Company has numerous pending litigations and suits filed against the company andits directors which may impact its financial position. The Company has not disclosed theimpact of such pending litigations.

ii. The Company did not have any long term contracts including derivative contracts forwhich there were any material foreseeable losses.

iii. There are no amounts required to be transferred to the Investor Education andProtection Fund by the Company during the year ended March 31 2019.

For S. Dedhia & Co

Chartered Accountants

F.R.N. 117695W

CA Sandeep Dedhia

Proprietor

M. No. 102606

Date : 30/05/2019

Place : Mumbai

Annexure "A"

to Independent Auditors' Report on the Standalone Financial Statements of "TREEHOUSE EDUCATION & ACCESSORIES LIMITED"

Referred to in paragraph 11(f) of the Independent Auditors Report of even date to themembers of Tree House Education & Accessories Limited on the standaloneInd ASfinancial statement for the year ended March 31 2019.

We have audited the internal financial controls over financial reporting of "TREEHOUSE EDUCATION & ACCESSORIES LIMITED" ("the Company") as of March 312019 in conjunction with our audit of the standalone Ind AS financial statements of theCompany for 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 Reporting(the"GuidanceNote") issued by the Institute of Chartered Accountants of India.These responsibilities include the design implementation and maintenance of adequateinternal financial controls that were operating effectively for ensuring the orderly andefficient conduct of its business including adherence to 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.

AUDITORS' 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 Notes") issued by the Institute of Chartered Accountants of Indiaand theStandards on Auditing deemed to be prescribed under Section 143(10) of theCompanies Act 2013 to the extent applicable to an audit of internal financial controlsboth applicable to an audit of internal financial controls and both issued by the ICAI.Those Standards and the Guidance Note require that we comply with ethical requirements andplan and perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls overfinancial reporting was established and maintained and if suchcontrols operated effectively in all material respects.

Our audit involves performing procedures to obtain audit and evidence about theadequacy of the internal financial controls system over financial reporting and theiroperating effectiveness. Our audit of 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 judgment including the assessment of therisks of material misstatement of the financial statements whether due to fraud or error.

Because of the matter described in Disclaimer of opinion paragraph below we were notable to obtain sufficient and appropriate audit evidence to provide a basis for our auditopinion on the Company's internal financial controls system over 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 overfinancialreporting includes those policies and procedures that

(1) pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and 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 with authorizations of management and directors of the company and

(3) provide reasonable assurance regarding prevention or timely detection ofunauthorized acquisition use or disposition of the company's assets that could have amaterial 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 projection 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.

DISCLAIMER OF OPINION

According to information and explanation given to us and based on our audit theCompany's internal financial control over financial reporting in the current financialyear to cover the essential components of Internal controls stated in Guidance Note onAudit of Internal Financial controls over Financial Reporting issued by ICAI are notcommensurate to the size of the Company.

The Internal Audit carried out by an independent firm on areas required to becovered asper the Guidance Note on Audit of Internal Financial Controls over Financial Reportingreports that the internal controls operating in the company are not commensurate to thesize of the Company.

We have considered the disclaimer report above in determining the nature timing andextent of audit tests applied in our audit of standalone financial statements of thecompany and the disclaimer does not affect our opinion on the standalone financialstatements of the company.

For S. Dedhia & Co

Chartered Accountants

F.R.N. 117695W

CA Sandeep Dedhia

Proprietor

M. No. 102606

Date : 30/05/2019

Place : Mumbai

Annexure "B"

to Independent Auditors' Report on the Standalone Financial Statements of "TREEHOUSE EDUCATION & ACCESSORIES LIMITED"

Referred to in paragraph 1 under the heading "Report and Other Legal RegulatoryRequirements" of Independent Auditors' Report of even date to the Members of TreeHouse Education & Accessories Limited on the standalone Ind AS financial statements asof and for the year ended March 31 2019.

i a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets. The management has identified thefixed assets consisting of furniture & fixtures and leasehold improvements into thoselying at closed centres franchise centres and own centres.

b) As explained to us by the management it is known that the company has carried out aphased programme of verification of fixed assets consisting of furniture & fixturesleasehold improvements and teaching aids & equipments located at franchise centres andno material discrepancies were noticed on such verification. It is further explained bythe management that the fixed assets consisting of furniture & fixtures and leaseholdimprovements lying at the centres closed during F.Y. 2015-16 & 2016-17 could not bephysically verified as the company did not have access to those centres. However we areunable to verify the reasonableness of the same as necessary documentary evidences werenot made available for our verification.

c) The title deeds of immovable properties are held in the name of the Company howeverall such Immovable properties are pledged with banks & financial institutions.

ii. The management has conducted physical verification of inventory at reasonableintervals during the year and nonmaterial discrepancies were noticed on physicalverification of stocks as compared to book records. However during the year under auditthe company has bifurcated the inventory into non-moving obsolete redundant. The saidnon-moving obsolete redundant inventory is of scrap value however in the absence ofexact scrap realisation value the same is valued at cost.

iii. The Company has not granted any loans secured or unsecured to companies firmsLimited LiabilityPartnerships or other parties during the year covered in the registermaintained u/s 189 of the Act. Accordingly the provisions of Clause 3(iii) of the Orderare not applicable to the Company.

iv. In our opinion and according to the information and explanation given to us theCompany has complied with the provisions of section 186 of the Companies Act 2013 inrespect of the loans and investments made and guarantees and security provided by it.

v. The Company has not accepted any deposits from the public and hence the directivesissued by the Reserve Bank of India and the provisions of sections 73 to 76 or any otherrelevant provisions of the Act and the rules framed there under are not applicable.

vi. Pursuant to the rules made by the Central Government of India the Company isrequired to maintain cost records as specified under Section 148(1) of the Act in respectof its products. We have broadly reviewed the same and are of the opinion that prima faciethe prescribed accounts and records have been made and maintained. We have not howevermade a detailed examination of the records with a view to determine whether they areaccurate or complete.

vii. As per records of the Company and according to the information and explanationsgiven to us the Company is not regular in depositing in undisputed applicable statutorydues including Provident Fund ESI Income-tax MVAT/CST Service Tax Cess GST and anyother statutory dues to the appropriate authorities though there has been a delay in fewcases. As on 31st March 2019 following are the amounts in arrears for a periods of morethan six months from the date they became payable:

Sr No Name of the Statue Nature of Dues Unpaid Liabilities > 6 months
1 Income Tax Act1961 TDS 25160374/-
2 Finance Act 1994 Service Tax 13086418/-
3 Maharashtra Vat Act 2002 MVAT & CST 2863634/-
4 The Employees' Provident Funds And Miscellaneous Provisions Act 1952 PF 2677796/-
5 Employees' State Insurance Act1948 ESIC 111270/-
6 Profession tax Act under respective states Profession Tax 301460/-
7 Goods & Service Tax Act 2017 GST 4164585/-
TOTAL 48365537/-

viii. According to the records of the Company examined by us and the information andexplanations given to us the Company has defaulted in the repayment of loans orborrowings to financial Institutions banks or government during the year. The Company didnot have any outstanding debentures at the balance sheet date.

ix. According to the information ad explanation given to us the Company has not raisedmoneys by way of initial public offer further public offer including debt instrumentsduring the year. In our opinion and according to the information and explanations given tous the company has applied the term loans for the purposes for which they were obtained.

x. During the course of out examination of the books and records of the Company carriedout in accordance with the generally accepted auditing practices in India and according tothe information and explanations given to us we have neither come across any instance ofmaterial fraud by the Company or on the Company by its officers or employees noticed orreported during the year nor have we been informed of any such case by the Management.

xi. In view of the losses managerial remuneration has not been paid or provided inaccordance with the requisite approvals as mandated by the provisions of Section 197 readwith Schedule V of the Act.

xii. As the Company is not a Nidhi Company and the Nidhi Rules 2014 are not applicableto it the provisions of Clause 3(xii) of the Order are not applicable to the Company.

xiii. Based upon the audit procedures performed and the information and explanationsgiven by the management no such transactions as specified in section 177 and 188 of theAct have been entered by the company during the year. Therefore the provisions of Clause3(xiii) of the Order are not applicable to the Company.

xiv. The Company has not made any preferential allotment or private placement of sharesor fully or partly convertible debentures during the year under review. Accordingly theprovisions of Clause 3(xiv) of the Order are not applicable to the Company.

xv. The company has not entered into any non-cash transactions with its directors orpersons connected with him as specified in section 192 of the Act. Accordingly theprovisions of Clause 3(xv) of the Order are not applicable to the Company.

xvi. The Company is not required to be registered under Section 45-1A of the ReserveBank of India Act 1934.

Accordingly the provisions of Clause 3(xvi) of the Order are not applicable to theCompany.

For S. Dedhia & Co

Chartered Accountants

F.R.N. 117695W

CA Sandeep Dedhia

Proprietor

M. No. 102606

Date : 30/05/2019

Place : Mumbai