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.
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
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
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
Emphasis of Matter
We draw attention to the following matters in the Notes to the
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
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
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
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
(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
Customs Act Customs Duty and 75.09
Customs Act Customs Duty and 2.00
Goa Tax on Luxuries Luxury Tax 33.93
Maharashtra VAT, VAT with interest and 27.90
Maharashtra VAT, VAT with interest and 153.30
Maharashtra VAT, VAT & CST with interest 246.47
2002 and penalty
Kerala Tax on Luxury Luxury Tax 34.31
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
Central Excise Penalty under Excise Act 3.12
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,
Customs Act 1990-91 Commissioner of Customs,
Goa Tax on Luxuries 2007-08 Appellate Authority,
Act The Assistant Commissioner
of Commercial Taxes, Margao
Maharashtra VAT, 2008-09 Maharashtra Sales Tax
Maharashtra VAT, 2006-07, Joint Commissioner of Sales
2002 2007-08 and tax,Appeals Mumbai.
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,
Kerala Government 2005-06 Deputy Commissioner
Sales Tax Act (Appeals),
Kerala Agricultural 2004-09 Tribunal, Kerala
Income Tax Act Agricultural and Commercial
Finance Act,1994 2007-12 Customs, Excise & Service
Tax Appellate Tribunal,
Central Excise 2003-05 CESTAT -WZB, Mumbai
(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
For PICARDO & CO.
Registration No: 107917W
Mumbai, 27th May 2015