1) We have audited the attached balance sheet of Blue Coast Hotels
Limited as at 31st March 2011 and the profit and loss account and also
the cash flow statement for the period ended on that date annexed
thereto. These financial statements are the responsibility of the
company''s management. Our responsibility is to express an opinion on
these financial statements based on our audit.
2) We conducted our audit in accordance with the auditing standards
generally accepted in India. Those Standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for
3) As required by the Companies (Auditor''s Report) Order, 2003 as
amended by the Companies (Auditor''s Report) (Amendment) order, 2004
issued by the Central Government of India in terms of sub-section (4A)
of section 227 of the Companies Act, 1956, we enclose in the Annexure a
statement on the matters specified in paragraphs 4 and 5 of the said
4) Further to our comments in the Annexure referred to above, we report
i. We have obtained all the information and explanations, which to the
best of our knowledge and belief were necessary for the purposes of
ii. In our opinion, proper books of account as required by law have
been kept by the company so far as appears from our examination of
iii. The balance sheet, profit and loss account and cash flow statement
dealt with by this report are in agreement with the books of accounts;
iv. In our opinion, the balance sheet, profit and loss account and cash
flow statement dealt with by this report comply with the accounting
standards referred to in sub-section (3C) of section 211 of the
Companies Act, 1956;
v. On the basis of written representations received from the directors
as on 31 st March, 2011 and taken on record by the board of directors,
we report that none of the directors is disqualified as on 31 March,
2011 from being appointed as a director in terms of clause (g) of
sub-section (1) of section 274 of the Companies Act, 1956;
vi. In our opinion and to the best of our information and according to
the explanations given to us, the said accounts give the information
required by the Companies Act, 1956, in the manner so required and give
a true and fair view in conformity with the accounting principles
generally accepted in India:-
(a) in the case of the balance sheet, of the state of affairs of the
company as at 31 st March, 2011;
(b) in the case of profit and loss account, of the loss for the year
ended on that date; and
(c) in the case of the cash flow statement, of the cash flows for the
year ended on that date.
Annexure to Auditors'' Report
Referred to in paragraph (3) of our report of even date to the members
of Blue Coast Hotels Limited on the Financial Statements for the year
ended 31 st March, 2011
(i) (a) The company is maintaining proper records showing full
particulars including quantitative details and situation of fixed
(b) As explained to us, all the fixed assets have been physically
verified by the management during the year. As explained to us by the
company, no material discrepancies were noticed on such verification.
(c) During the period, the company has not disposed off substantial
part of the fixed assets.
(ii) (a) As explained to us, the inventory has been physically verified
by the management during the year. In our opinion, the frequency of
verification is reasonable.
(b) The procedures of physical verification of inventories followed by
the management are reasonable and adequate in relation to the size of
the company and the nature of its business.
(c) On the basis of our examination of the records of inventory, we are
of the opinion that the company is maintaining proper records of
inventory. As explained to us, the discrepancies noticed on
verification between the physical stocks and the book records were not
material and have been properly dealt with in the books of accounts.
(iii) As per records of the company and as per information and
explanations furnished to us, we are of the opinions that during the
year, the company has neither granted nor taken any loans, secured or
unsecured to/from companies, firms and other parties covered in the
register maintained under Section 301 of the Companies Act, 1956 except
grant of interest free temporary loan/advance of Rs. 0.01 lacs and Rs.
58.61 lacs to Blue Coast Hospitality Limited and Golden Joy Hotel
Private Limited (both subsidiary companies).
(iv) In our opinion and according to the information and explanations
given to us, there are adequate internal control system commensurate
with the size of the company and the nature of its business with regard
to purchases of inventory, fixed assets and with regard to the sale of
goods and services. During the course of our audit, no major weakness
has been noticed in the internal controls systems.
(v) (a) Based on the audit procedures applied by us and according to
the information and explanations provided by the management, we are of
the opinion that the particulars of contracts or arrangements referred
to in section 301 of the act, wherever applicable, have been entered in
the register required to be maintained under that section.
(b) In our opinion and according to the information and explanations
given to us, the transactions made in pursuance of such contracts or
arrangements have been made at prices which are reasonable having
regard to prevailing market prices at the relevant time.
(vi) In our opinion and according to the information and explanations
given to us, the company has not accepted deposits from public and
hence provisions of section 58Aand58AA of the Companies Act, 1956 are
(vii) In our opinion and according to the information and explanations
given to us, the company has an internal audit system commensurate with
the size of the company and nature of its business.
(viii) As explained to us, the Central Government has not prescribed
any cost records under Section 209 (1) (d) of the Companies Act, 1956
for the company.
(ix) (a) According to the records of the company, the company in
general, is regular in depositing with appropriate authorities
undisputed statutory dues including Provident Fund, Employees'' State
Insurance, Income Tax, Sales-tax, Wealth-tax, Service tax, Custom duty,
Excise duty, Cess and other statutory dues applicable to it except
undisputed amount in respect of TDS which is outstanding in the books
of accounts as on 31.03.2011, for a period of six months from the date
the amount became payable amounting to Rs. 18.22 lacs. However, the
company has deposited the same after 31.3.2011.
(b) According to the information and explanations given to us and on
the basis of our verification of books of accounts of the company, no
amounts payable in respect of Income-tax, Sales-tax, Wealth tax,
Service-tax Custom duty, Excise duty, Cess were outstanding, as at 31
st March, 2011 due to any dispute.
(x) The company has no accumulated losses as on 31st March, 2011 .The
company has not incurred cash losses during the year covered by our
audit and in the immediately preceding financial year.
(xi) Based on our audit procedures and on the information and
explanations give by the management, we are of the opinion that the
company has not defaulted in repayment of dues to financial
institutions and banks,
(xii) Based on our examination of documents and records, we are of the
opinion that the company has not granted loans and advances on the
basis of security by way of pledge of shares, debentures and other
(xiii) In our opinion, the company is not a chit fund/nidhi/mutual
benefit fund/societies and hence provisions of clause (xiii) are not
applicable to it.
(xiv) In our opinion, the company is not dealing or trading in shares,
securities, debentures and other investments hence provisions of this
clause are not applicable to it.
(xv) Based on our examination of the records of the company and as
explained to us, we are of the opinion that the company has not given
any guarantee for loans taken by others from bank or financial
(xvi) Based on our examination of the records, we are of the opinion
that the term loans have been applied for the purpose for which they
(xvii) Based on our examination of the records, we are of the opinion
that funds raised from short term basis were not used for long term
(xvii i) During the year the company has not made any preferential
allotment of shares to parties and companies covered in the register
maintained under section 301 of the Act.
(xix) During the year, the company has allotted 10000, 12% Non
Convertible Debenture of Rs. 100000/- each to an Indian company for
which the company has created the necessary security/charge. (Refer
Note no. 2.1 of II of schedule XVI).
(xx) During the year covered by our audit, the company has not raised
any money by way of public issue.
(xxi) Based upon the audit procedures performed and information and
explanations given by the management, we report that no fraud on or by
the company has been noticed or reported during the year.
For M Kamal Mahajan And Co.
Place: New Delhi (Partner)
Date : 30th May, 2011 M. No. 504238