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Hotel Leela Venture

BSE: 500193|NSE: HOTELEELA|ISIN: INE102A01024|SECTOR: Hotels
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« Mar 14
Auditor's Report (Hotel Leela Venture) Year End : Mar '15
 We have audited the accompanying standalone financial statements of
 Hotel Leelaventure Limited (the Company), which comprise the Balance
 Sheet as at March 31, 2015, the Statement of Profit and Loss, and the
 Cash Flow statement for the year then ended, and a summary of the
 significant accounting policies and other explanatory information.
 
 Management''s Responsibility for the Standalone Financial Statements
 
 The Company''s Board of Directors is responsible for the matters stated
 in Section 134(5) of the Companies Act, 2013 (the Act) with respect
 to the preparation of these standalone financial statements that shall
 give a true and fair view of the financial position, financial
 performance and cash flows of the Company in accordance with the
 accounting principles generally accepted in India, including the
 Accounting Standards specified under Section 133 of the Act, read with
 Rule 7 of the Companies (Accounts ) Rules, 2014. This responsibility
 also includes maintenance of adequate accounting records in accordance
 with the provisions of the Act for safeguarding of the assets of the
 Company and for preventing and detecting frauds and other
 irregularities; the selection and application of appropriate accounting
 policies; making judgments and estimates that are reasonable and
 prudent; and the design, implementation and maintenance of adequate
 internal financial controls that were operating effectively for
 ensuring the accuracy and completeness of the accounting records,
 relevant to the preparation and presentation of the financial
 statements that give a true and fair view and are free from material
 misstatement, whether due to fraud or error.
 
 Auditor''s Responsibility
 
 Our responsibility is to express an opinion on these standalone
 financial statements based on our audit.
 
 We have taken into account the provisions of the Act, the accounting
 and auditing standards and matters which are required to be included in
 the audit report under the provisions of the Act and the Rules made
 thereunder.
 
 We conducted our audit in accordance with the Standards on Auditing
 specified under Section 143(10) of the Act. Those Standards require
 that we comply with ethical requirements and plan and perform the audit
 to obtain reasonable assurance about whether the financial statements
 are free from material misstatement.
 
 An audit involves performing procedures to obtain audit evidence about
 the amounts and the disclosures in the financial statements. The
 procedures selected depend on the auditor''s judgment, including the
 assessment of the risks of material misstatement of the financial
 statements, whether due to fraud or error. In making those risk
 assessments, the auditor considers internal financial control relevant
 to the Company''s preparation of the financial statements that give a
 true and fair view in order to design audit procedures that are
 appropriate in the circumstances. An audit also includes evaluating the
 appropriateness of the accounting policies used and the reasonableness
 of the accounting estimates made by the Company''s Directors, as well as
 evaluating the overall presentation of the financial statements.
 
 We believe that the audit evidence we have obtained is sufficient and
 appropriate to provide a basis for our audit opinion on the standalone
 financial statements.
 
 Opinion
 
 In our opinion and to the best of our information and according to the
 explanations given to us, the aforesaid standalone financial statements
 give the information required by the Act in the manner so required and
 give a true and fair view in conformity with the accounting principles
 generally accepted in India, of the state of affairs of the Company as
 at March 31, 2015 and its loss and its cash flows for the year ended on
 that date.
 
 Emphasis of Matter
 
 We draw attention to the following matters in the Notes to the
 financial statements:
 
 Note 31.3 regarding the Company''s liabilities, net worth and interest
 provision. The negative net worth as on March 31, 2015 was Rs.
 38,602.98 lakhs. The loss for the year and negative net worth would
 have been higher by another Rs. 78,240.90 lakhs, if interest and other
 finance cost as notified by Asset Reconstruction Companies were
 provided for in the books of the current year. The negative net worth
 could go up further if the amount realised on sale of assets is less
 than the book value. This raises question on whether the Company can be
 considered as a  Going Concern. However, as the Company is hopeful of
 a viable restructuring package as explained by them in the note and
 accordingly has prepared the financial statements on a going concern
 basis.
 
 Report on Other Legal and Regulatory Requirements
 
 1 As required by the Companies (Auditor''s Report) Order, 2015 issued by
 the Central Government of India in terms of subsection (11) of Section
 143 of the Act, (hereinafter referred to as the Order) and on the
 basis of such checks of the books and records of the Company as we
 considered appropriate and according to the information and
 explanations given to us, we give in the Annexure, a 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 best of our knowledge and belief were necessary for the
 purposes of our audit.
 
 b) In our opinion, proper books of account as required by law have been
 kept by the Company so far as it appears from our examination of those
 books.
 
 c) The Balance Sheet, the Statement of Profit and Loss, and the Cash
 Flow Statement dealt with by this Report are in agreement with the
 books of account.
 
 d) In our opinion, the aforesaid standalone financial statements comply
 with the Accounting Standards specified under Section 133 of the Act,
 read with Rule 7 of the Companies (Accounts) Rules, 2014.
 
 e) The going concern matter described under the Emphasis of Matters
 paragraph above, in our opinion, may have an adverse effect on the
 functioning of the Company.
 
 f) On the basis of the written representations received from the
 directors as on March 31st, 2015, taken on record by the Board of
 Directors, none of the directors is disqualified
 
 as on March 31st, 2015 from being appointed as a director in terms of
 Section 164(2) of the Act.
 
 g) With respect to the other matters to be included in the Auditor''s
 Report in accordance with Rule 11 of the Companies (Audit and Auditors)
 Rules,2014, in our opinion and 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
 financial position in its financial statements - Refer Note 31.1,31.2
 and 31.4 (a) and (b) to the financial statements;
 
 ii.  The Company has made provision, as required under the applicable
 law or accounting Standards, for material foreseeable losses, if any,
 on long-term contracts. We have been informed that the Company did not
 have any pending derivative contracts.
 
 iii.  There has been no delay in transferring amounts, required to be
 transferred, to the Investor Education and Protection Fund by the
 Company.
 
 ANNEXURE TO THE INDEPENDENT AUDITORS'' REPORT
 
 [referred to in paragraph (1) under the heading of Report on Other
 Legal and Regulatory Requirements of our report of even date]
 
 (i) (a) In our opinion and based on the information made available to
 us, the Company has maintained proper records showing full particulars
 including quantitative details and situation of fixed assets.
 
 (b) As explained to us, all the fixed assets were physically verified
 by the Management in a phased periodical manner, which in our opinion
 is reasonable, having regard to the size of the Company and nature of
 its assets. According to the information and explanations given to us,
 no material discrepancies were noticed on such verification.
 
 (ii) (a) As explained to us, inventories were physically verified
 during the year by the Management at reasonable intervals.
 
 (b) In our opinion and according to the information and explanation
 given to us, the procedures of physical verification of inventories
 followed by the Management were reasonable and adequate in relation to
 the size of the Company and nature of the business.
 
 (c) In our opinion and according to the information and explanation
 given to us, the Company has maintained proper records of inventories.
 As explained to us, there were no material discrepancies noticed on
 physical verification of inventories, compared to the book records.
 
 (iii) The Company has not granted secured/unsecured loans to firms or
 parties covered in the register maintained under Section 189 of the Act
 except an interest free unsecured advance made to a subsidiary which
 was later fully converted in to equity.
 
 (iv) In our opinion and according to the information and explanations
 given to us, there are adequate internal control procedures
 commensurate with the size of the Company and nature of its business
 with regard to purchase of inventories and fixed assets and sale of
 goods and services. During the course of our audit, we have not
 observed any continuing failure to correct major weaknesses in internal
 controls.
 
 (v) In our opinion and according to the information and explanations
 given to us, the Company has not accepted deposits in terms of the
 provisions of Sections 73 and 74 of the Act and the rules framed
 thereunder to the extent notified.
 
 (vi) The central Government has not prescribed maintenance of cost
 records under Section 148(1) of the Act in respect of any of the
 activities of the Company.
  (vii) (a) Based on information and explanation furnished to us, there
 were delays in depositing undisputed statutory dues, including Provident
 Fund, Employees'' State Insurance, Income-Tax, Wealth Tax, Sales-Tax,
 Service Tax, Cess and other material statutory dues with the appropriate
 authorities during the year under review. There are no undisputed
 amounts payable in respect of the aforesaid dues which were outstanding
 as on 31st March 2015 for a period of more than six months from the date
 they became payable.
 
 (b) According to the information and explanations given to us, details
 of disputed Sales Tax, Income Tax, Custom Duty, Wealth Tax, Service
 Tax, Excise Duty and Cess which have not been deposited with
 appropriate authorities as on 31st March, 2015 on account of dispute
 are given below:
 
 Name of the Statute       Nature of Dues                    Amount
                                                          (Rs. in Lakhs)
 
 Karnataka VAT Act         VAT with interest and              133.92
 2003                      penalty
 
 Customs Act               Customs Duty and                    75.09
                           penalty
 
 Customs Act               Customs Duty and                     2.00
                           penalty
 
 Goa Tax on Luxuries       Luxury Tax                          33.93
 Act
 
 Maharashtra VAT,          VAT with interest and               27.90
 2002                      penalty
 
 Maharashtra VAT,          VAT with interest and              153.30
 2002                      penalty
 
 Maharashtra VAT,          VAT & CST with interest            246.47
 2002                      and penalty
 
 Kerala Tax on Luxury      Luxury Tax                          34.31
 1976
 
 Kerala Government         Sales Tax and interest             26.80
 Sales Tax Act
 
 Kerala Agricultural       Agricultural Income Tax            25.77
 Income Tax Act            and interest
 
 Finance Act,1994          Service Tax, interest and       2,490.48
                           penalty
 
 Central Excise            Penalty under Excise Act            3.12
 Act,1944
 
 Name of the Statute     Period to which the   Forum where dispute
                         amount relates        is pending
 
 Karnataka VAT Act       Financial Year       Matter remanded to
 2003                    2005-06 to2009-10    Assessing Officer by
                                              High Court of Karnataka.
 
 Customs Act             1989-90              Customs, Excise & Service
                         and 2000-01          Tax Appellate Tribunal,
                                              Mumbai.
 
 Customs Act             1990-91              Commissioner of Customs,
 Mumbai.
 
 Goa Tax on Luxuries     2007-08              Appellate Authority,
 Act                                          The Assistant Commissioner
                                              of Commercial Taxes, Margao
 
 Maharashtra VAT,        2008-09              Maharashtra Sales Tax
 2002                                         Tribunal.
 
 Maharashtra VAT,        2006-07,             Joint Commissioner of Sales
 2002                    2007-08 and          tax,Appeals  Mumbai.
                         2009-10
 
 Maharashtra VAT,        2010-11              Appeal to be filed before
 2002                                         Joint Commissioner of
                                              Sales tax, Appeals, Mumbai
 
 Kerala Tax on Luxury    2006-07              Sales Tax Tribunal,
 1976                                         Ernakulam.
 
 Kerala Government       2005-06              Deputy Commissioner
 Sales Tax Act                                (Appeals),
                                              Thiruvananthapuram
 
 Kerala Agricultural     2004-09              Tribunal, Kerala
 Income Tax Act                               Agricultural and Commercial
                                              Tax.
 
 Finance Act,1994        2007-12              Customs, Excise & Service
                                              Tax Appellate Tribunal,
                                              Bangalore.
 
 Central Excise          2003-05              CESTAT -WZB, Mumbai
 Act,1944
 
 (c) The amount required to be transferred to Investor Education and
 Protection Fund has been transferred within the stipulated time in
 accordance with the provisions of the Companies Act,1956 (1 of 1956)
 and the rules made thereunder.
 
 (viii) The accumulated losses of the Company exceeds 50% of its net
 worth. The Company has incurred cash losses during the financial year
 covered by our audit and in the immediately preceding financial year.
 
 (ix) According to the explanation and information given to us, the
 Company has defaulted in repayment of dues to banks/financial
 institutions/debenture holders during the year under review, the period
 and amount of defaults are as under :
 
 a.  The Company had defaulted in its repayment commitments to its
 erstwhile Corporate Debt Restructuring (CDR) lenders, pursuant to
 which, on 30th June, 2014, the CDR lenders with exposure of 96.6%
 assigned their debt to Asset Reconstruction Companies (ARC). (Refer
 Note 31.3 of the standalone financial statements).
 
 b.  Company had defaulted in repayment of Rs. 2250 lakhs to Life
 Insurance Corporation of India (LIC) which was due on March 31,2014 and
 subsequent interest payments. Pursuant to Company''s request, LIC,
 during March 2015 has rescheduled the repayment terms and accordingly
 there is no principal or interest accrued and due for payment as at the
 end of the year.
 
 c.  There were also defaults in repayment of principal and interest to
 other banks and financial institutions. The overdue instalments and
 interest accrued and due as at March 31,2015, was Rs. 665.42 lakhs and
 Rs. 1132.03 lakhs respectively.
 
 (x) According to the information and explanations given to us, the
 Company has not given any guarantee for loans taken by others from bank
 or financial institutions..
 
 (xi) To the best of our knowledge and belief and according to the
 information and explanations given to us, in our opinion, term loans
 availed by the Company were, prima facie, applied by the Company during
 the year for the purposes for which the loans were obtained.
 
 (xii) To the best of our knowledge and belief and according to the
 information and explanations given to us, we have neither come across
 any instance of material fraud on or by the Company, noticed or
 reported during the year, nor have been informed of any such case by
 the Management.
 
 For PICARDO & CO.
 Chartered Accountants
 Registration No: 107917W
 
 K.V. Gopalakrishnayya
 Partner
 Membership No.21748
 Mumbai, 27th May 2015
 
 
 
Source : Dion Global Solutions Limited
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