We have audited the attached Balance Sheet of ADVANI HOTELS & RESORTS
(INDIA) LIMITED, as at 31st March, 2011 and also the Profit and Loss
Account and the Cash Flow Statement of the Company for the year 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.
We conducted our audit in accordance with 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 a 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
As required by the Companies (Auditor''s Report) Order, 2003, issued by
the Central Government of India in terms of sub-Section (4A) of Section
227 of the Companies Act, 1956, and on the basis of such checks as we
considered appropriate, we enclose in the Annexure a statement on the
matters specified in paragraphs 4 and 5 of the said Order.
Further to our comments in the Annexure referred to above, we report
1. We have obtained all the information and explanations, which to the
best of our knowledge and belief were necessary for the purpose of our
2. 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
3. The Balance Sheet, Profit and Loss Account and Cash Flow Statement,
dealt with by this Report, are in agreement with the books of account.
4. In our opinion, the Balance Sheet, Profit and Loss Account and Cash
Flow Statement comply with the applicable Accounting Standards referred
to in sub-Section (3-C) of Section 211 of the Companies Act, 1956.
5. On the basis of written representations received from the Directors
of the Company and taken on record by the Board of Directors, we report
that none of the Directors of the Company is disqualified as on 31st
March, 2011 from being appointed as a Director under Clause (g) of
sub-Section (1) of Section 274 of the Companies Act, 1956.
6. In our opinion and to the best of our information and according to
the explanations given to us, the said accounts, read together with the
significant accounting policies stated in Schedule K and the other
notes appearing thereon, 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:
(i) in the case of the Balance Sheet, of the state of the affairs of
the Company as at 31st March, 2011;
(ii) in the case of Profit and Loss Account, of the profit of the
Company for the year ended on that date; and
(iii) in the case of Cash Flow Statement, of the cash flows of the
Company for the year ended on that date.
ANNEXURE REFERRED TO IN OUR REPORT OF EVEN DATE
1. (a) The Company has maintained proper records showing full
particulars including quantitative details and situation of fixed
(b) During the year under report, the Company has formulated a policy
to carry out physical verification of its fixed assets in a phased
manner at regular intervals, which in our opinion is reasonable having
regard to its size of the Company and nature of fixed assets. The
Company has physically verified its fixed assets during the year in
accordance with the above policy. No material discrepancies were
noticed by the Management on such physical verification as compared to
(c) In our opinion, the Company has not disposed off a substantial part
of its fixed assets during the year and the going concern status of the
Company is not affected.
2. (a) The inventories have been physically verified during the year
by the Management. In our opinion, the frequency of verification is
(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 inventory records of the
Company, we are of the opinion that the Company is maintaining proper
records of inventory. Discrepancies, which were noticed on physical
verification of inventory as compared to book records, were not
material and have been properly dealt with in the books of account.
3. (a) The Company has not granted any loan or advance to companies,
firms or other parties covered in the Register maintained under Section
301 of the Companies Act, 1956 except an interest free advance of
Rs. NIL (maximum balance Rs. 96,980,573/-) being amount due on current
account from one of its erstwhile subsidiaries, out of which Rs.
25,315,947/- has been written off as irrecoverable against the
provision made for the same in the previous year.
(b) The terms and conditions of above interest free advance given were
prima facie not prejudicial to the interest of the Company except to
the extent indicated in 3(a) above.
(c) According to the information and explanations given to us, there is
no stipulation for repayment of the above advance given by the Company
to its subsidiary. However, the entire amount except Rs. 25,315,947/-
which is considered doubtful by the Management has been recovered
during the year.
(d) In view of our comment in paragraph 3 (c) above, clause Ml (d) of
paragraph of the aforesaid Order is not applicable to the Company.
(e) The Company has not taken any loan, secured or unsecured, during
the year from companies, firms and other parties covered in the
Register maintained under Section 301 of the Companies Act, 1956. In
view of the same, our comments on clauses III (f) and (g) of paragraph
(4) of the aforesaid Order are not applicable to the Company.
4. In our opinion, and according to the information and explanations
given to us, there is an adequate internal control system commensurate
with the size of the Company and the nature of its business for the
purchase of inventory and fixed assets and for the sale of goods and
services. During the course of our audit, no major weaknesses have been
noticed in the internal control system.
5. To the best of our knowledge and belief and according to the
information and explanations given to us, (a) the particulars of
contracts or arrangements referred to in Section 301 of the Companies
Act, 1956 have been entered in the register required to be maintained
under that Section; and (b) such transactions exceeding the value of
Rupees Five lacs in respect of any party during the year have been made
at prices, which are reasonable having regard to prevailing market
prices at the relevant time.
6. The Company has not accepted any deposits from the public within
the meaning of Section 58A, 58AA and other provisions of the Companies
Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975.
Hence the clause (vi) of the Order is not applicable to the Company.
7. In our opinion, the internal audit functions carried out during the
year by a firm of Chartered Accountants appointed by the Management
have been commensurate with the size of the Company and nature of its
8. The maintenance of cost records has not been prescribed by the
Central Government under Section 209(1 )(d) of the Companies Act, 1956
for any of the products of the Company.
9. (a) According to the records of the Company and the information and
explanations given to us, the Company has been generally regular in
depositing undisputed statutory dues, including provident fund,
investor education & protection fund, employees'' state insurance,
income-tax, sales-tax, wealth-tax, service tax, customs duty, excise
duty, cess and other applicable statutory dues with the appropriate
authorities during the year. The Company''s operations do not give
rise to any excise duty liability.
(b) According to the information and explanations given to us, there
are no undisputed amounts payable in respect of undisputed statutory
dues as at 31st March, 2011 which were outstanding for a period of more
than six months from the date they became payable.
(c) According to the information and explanations given to us and on
the basis of our examination of the documents and records, there are no
cases of non-deposit with appropriate authorities of disputed dues of
income-tax, sales-tax, wealth tax, service tax, customs duty, excise
duty, cess except the following:
Name of the Nature of dues Amount Period to which
statute (Rs. in the amount
Central Sales Central Sales tax 12.16 Asst. Years
Tax Act, 1956 2005-06 &
Income-tax Act, Income-tax on 10.66 Asst. Year
1961 completion of 2005-06
Income-tax Act, Income-tax on 15.13 Asst Years
1961 assessment of TDS 2005-06 to
Name of the statute Forum where the
dispute is pending
Central Sales Tax Act,
1956 Asst. Commissioner
of Commercial Tax
(Value Added Tax)
Income-tax Act, 1961 Income-Tax
Income-tax Act, 1961 Commissioner of
10. The Company neither had accumulated losses at the end of the
financial year nor incurred any cash losses either during the financial
year or preceding financial year.
11. According to the records of the Company examined by us and the
information and explanations given to us, the Company had not defaulted
in repayment of dues to banks as per loan agreements or extended due
dates. There were no borrowings from any financial institutions or by
way of debentures.
12. According to the information and explanations given to us, the
Company has not granted loans and advances on the basis of security by
way of pledge of shares, debentures and other securities.
13. The provisions of any special statute applicable to chit fund /
nidhi / mutual benefit fund / societies are not applicable to the
14. The Company is not a dealer or trader in shares, securities,
debentures, and other investments.
15. According to the information and explanations given to us, the
Company had given a guarantee for loan taken by one of its erstwhile
subsidiaries from a bank, the terms and conditions whereof, in our
opinion, were not prima facie prejudicial to the interest of the
Company. The said guarantee has been extinguished during the year.
16. In our opinion on an overall basis, and according to the
information and explanations given to us, the term loans taken during
the year were applied for the purpose for which the loans were obtained.
17. According to the information and explanations given to us and on
an overall examination of the Balance sheet of the Company, we report
that funds raised on short term basis have prima facie, not been used
during the year for long term investment.
18. The Company has not made any preferential allotment of shares to
parties and companies covered in the Register maintained under Section
301 of the Companies Act, 1956.
19. The Company has not issued any debentures during the year under
audit. Accordingly, the provisions of clause (XIX) of paragraph 4 of
the aforesaid Order are not applicable to the Company.
20. The Company has not raised money by public issue during the year.
Accordingly, the provisions of clause (XX) of paragraph 4 of the
aforesaid Order are not applicable to the Company.
21. To the best of our knowledge and belief, and according to the
information given to us, no fraud on or by the Company was noticed or
reported during the year.
For J.G.VERMA & CO.
Registration No. 111381W
Membership No. 5005
Mumbai, May 13, 2011