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Tree House Education & Accessories Ltd.

BSE: 533540 Sector: Others
NSE: TREEHOUSE ISIN Code: INE040M01013
BSE 00:00 | 03 Feb 15.65 0.35
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NSE 00:00 | 03 Feb 15.65 0.30
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15.35

HIGH

15.70

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OPEN 15.65
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VOLUME 439
52-Week high 25.70
52-Week low 7.32
P/E
Mkt Cap.(Rs cr) 66
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
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OPEN 15.65
CLOSE 15.30
VOLUME 439
52-Week high 25.70
52-Week low 7.32
P/E
Mkt Cap.(Rs cr) 66
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

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

Company auditors report

To

THE BOARD OF DIRECTORS

TREE HOUSE EDUCATION & ACCESSORIES LIMITED

Report on the Standalone Indian AS Financial Statements

We have audited the accompanying standalone Ind AS financial statementsof TREEHOUSE EDUCATION & ACCESSORIES LIMITED ("the Company") whichcomprise the Balance Sheet as at March 312022 the Statement of Profit and Loss(including Other Comprehensive Income) the Cash Flow Statement and the Statement ofChanges in Equity for the year then ended and a summary of significant accountingpolicies and other explanatory information.

Management's Responsibility for the Standalone AS FinancialStatements

The Company's Board of Directors are responsible for the matters statedin Section 134(5) of the Companies Act 2013 ("the Act") with respect topreparation of these standalone Ind AS financial statements to give a true and fair viewof the financial position financial performance (including other comprehensive income)cash flows and changes in equity of the Company in accordance with the accountingprinciples generally accepted in India including the Indian Accounting standardsspecified in the Companies (Indian Accounting Standards) Rules 2015 (as amended) underSection 133 of the Act. This responsibility also includes maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding of theassets of the Company and for preventing and detecting frauds and other irregularities;selection and application of appropriate accounting policies; making judgments andestimates that are reasonable and prudent; and design implementation and maintenance ofadequate internal financial controls that were operating effectively for ensuring theaccuracy and completeness of the accounting records relevant to the preparation andpresentation of the standalone Ind As financial statements that give a true and fair viewand are free from material misstatement whether due to fraud or error.

Auditors' Responsibility

Our responsibility is to express an opinion on these standalone Ind ASfinancial statements based on our audit.

We have taken into account the provisions of the Act and the Rules madethereunder including the accounting and auditing standards and matters which are requiredto be included 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 inaccordance with the Standards on Auditing specified under Section 143(10) of the Act andother applicable authoritative pronouncements issued by the Institute of CharteredAccountants of India. Those standards and pronouncements require that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance aboutwhether the standalone Ind AS financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence aboutthe amounts and disclosures in the standalone Ind AS financial statements. The proceduresselected depend on the auditor's judgment including the assessment of the risks ofmaterial misstatement of the standalone Ind AS financial statements whether due to fraudor error. In making those risk assessments the auditor considers internal financialcontrol relevant to the Company's preparation of the standalone Ind AS financialstatements that give a true and fair view in order to design audit procedures that areappropriate in the circumstances. An audit also includes evaluating the appropriateness ofaccounting policies used and the reasonableness of the accounting estimates made by theCompany's Directors as well as evaluating the overall presentation of the standalone IndAS financial statements.

We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the standalone Ind AS financialstatements.

Basis of Forming an Opinion

1. We draw your attention to the Standalone Ind AS FinancialStatements with regard to Fixed Assets. The Company has informed us that it hasidentified Furniture & Fixtures and Leasehold Improvements into those lying at closedcentres converted franchise centres and own centres in a phased manner. During COVID-19Pandemic has forced non-opening of pre-schools and hence all such assets held by theCompany at those centres are reclassified as "Assets held for Disposal/Sale".

2. We draw attention to the Standalone Ind AS Financial Statements withregards to Trade Receivables. In our opinion the deliverables and receipts are outstandingfor a longer period of time.

3. The management has conducted physical verification of inventory atreasonable intervals during the year and no material discrepancies were noticed onphysical verification of stocks as compared to book records.

4. The COVID-19 Pandemic has forced non-opening of pre-schools. Hencethe schools were conducted virtually during the year 2021-22.

5. Confirmation letters have been sent by the Company to sundrycreditors and debtors and parties to whom loans & advances deposits have been grantedfor confirming the balances lying in their ledger accounts in books of the Company. Thebalances under these heads have been shown as per books of accounts and are subject toconfirmation reconciliation and adjustment if any.

6. The Company has defaulted in repayment of credit facility availedfrom HDFC Bank due to which it has been classified as short term borrowing. The managementhas informed us that the Company has received notice from HDFC Bank under "SARFAESIAct". The amount classified as short term borrowing is at Rs. 1980.57 lakhs.

7. The Company has booked impairment loss on shares held by TreeHouseEmployees Welfare Trust of Rs. 5.41 lakhs based on the market value of the shares as on31st March 2022.

8. The Company has repaid loan of ICICI Bank in full under OTS Scheme(One Time Settlement Scheme) thereby being benefitted by waiver of interest of Rs 1211.84lakhs.

9. The Company has sold its office at Khar Mumbai Maharashtra andschool building in Jhunjunu Rajasthan to pay off its debts & liabilities.

10. Out of the assets reclassified as "Assets held forDisposal/Sale" some of its assets such as furniture teaching aids office equipmentsand old computers & accessories lying at the Vasai godown have been sold off viatender bids.

11. Mr. Rajesh Bhatia & Anr. (Promoters of the Company) filed anappeal before Securities Appellate Tribunal ("SAT") against an Order NoWTM/SM/IVD-ID-1/28/2021-22 dated May 24 2021 received from Securities and Exchange Boardof India (SEBI) under the provisions of sections 11(1) 11(4) 11B(1) 11B(2) and 11(4A)of the Securities and Exchange Board of India Act 1992. Accordingly the SAT vide itsorder dated August 30 2021 directed the promoters of the Company to deposit a sum of Rs.15 lakhs as security deposit with respondent i.e. Securities and Exchange Board of Indiathe said amount was deposited on time as per the order. Further the matter is awatinghearing.

12. The Company has received summons on 18th Day of November 202113th December 2021 also 23rd Day of December 2021 and 11th Day of February 2022 fromSecurities and Exchange Board of India("SEBI") for production of documentsbefore the Investigating Authority(‘IA') under Section 11(2) 11C(2) (3) and (5) ofthe Securities And Exchange Board of India Act 1992 regarding the preparation offinancial statements of the Company in a manner detrimental to the investors or thesecurities market and any intermediary or any person associated with the Securities marketunder the provision of the SEBI Act 1992 Securities Contracts (Regulations) Act 1956and other provisions as specified in Section 24 of the Companies Act 2013 or the Rules orRegulations made or directions issued by SEBI thereunder. As informed to us the Companyhas duly produced necessary documents and sent/shared necessary replies to SEBI.

13. The Company has received reminder letter from National StockExchange of India ("NSE") vide letter No. NSE/SOP/RBF/0151 dated October 252021 for freezing of Promoters Holding for the non- payment of fine of Rs. 902700/-(Rupees Nine Lakhs Two Thousand Seven Hundred) for the Non-Compliance of Regulation 17(1)of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015. As informedto us the Company is in due process of filing an appeal/application before the high courtof Mumbai.

14. There was an ongoing arbitration matter between the Company andJanodhar Sikhshan Prasarak Mandal and others ("Respondents") in which thecompany has received order in its favour on January 11 2021 wherein the company shallreceive compensation from the Respondents. The company continues to pursue legal optionsfor recovery of proceeds as per the order.

15. Forensic Audit of the Company for the period from F.Y.2011-12 to2017-18 is underway. The Company is defending/pursuing legal cases on various forumsagainst itself and its past directors.

16. It is worthwhile to mention that Corporate Governance and legalcompliances have always been the topmost priority of the Company and Company ensures thatall available information about the impact of these events on the company and itsoperations is communicated in a timely and cogent manner to its investors andstakeholders.

Opinion

In our opinion and to the best of our information and according to theexplanations given to us the aforesaid standalone

Ind AS financial statements give the information required by the Act inthe manner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India of the standalone state of affairs of the Companyas at March 312022 and its loss (including other comprehensive income) its cash flowsand 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 issuedby the Central Government of India in terms of section 143(11) of the Act ("TheOrder") and on the basis of such checks of the books and records of the Company aswe considered appropriate and according to the information and explanations given to uswe give inthe Annexure B statement on the matters specified in paragraphs 3 and 4 of theOrder.

2. As required by section 143(3) of the Act we report that:

a) We have sought and obtained all the information and explanationswhich to the best of our knowledge and belief were necessary for the purpose of ouraudit.

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

c) The Balance SheettheStatement of Profit and Loss(including othercomprehensive income) and the Cash Flow Statementand the Statement of Changes in Equitydealt with by this Report are in agreement with the books of account.

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

e) With respect to the adequacy of the internal financial controls overfinancial reporting of the Company and the operating effectiveness of such controls referto our separate report in "Annexure A". Our report expresses an unmodifiedopinion on the adequacy and operating effectiveness of the company's financial controlsover financial reporting.

f) With respect to other matters to be included in the Auditor's Reportin accordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in ouropinion and to the best of our information and according to the explanations given to us:

i. There arepending litigations and suits filed against the company andits past directors which may impact its financial position. The Company has not disclosedthe impact of such pending litigations.

ii. The Company did not have any long term contracts includingderivative contracts for which there were any material foreseeable losses.

iii. The Company has transferred Rs. 5984/-lying as unpaid dividendpertaining to the year 2014 to the Investor Education and Protection Fund during the yearended March 312022.

Annexure"A"to Independent Auditors' Report on theStandalone Financial Statements of

"TREE HOUSE EDUCATION & ACCESSORIES LIMITED"

Referred to in paragraph 11(f) of the Independent Auditors Report ofeven date to the members of TreeHouse Education & Accessories Limited on theStandalone Ind AS financial statement for the year ended March 312022.

We have audited the internal financial controls over financialreporting of "TREEHOUSE EDUCATION & ACCESSORIES LIMITED" ("theCompany") as of March 31 2022 in conjunction with our audit of the standalone Ind ASfinancial statements of the Company for the year ended on that date.

MANAGEMENT'S RESPONSIBILITY FOR INTERNAL FINANCIAL CONTROLS

The Company's management is responsible for establishing andmaintaining internal financial controls based on the internal control over financialreporting criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting (the"GuidanceNote") issued by the Institute of CharteredAccountants of India. These responsibilities include the design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the orderly and efficient conduct of its business including adherence toCompany's policies the safeguarding of its assets the prevention and detection of fraudsand errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Companies Act 2013.

AUDITORS' RESPONSIBILITY

Our responsibility is to express an opinion on the Company's internalfinancial controls over financial reporting based on our audit. We conducted our audit inaccordance with the Guidance Note on Audit of Internal Financial Controls over FinancialReporting (the "Guidance Notes") issued by the Institute of CharteredAccountants of India and the Standards on Auditing deemed to be prescribed under Section143(10) of the Companies Act 2013 to the extent applicable to an audit of internalfinancial controls both applicable to an audit of internal financial controls and bothissued by the ICAI. Those Standards and the Guidance Note require that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance aboutwhether adequate internal financial controls over financial reporting was established andmaintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit and evidenceabout the adequacy of the internal financial controls system over financial reporting andtheir operating effectiveness. Our audit of internal financial controls over financialreporting included obtaining an understanding of internal financial controls overfinancial reporting assessing the risk that a material weakness exists and testing andevaluating the design and operating effectiveness of internal control based on theassessed risk. The procedures selected depend on the auditor's judgment including theassessment of the risks of material misstatement of the financial statements whether dueto fraud or error.

Because of the matter described in Disclaimer of opinion paragraphbelow we were not able to obtain sufficient and appropriate audit evidence to provide abasis for our audit opinion on the Company's internal financial controls system overfinancial reporting.

MEANING OF INTERNAL FINANCIAL CONTROLS OVER FINANCIAL REPORTING

A company's internal financial control over financial reporting is aprocess designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles. A company's internal financial control overfinancial reporting includes those policies and procedures that

(1) pertains to the maintenance of records that in reasonable detailaccurately and fairly reflect the transactions and dispositions of the assets of theCompany;

(2) provides reasonable assurance that transactions are recorded asnecessary to permit preparation of financial statements in accordance with generallyaccepted accounting principles and that receipts and expenditures of the company arebeing made only in accordance with authorizations of management and directors of thecompany and

(3) provides reasonable assurance regarding prevention or timelydetection of unauthorized acquisition use or disposition of the company's assets thatcould have a material effect on the financial statements.

INHERENT LIMITATIONS OF INTERNAL FINANCIAL CONTROLS OVER FINANCIALREPORTING

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

Disclaimer of Opinion

According to information and explanation given to us and based on ouraudit the Company's internal financial control over financial reporting in the currentfinancial year to cover the essential components of Internal controls stated in GuidanceNote on Audit of Internal Financial controls over Financial Reporting issued by ICAI arenot commensurate to the size of the Company.

The Internal Audit carried out by an independent firm on areas requiredto be covered as per the Guidance Note on Audit of Internal Financial Controls overFinancial Reporting reports that the internal controls operating in the company are notcommensurate to the size of the Company.

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

Annexure "B" to Independent Auditors' Report on theStandalone Financial Statements of

"TREEHOUSE EDUCATION & ACCESSORIES LIMITED"

Referred to in paragraph 1 under the heading "Report and OtherLegal Regulatory Requirements" of Independent Auditors' Report of even date to theMembers of TreeHouse Education & Accessories Limited on the Standalone Ind ASfinancial statements as of and for the year ended March 312022.

I. a) The Company has maintained proper records showing fullparticulars including quantitative details and situation of fixed assets. The managementhas identified the fixed assets consisting of furniture & fixtures and leaseholdimprovements into those lying at closed centres franchise centres and own centres.

b) As explained to us by the management it is known that the companyhas carried out a phased programme of verification of fixed assets consisting of furniture& fixtures leasehold improvements and teaching aids & equipment located atfranchise centres and no material discrepancies were noticed on such verification. It isfurther explained by the management that the fixed assets consisting of furniture &fixtures and leasehold improvements lying at the centres closed during F.Y. 2015-16 &2016-17 could not be physically verified as the company did not have access to thosecentres.

c) During the year 2020-21 the Company has carried out physicalverification of above fixed assets lying at Head Office Centres at Bandra and Khar andthose lying at godown. The COVID-19 Pandemic has forced nonopening of pre-schools andhence all such assets held by the Company at those centres are reclassified as"Assets held for Disposal/Sale".The written down value of assets held as"Assets held for Disposal/Sale" as on March 312022 is Rs 410361317/-.

i. The title deeds of immovable properties are held in the name of theCompany are pledged with banks & financial institutions.

ii. The management has conducted physical verification of inventory atreasonable intervals during the year and no material discrepancies were noticed onphysical verification of stocks as compared to book records.

iii. The Company has not granted any loans secured or unsecured tocompanies firms Limited Liability Partnerships or other parties during the year coveredin the register maintained u/s 189 of the Act. Accordingly the provisions of Clause3(iii) of the Order are not applicable to the Company.

iv. In our opinion and according to the information and explanationgiven to us the Company has complied with the provisions of section 186 of the CompaniesAct 2013 in respect of the loans and investments made and guarantees and securitiesprovided by it.

v. The Company has not accepted any deposits from the public and hencethe directives issued by the Reserve Bank of India and the provisions of sections 73 to 76or any other relevant provisions of the Act and the rules framed there under are notapplicable.

vi. Pursuant to the rules made by the Central Government of India theCompany is required to maintain cost records as specified under Section 148(1) of the Actin respect of its products. We have broadly reviewed the same and are of the opinion thatprima facie the prescribed accounts and records have been made and maintained. We have nothowever made a detailed examination of the records with a view to determine whether theyare accurate or complete.

vii. As per records of the Company and according to the information andexplanations given to us the Company is not regular in depositing in undisputed applicablestatutory dues including Provident Fund Income-tax MVAT/CST GST and any other statutorydues to the appropriate authorities though there has been a delay in few cases. As on 31stMarch 2022 following are the amounts in arrears for a period of more than six months fromthe date they became payable:

Sr No Name of the Statue Nature of Dues Unpaid Liabilities > 6 months
1 Income Tax Act 1961 TDS 23122757/-
2 Maharashtra Vat Act 2002 MVAT & CST 2015311/-
3 The Employees' Provident Funds And Miscellaneous Provisions Act 1952 PF 2469729/-
4 Profession Tax Act under respective states Profession Tax 187295/-
TOTAL 27795092/-

viii. According to the records of the Company examined by us and theinformation and explanations given to us the Company has defaulted in the repayment ofloans or borrowings to financial Institutions banks or government during the year. TheCompany did not have any outstanding debentures at the balance sheet date.

ix. According to the information and explanation given to us theCompany has not raised moneys by way of initial public offer further public offerincluding debt instruments during the year. In our opinion and according to theinformation and explanations given to us the company has applied the term loans for thepurposes for which they were obtained.

x. During the course of examination of the books and records of theCompany carried out in accordance with the generally accepted auditing practices in Indiaand according to the information and explanations given to us we have neither come acrossany instance of material fraud by the Company or on the Company by its officers oremployees noticed or reported during the year nor have we been informed of any such caseby the Management.

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

xii. In view of the losses managerial remuneration has been paid inaccordance with the provisions of Section 197 read with Schedule V of the Act.

xiii. Based upon the audit procedures performed and the information andexplanations given by the management no such transactions as specified in section 177 and188 of the Act have been entered by the company during the year. Hence the provisions ofClause 3(xiii) of the Order are not applicable to the Company.

xiv. The Company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures during the year underreview. Hence the provisions of Clause 3(xiv) of the Order are not applicable to theCompany.

xv. The company has not entered into any non-cash transactions with itsdirectors or persons connected with him as specified in section 192 of the Act. Hence 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 45-1Aof the Reserve Bank of India Act 1934. Hence the provisions of Clause 3(xvi) of the Orderare not applicable to the Company.

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