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Viceroy Hotels Ltd.

BSE: 523796 Sector: Services
NSE: VICEROY ISIN Code: INE048C01017
BSE 00:00 | 20 Feb 1.12 0.01
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1.12

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NSE 00:00 | 20 Feb 1.15 0
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OPEN 1.12
PREVIOUS CLOSE 1.11
VOLUME 10798
52-Week high 5.02
52-Week low 1.08
P/E
Mkt Cap.(Rs cr) 5
Buy Price 1.12
Buy Qty 459.00
Sell Price 1.19
Sell Qty 343.00
OPEN 1.12
CLOSE 1.11
VOLUME 10798
52-Week high 5.02
52-Week low 1.08
P/E
Mkt Cap.(Rs cr) 5
Buy Price 1.12
Buy Qty 459.00
Sell Price 1.19
Sell Qty 343.00

Viceroy Hotels Ltd. (VICEROY) - Auditors Report

Company auditors report

To the Members of

M/s. VICEROY HOTELS LIMITED

Report on the Ind AS Standalone Financial Statements

We have audited the accompanying Ind AS Standalone Financial Statements of VICEROYHOTELS LIMITED ("the company") which comprise the Balance Sheet as at 31stMarch 2018 the Statement of Profit and Loss (including Other Comprehensive Income) theCash Flow Statement and the Statement of changes in equity for the year then ended and asummary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Ind AS Standalone Financial Statements

The Company’s Board of Directors is responsible for the matters stated in Section134(5) of the Companies Act 2013("the Act") with respect to the preparation andpresentation of these Standalone financial statements that give a true and fair view ofthe financial position financial performance and cash flows of the Company in accordancewith the accounting principles generally accepted in India including the AccountingStandards specified under Section 133 of the Act read with relevant rules issued thereunder. This responsibility includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding the assets of the Company andfor preventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; design implementation and maintenance of adequate internal financial controlsthat are operating effectively for ensuring the accuracy and completeness of theaccounting records relevant to the preparation and presentation of the financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these Ind AS Standalone FinancialStatements based on our audit. We have taken into account the provisions of the Act theaccounting and auditing standards and matters which are required to be included in theaudit report under the provisions of the Act and the Rules made there under.

We conducted our audit in accordance with the Standards on Auditing specified underSection 143(10) of the Act. Those Standards require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetherthe Ind AS Standalone Financial Statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures in the Ind AS Standalone Financial Statements. The procedures selected dependon the auditor’s judgment including the assessment of the risks of materialmisstatement of the Ind AS Standalone Financial Statements whether due to fraud or error.In making those risk assessments the auditor considers internal financial controlrelevant to the Company’s preparation of the Ind AS Standalone Financial Statementsthat give a true and fair view in order to design audit procedures that are appropriatein the circumstances. An audit also includes evaluating the appropriateness of accountingpolicies used and the reasonableness of the accounting estimates made by theCompany’s Directors as well as evaluating the overall presentation of the Ind ASFinancial Statements.

An audit also includes evaluating the appropriateness of accounting policies used andthe reasonableness of the accounting estimates made by the Company’s Directors aswell as evaluating the overall presentation of the Ind AS Standalone Financial Statements.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Ind AS Standalone Financial Statements:

1. Basis of Qualified Opinion:

a. Capital Work In Progress: The Company has converted capital work in progressinto Fixed Assets during the F.Y 2017-18 of an amount of Rs. 111.94 Crores. However thecompany has not submitted us any valuation certificate towards capitalization of fixedassets of Rs.111.94 crores hence the depreciation claimed by the company an amount ofRs.3.56 crores towards capitalized amount during the year is not ascertainable.

b. Forfeiture of Advance: the company has forfeited an advance of amount Rs.134.65Crores in the F.Y 201314 and adjusted in slump sale proceeds as disclosed in the annualreport of F.Y 2013-14 in the current financial year again the company has recognized theforfeited advances in the books of accounts as outstanding liability which is not in linewith the IND As accounting policies also the management of the company has not providedus any supporting document towards re recognition of such advances liability in the booksof accounts of the current financial year 2017-18.

c. Corporate guarantee: The Company Viceroy Hotels Limited has given corporateguarantee for an amount of Rs. 317 Crores to Edelweiss Asset Reconstruction CompanyLimited in respect of loans taken by Viceroy Bangalore hotels private limited in theprevious year’s which is violating the provisions specified U/s 186 of The CompaniesAct 2013. The company has not obtained shareholders permission in the general meeting forsuch corporate guarantee given.

d. NCLT: The Asset Reconstruction Company (India) Ltd (ARCIL) has filed Plea underSec.7 of The Insolvency and Bankruptcy code -2016 against M/s Viceroy Hotels Limited fornonpayment of Loans and an Order has been received by the company from NCLT for the same.The company is in the process of corporate insolvency Resolution process which may effectthe Going concern of the company.

e. Loans From Banks or Financial Institutions: During the current financial yearthe company has not provided interest on the loans obtained from various Banks andFinancial institutions which is not accordance with accepted accounting principles.Confirmations from banks and Financial institutions is not yet received. and all theloans obtained has been turned out into NPA’s.

f. Statutory Dues: The Company has not paid the statutory dues for more than 6months as per the books of accounts and records maintained by the companys is as follows:

Sl.No Part i c u l a rs Amount (Rs. )
1. TDS 34738983/-
2. ESI 15177/-
3. PF 122949/-
Total 34877109/-

g. Trade Payables and Trade Receivables: The Trade payables and Trade receivablesof Rs. 1905100/- and Rs. 103213822/- Respectively could not be verified asconfirmation of balances is not received.

h. Exceptional items: The company has written off various current and non currentassets during the year for ehich there is no provision has been created by the companyupto previous year and as per the board these assets will not generate any future cashflows.

i. Going Concern: The above conditions indicate the existence of materialuncertainties which may caste significant doubt on the Company’s abilities tocontinue as going concern. In the event that the going concern assumption of the companyis inappropriate adjustments will have to be made as not a going concern. However thefinancials has not been made with such adjustments for the F.Y 2017-18.

Qualified Opinion

In our opinion and to the best of our information and according to the explanationsgiven to us except for the effects/ possible effects of our observations stated in "Basis of Qualified Opinion paragraph" above the aforesaid Ind AS StandaloneFinancial Statements give the information required by the Act in the manner so requiredand give a true and fair view in conformity with the accounting principles generallyaccepted in India of the state of affairs (financial Position) of the Company as at 31stMarch 2018 its Loss(financial performance including other comprehensive income/Loss) andits cash flows and 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 theCentral Government of India in terms of sub-section (11) of section143 of the Act we givein the Annexure A a statement on the matters Specified in paragraphs 3 and 4 of theOrder.

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

a) We have sought and obtained the information and explanations which to the best ofour 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 appears from our examination of those books except for those given in"Basis of Qualified Opinion" Paragraph of our audit report.

c) The matters described in Basis of Qualified opinion paragraph above in our opinionmay have an adverse effect on the functioning of the company.

d) Due to the possible effects of the matter described in the Basis for QualifiedOpinion paragraph we are unable to state whether the Balance Sheet Statement of Profitand Loss and Cash Flow Statement comply with the Accounting Standards specified underSection 133 of the Act read with relevant rules issued there under.

e) The matter described in the Basis for Qualified Opinion paragraph above in ouropinion may have an adverse effect on the functioning of the Company.

f) On the basis of written representations received from the directors as on 31stMarch 2018 and taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2018 from being appointed as a director in terms ofSection 164(2) of The Companies Act 2013.

g) With respect to the adequacy of the internal financial controls over financialreporting of the company and the operating effectiveness of such controls refer to ourseparate report in ‘Annexure B’; and

h) With respect to other matters to be included in the Auditor’s Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations on its financialposition in its financial statements. (Refer Note no 35)

ii. The Company does not have any long-term contracts including derivative contractsfor which there were any material foreseeable losses.

iii. There are no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the company.

For P C N & Associates
(Formerly Known as Chandra Babu Naidu & Co)
Place : Hyderabad Chartered Accountants
Date : 30-05-2018 Firm Registration No: 016016S
Sd/-
Lakshmi Prasanthi.S
Partner
M.No:236578

Annexure A to the Auditor’s Report

Annexure referred to in Independent Auditor’s Report to the Members of M/s VICEROYHOTELS LIMITED on the Ind AS Financial Statements for the year ended 31st March 2018 wereport that:

i. In respect of its fixed assets:

a) The Company has not produced Fixed Assets Register.

b) As per the information and explanations given by the management the fixed assetshave been physically verified by the management in a phased periodical manner. But as perthe "Basis of Qualified opinion" given by us there is capitalization of Rs.111.94 crores during the year under consideration as we haven’t obtained anyvaluation certificate towards capitalization of fixed assets; hence we are unable toascertain the verification of fixed assets by the management.

c) According to the information and explanation given to us and on verification ofdocuments provided to us we are of the opinion that the title deeds of immovableproperties are held as per note no 39 in the Company. We are unable to ascertain the titledeeds of immovable properties in the name of the company as we have not receivedinformation from the management.

ii. As per the information and explanations given to us and as per the books andrecords maintained by the company the physical verification of inventory has beenconducted at reasonable intervals by the management during the year and no materialdiscrepancies were noticed on such verification.

iii. As per the information and explanations given to us and as per the books andrecords maintained by the company The Company has not granted any loans secured orunsecured to companies firms Limited Liability Partnership firms or other partiescovered in the register maintained under Section 189 of the Act.

iv. In our opinion and according to the information and explanations given to us thecompany in respect of loans investments are within the limits prescribed . However thecompany has issued corporate guarantee which is exceeding the limits specified in underSec. 186 of the companies Act 2013 for which we have given qualified opinion in "Basis of qualified opinion paragraph" and also refer Note No:31 in Notes to accounts

v. In our opinion and according to the information and explanations given to us theCompany has not accepted any deposits within the meaning of section 73 to 76 or any otherrelevant provisions of the Companies Act2013 and the rules framed there under.

vi. In respect of the Company the Central Government has not prescribed maintenance ofcost records under subsection (1) of section 148 of the Companies Act 2013.

vii. (a) The Company is not regular in depositing statutory dues including PF ESIService Tax with the appropriate authorities as at the end of the financial year and theamounts which were due for more than 6 months from the date they became payable as perbooks and records of the company are as follows:

Sl.No Part i cu l a rs Amount (Rs. )
1. TDS 34738983/-
2. ESI 15177/-
3. PF 122949/-
Total 34877109/-

(b) According to the information and explanations given to us no disputed amounts arepayable in respect of Income Tax and any other statutory dues as at the end of the periodexcept the below mentioned dues to income tax.

Name of the Statue Nature of Dues Amount (Rs.) Period to which it relates Case is pending at
Income Tax IncomeTax Rs.558557970/- A.Y 2014-15 Income Tax appeals
Income Tax Income Tax Rs.56313258/- A.Y 2013-14 Income Tax appeals

viii. According to the information and explanations given to us the company hasdefaulted in repayment of dues to various banks and financial institutions which are asfollows and all are become NPA as per books and records maintained by the company.

Amount in Crores (Rs.)

Name of the Bank/Institution Principle Due Interest Due Total Dues
ARCIL Principal Interest

131.68

92.79

224.47

Axis Bank Ltd- NCDs 42.50 32.67
IDFC Ltd 69.18 44.85
Axis Bank Ltd 20.00 14.27
IARC LTD 1.95 - 1.95
State Bank of India 56.18 50.55 106.73
Canara Bank 24.02 34.81 58.83
Total 213.83 178.15 391.98

We didn’t receive any confirmations from Banks/ Financial institutions/AssetReconstruction companies for the above outstanding balances.

ix. According to information and explanations given to us the Company has not raisedmoneys by way of initial public offer or further public offer including debt instrumentsand as per the books and records of the company during the year and term loans.Accordingly the provisions of clause 3(ix) of the order are not applicable to the companyand hence not commented upon.

x. During the course of examination of books of accounts and records of the companycarried out in accordance with the generally accepted auditing practices in India andaccording to information and explanations given to us we have neither come across anyinstance of material fraud on or by the company noticed or reported during the year norhave been informed of such cases by the management.

xi. According to information and explanations given to us the company and verificationof the records of the company the company has not paid / provided managerial remunerationduring the year under consideration.

xii. In our opinion and according to information and explanations given to us thecompany is not a Nidhi Company. Therefore the provisions of clause 3(xii) of the orderare not applicable to the company and hence not commented upon.

xiii. According to the information & explanations given to us and to the best ofour knowledge and belief all the transactions with the related parties are in compliancewith section 177 and 188 of the Companies act 2013 wherever applicable and the details oftransactions with related parties have been disclosed in the financial statements asrequired by the applicable accounting standard. (Refer Note no 38)

xiv. During the year under audit the Company has not made any preferential allotmentor private placement of shares or fully or partly convertible debentures and hence theprovisions of clause 3(xiv) of the Order relating to compliance with section 42 of"the Act" are not applicable to the company.

xv. According to information and explanations given to us and to the best of ourknowledge and belief the company has not entered into any non-cash transactions withdirectors or persons connected with the directors. Therefore the provisions of clause3(xv) of the order are not applicable to the company.

xvi. According to information and explanations given to us and to the best of ourknowledge and belief the company is not required to be register under section 45-IA ofReserve Bank of India Act 1934.

For P C N & Associates
(Formerly Known as Chandra Babu Naidu & Co)
Place : Hyderabad Chartered Accountants
Date : 30-05-2018 Firm Registration No: 016016S
Sd/-
Lakshmi Prasanthi.S
Partner
M.No:236578

Annexure B to the Independent Auditor’s Report

Report on the Internal Financial Controls over Financial Reporting under clause (i) ofthe Sub-section 3 of the Section 143 of the Companies Act 2013 (‘The Act’)

We have audited the internal financial controls over financial reporting of VICEROYHOTELS LIMITED (‘the company’) as of 31st March 2018 in conjunction with ouraudit of IND AS Standalone Financial Statements of the company for the year ended on thatdate.

Management’s Responsibility for Internal Financial Controls

The Company’s management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls Over Financial Reportingissued by the Institute of Chartered Accountants of India (ICAI). These responsibilitiesinclude the design implementation and maintenance of adequate internal financial controlsthat were operating effectively for ensuring the orderly and efficient conduct of itsbusiness including adherence to company’s policies the safeguarding of its assetsthe prevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the Act.

Auditor’s Responsibility

Our responsibility is to express an opinion on the company’s internal financialcontrols over financial reporting based on our Audit. We conducted our audit in accordancewith the Guidance note on Audit of Internal Financial Controls Over Financial Reporting(the "Guidance Note") and the standards on Auditing deemed to be prescribedunder section 143(10) of the Act to the extent applicable to an Audit of InternalFinancial Controls both applicable to an audit of Internal Financial Controls and bothissued by the ICAI. These standards and guidance note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate 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 evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our Audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the Auditor’s Judgment including the assessment of the risk ofmaterial misstatement of the IND AS Financial Statements whether due to fraud or error.

Because of the matters described in the Basis of Qualified Opinion paragraph we werenot able to obtain sufficient appropriate audit evidence to provide a basis for an opinionon internal financial controls.

Meaning of Internal Financial Controls over Financial Reporting

A Company’s internal financial control over financial reporting is a processdesigned to provide reasonable assurance regarding the reliability of financial reportingand the preparation of IndAS Financial Statements for external purposes in accordance withgenerally accepted accounting principles. A Company’s internal financial control overfinancial reporting includes these policies and procedures that (1) pertain to themaintenance of records that in reasonable detailed accurately and fairly reflect thetransactions and dispositions of the assets of the company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of Ind ASFinancial Statements in accordance with generally accepted principles and that receiptsand expenditures are being made only in accordance with authorization of management anddirectors of the Company; and (3) provide reasonable assurance regarding prevention ortimely detection of unauthorized acquisition use or disposition of the Company’sassets that could have a material effect on the Ind AS Financial Statements.

Inherent Limitation of Internal Financial Controls over Financial Reporting

Because of the inherent limitation 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.

Basis of Qualified Opinion:

1. The company did not have appropriate internal controls for confirmation andreconciliation of trade receivables trade payables other current assets and currentliabilities.

2. The company did not have fixed asset registers.

3. The company has written off various assets and liabilities as exceptional items dueto which we couldn’t get appropriate audit evidence in relation to internal financialcontrols over financial reporting.

As a result of these matters we have not been able to obtain sufficient andappropriate audit evidence in relation to Internal Financial Controls over FinancialReporting and consequently we are unable to determine whether the company has establishedadequate internal financial controls over Financial Reporting and also whether suchinternal financial controls were operating effectively as at March 31st 2018.

Qualified Opinion

In our opinion the company has in all material respects except for the mattersdescribed in Basis of Qualified opinion paragraph an adequate internal financial controlssystem over financial reporting and such internal financial controls over financialreporting were operating effectively as at 31stMarch 2018 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 P C N & Associates
(Formerly Known as Chandra Babu Naidu & Co)
Place : Hyderabad Chartered Accountants
Date : 30-05-2018 Firm Registration No: 016016S
Sd/-
Lakshmi Prasanthi.S
Partner
M.No:236578