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Chalet Hotels

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Auditor's Report (Chalet Hotels) Year End : Mar '19

Report on the Audit of the Standalone Ind AS Financial Statements

Opinion

We have audited the Standalone Ind AS Financial Statements of Chalet Hotels Limited (formerly known as Chalet Hotels Private Limited) (“the Company”), which comprise the Standalone Balance Sheet as at 31 March 2019, the Standalone Statement of Profit and Loss (including other comprehensive income), the Standalone Statement of Changes in Equity and the Standalone Statement of Cash Flows for the year then ended, and notes to the Standalone Ind AS Financial Statements, including a summary of the significant accounting policies and other explanatory information (hereinafter referred to as “Standalone Ind AS Financial Statements”).

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid Standalone Ind AS Financial Statements give the information required by the Companies Act, 2013 (‘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 31 March 2019 and loss (including other comprehensive income), changes in equity and its cash flows for the year ended on that date.

Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing (SAs) specified under Section 143 (10) of the Act. Our responsibilities under those SAs are further described in the Auditors’ Responsibilities for the Audit of the Standalone Ind AS Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India together with the ethical requirements that are relevant to our audit of the standalone Ind AS financial statements under the provisions of the Act and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Emphasis of Matter

We draw attention to Note 42 (c) of the standalone Ind AS financial statements, in respect of the entire building comprising of the hotel and apartments therein, purchased together with a demarcated portion of the leasehold rights to land at Vashi (Navi Mumbai), from K. Raheja Corp Private Limited, on which the Company’s Four Points by Sheraton Hotel has been built. The allotment of land by City & Industrial Development Corporation of Maharashtra Limited (‘CIDCO’) to K. Raheja Corp Private Limited has been challenged by two public interest litigations and the matter is currently pending with the Honorable Supreme Court of India. Pending the outcome of proceedings and a final closure of the matter, no adjustments have been made in the standalone Ind AS financial Statements as at and for the year ended 31 March 2019 to the carrying value of the leasehold rights (reflected as prepayments) and the hotel assets thereon aggregating to Rs. 497.90 million and Rs. 503.79 million as at 31 March 2019 and 31 March 2018 respectively.

We draw attention to Note 49 to the standalone Ind AS financial statements, relating to remuneration paid to the Managing Director & CEO and to the Executive Director & CFO of the Company for the financial year ended 31 March 2019, being in excess of the limits prescribed under Section 197 of the Act by Rs. 52.41 Million, which is subject to the approval of the shareholders.

Our opinion is not qualified in respect of these matters.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the standalone Ind AS financial statements of the current period. These matters were addressed in the context of our audit of the standalone Ind AS financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Deferred tax assets (refer note 23 to the standalone Ind AS financial statements)

Key Audit Matter

How the matter was addressed in our audit

The carrying amount of the Deferred Tax Assets of Rs. 732.40 million

Our audit procedures included:

represents 2% of the Company’s total assets.

-

In respect of deferred tax assets, we analysed Company’s

The Company has recorded deferred tax assets on expenditure

assumptions used to determine the manner in which the timing

on specified business under Section 35AD and unabsorbed carry

differences, including the recoverability of the deferred tax assets,

forward tax losses, to the extent that the same will be recoverable

would be realised by comparing this to evidence obtained in

using the estimated future taxable income based on the approved

respect of cash flow forecasts, business plans and minutes of

business plans and budgets of the Company. The Company has

Directors and Audit Committee meetings and our knowledge

generated taxable income for the financial year ended 31 March

of the business;

2019 and has adjusted the carry forward losses partially. The

-

Regarding recognised deferred tax asset resulting from

Company is expected to continue generating taxable income

unabsorbed carry forward tax losses, we analysed Company’

going forward.

assessment for recovery of deferred tax assets;

We focused on this area as recognition of deferred tax requires

-

We used, amongst others, budgets, forecasts and tax laws to

significant judgment in estimating future taxable income and accordingly recognition of deferred tax.

assess Management’s assumptions;

We tested the underlying data for the key deferred tax and tax provision calculations; and

-

We also assessed the adequacy of the Company’s disclosure included in Note 23 relating to unrecognised deferred tax assets.

Litigation and Claims (refer to note 42 to the standalone Ind AS financial statements)

The Key Audit Matter

How the matter was addressed in our audit

As at 31 March 2019, the Company has two key litigations pertaining

Our procedures included, amongst others:

to its Land at Bengaluru Residential project carried under inventories

- Making enquiries of management and the legal department head

and leasehold rights to land at Vashi (Navi Mumbai) from K. Raheja Corp Private Limited.

to obtain their view on significant legal matters;

- Reviewing the information held by the Company and assessing the

We focused on this area as a key audit matter due to the amounts involved as well as the inherent uncertainty in the application of the

impact of this evidence on the appropriateness of the provision;

measurement aspects of accounting standards to determine the

- Assessing correspondence from the Company’s external lawyers

amount, if any, to be provided for and the disclosures to be made in

in response to our requests for confirmation of all significant

respect of this matter.

litigations; and

- Assessing whether the Company’s disclosures adequately reflect the quantitative and qualitative considerations in relation to the matters in accordance with auditing standards.

Other Information

The Company’s Management and Board of Directors are responsible for the other information. The other information comprises the information included in the Company’s annual report, but does not include the standalone Ind AS financial statements and our auditors’ report thereon.

Our opinion on the standalone Ind AS financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the standalone Ind AS financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the standalone Ind AS financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Management’s Responsibility for the Standalone Ind AS Financial Statements

The Company’s Management and Board of Directors are responsible for the matters stated in Section 134(5) of the Act, with respect to the preparation of these standalone Ind AS

financial statements that give a true and fair view of the state of affairs, profit/loss and other comprehensive income, changes in equity and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) specified under Section 133 of the Act. 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; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and 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 Standalone Ind AS Financial Statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

In preparing the Standalone Ind AS Financial Statements, management and Board of Directors are responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Board of Directors is also responsible for overseeing the Company’s financial reporting process.

Auditors’ Responsibility for the Audit of the Standalone Ind AS Financial Statements

Our objectives are to obtain reasonable assurance about whether the standalone Ind AS financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these standalone Ind AS financial statements.

As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

- Identify and assess the risks of material misstatement of the standalone Ind AS financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

- Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under Section 143(3)(i) of the Act, we are also responsible for expressing our opinion on whether the Company has adequate internal financial controls with reference to financial statements in place and the operating effectiveness of such controls.

- Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

- Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the standalone Ind AS financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern.

- Evaluate the overall presentation, structure and content of the standalone Ind AS financial statements, including the disclosures, and whether the standalone Ind AS financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the standalone Ind AS financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

As required by the Companies (Auditor’s Report) Order, 2016 (‘the Order’), issued by the Central Government of India in terms of Section 143 (11) of the Act, we give in the “Annexure A”, a statement on the matters specified in paragraphs 3 and 4 of the Order.

(A) 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 Standalone Balance Sheet, the Standalone Statement of Profit and Loss (including other comprehensive income), the Standalone Statement of Changes in Equity and the Standalone Statement of Cash Flows dealt with by this report are in agreement with the books of account;

(d) In our opinion, the aforesaid Standalone Ind AS Financial Statements comply with the Indian Accounting Standards (Ind AS) specified under Section 133 of the Act;

(e) On the basis of the written representations received from the directors as on 31 March 2019 taken on record by the Board of Directors, none of the directors is disqualified as on 31 March 2019 from being appointed as a director in terms of Section 164 (2) of the Act; and

(f) With respect to the adequacy of the internal financial controls with reference to financial statements of the Company and the operating effectiveness of such controls, refer to our separate Report in “Annexure B”.

(B) With respect to the other matters to be included in the Auditors’ 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 as at 31 March 2019 on its financial position in its Standalone Ind AS Financial Statements - Refer note 36 and 42 to the Standalone Ind AS Financial Statements;

ii. the provision has been made in the Standalone Ind AS Financial Statements, as required under the applicable law or Ind AS, for material foreseeable losses, on long-term contracts including derivative contracts, Refer notes 12, 27 and 29 to the Standalone Ind AS Financial Statements;

iii. there are no amounts which are required to be transferred to the Investor Education and Protection Fund by the Company during the year ended 31 March 2019; and

iv. the disclosures in the Standalone Ind AS Financial Statements regarding holdings as well as dealings in Specified Bank Notes during the period from 8 November 2016 to 30 December 2016 have not been made in these Standalone Ind AS Financial Statements since they do not pertain to the financial year ended 31 March 2019.

(C) With respect to the matter to be included in the Auditors’ Report under Section 197(16) of the Act, we report that:

i. we draw attention to note 49 to the Standalone Ind AS Financial Statements, relating to remuneration paid to the Managing Director & CEO and to the Executive Director & CFO of the Company for the financial year ended 31 March 2019, being in excess of the limits prescribed under Section 197 of the Act by Rs. 52.41 million, which is subject to the approval of the shareholders. Our opinion is not modified in respect of this matter; and

ii. the Ministry of Corporate Affairs has not prescribed other details under Section 197(16) which are required to be commented upon by us.

With reference to the Annexure A referred to in the Independent Auditors’ Report to the members of the Company on the Standalone Ind AS Financial Statements for the year ended 31 March 2019, we report the following:

(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets and investment properties.

(b) The Company has a regular programme of physical verification of its fixed assets and investment property by which all fixed assets and investment property are verified by the management according to a phased programme designed to cover all the items over a period of three years. In our opinion, this periodicity of physical verification is reasonable having regard to the size of the Company and the nature of its assets. In accordance with the policy, the Company has physically verified certain property, plant and equipment and investment properties during the year and no material discrepancies were noticed in respect of assets verified during the year and have been dealt with in books of account.

(c) According to the information and explanations given to us and on the basis of our examination of the records of the Company, the title deeds of immovable properties comprising of freehold land and buildings and lease agreement in respect of the leasehold land and building, as listed in Notes 2 and 4 of the Standalone Ind AS Financial Statements, are held in the name of the Company, except as stated in the table below:

Land / building

Number of cases

Freehold

Notes in the standalone Ind AS financial statements

Gross block(Rs. in million)

Net block (Rs. in million)

Remarks

Building

1

Freehold

2

536.33

342.93

Refer note 42 (c) in the standalone Ind AS financial statements in respect of the matter which is presently under litigation

Further in respect of the leasehold land acquired by the Company, attention is invited to the table below:

Land / building

Number of cases

Lease hold

Notes in the standalone Ind AS financial statements

Gross block (Rs. in million)

Net block (Rs.in million)

Remarks

Land

1

Leasehold

11

65.06

53.32

Refer note 42 (c) in the standalone Ind AS financial statements in respect of the matter which is presently under litigation

(ii) The inventory has been physically verified by the management during the year. In our opinion, the frequency of such verification is reasonable. The Company does not have any stock lying with third parties at the year-end. The discrepancies noticed on verification between the physical stocks and the book records were not material and have been dealt with in books of account.

(iii) The Company has granted unsecured loans to nine companies and one body corporate covered in the register maintained under Section 189 of the Companies Act, 2013 (‘the Act’). The Company has not granted any loans, secured or unsecured, to limited liability partnership, firms or other parties covered in the register required to be maintained under Section 189 of the Act.

(a) According to the information and explanations given to us and based on the audit procedures conducted by us, we are of the opinion that the rate of interest and other terms and conditions of unsecured loans granted by the Company to the companies and the body corporate covered in the register required to be maintained under Section 189 of the Act are not, prima facie, prejudicial to the interest of the Company.

(b) According to the information and explanations given to us and based on the audit procedures conducted by us, the unsecured loans granted to the companies and the body corporate and the interest thereon has repaid as demanded during the year.

(c) There are no overdue amounts of more than 90 days in respect of the unsecured loans granted to the companies and the body corporate by the Company.

(iv) In our opinion and according to the information and explanations given to us and based on the legal opinion obtained conducted by the Company and the resolution passed by the Board of Directors of the Company, the unsecured loans granted by the Company are in compliance with the provisions of Section 185 of the Act. The Company has not provided any security during the year to the parties covered under Sections 185 of the Act. According to the information and explanations given to us, the provisions of Section 186 of the Act in respect of the loans given are not applicable to the Company, since it is covered as a Company engaged in infrastructural facilities. The Company has complied with the provisions of Section 186 of the Act in respect of investments made during the year. The Company has not provided any guarantee or security during the year. Accordingly, compliance under 186 of the Act in respect of providing guarantees and securities are not applicable to the Company.

(v) In our opinion, and according to the information and explanations given to us, the Company has not accepted deposits as per the directives issued by the Reserve Bank of India and the provisions of Sections 73 to 76 or any other relevant provisions of the Act and the rules framed thereunder. Accordingly, paragraph 3(v) of the Order is not applicable to the Company.

(vi) We have broadly reviewed the books of accounts maintained by the Company pursuant to the rules prescribed by the Central Government for the maintenance of cost records under Section 148(1) of the Act and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. However, we have not made a detailed examination of the records.

(vii) (a) According to the information and explanations given to us and on the basis of our examination of records of the Company, amounts deducted / accrued in the books of account in respect of undisputed statutory dues including Provident fund, Duty of Customs, Employees’ State Insurance, Goods and Services tax, Labour cess, Professional tax, Property tax, Cess and other material statutory dues have been regularly deposited during the year by the Company with the appropriate authorities. Amounts deducted / accrued in the books of account in respect of undisputed statutory dues of Income-tax have generally been regularly deposited during the year by the Company with the appropriate authorities, though there have been slight delays in a few cases. As explained to us, the Company did not have any dues on account of wealth tax.

According to the information and explanations given to us, no undisputed amounts payable in respect of Provident fund, Duty of Customs, Employees’ State Insurance, Profession tax, Property Tax, Labour cess, Income-tax, Goods and Services tax, Cess and other material statutory dues were in arrears as at 31 March 2019 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us, there are no dues of Income-tax, Sales tax, Service tax, Value added tax and Goods and Services tax as at 31 March 2019, which have not been deposited with the appropriate authorities on account of any dispute, except as stated below:

Name of the statute

Nature of the dues

Demand Rupees in millions

Amount paid Rupees in millions

Financial year (F.Y.) to which the amount relates

Forum where dispute is Pending

Finance Act, 1994

Demand for service tax under reverse charge mechanism on Expenditure in Foreign currency case.

17.20

0.51

2006-07 & 2007-08

CESTAT, Mumbai

Finance Act, 1994

Denial of cenvat credit of service tax paid on Marriott fees paid

55.76

2004-05 to 2010-11

CESTAT, Mumbai

Finance Act, 1994

Denial of input credit on services relating to rent a cab service

4.97

2012-13 to 2014-15

Commissioner (appeals), Mumbai

Finance Act, 1994

Demand for service tax on Telephone services and Laundry wet cleaning service as accommodation services

4.06

May 2011 to June 2012

Commissioner (appeals), Hyderabad

Finance Act, 1994

Service tax demand on treating In-room dining and Mini-bar services as ‘Accommodation’ instead of ‘Restaurant Services’ by Service tax Department.

6.88

2012-13 to 2014-15

Commissioner (appeals), Hyderabad

Finance Act, 1994

Letter demanding Interest on Cenvat credit availed not utilized raised by the service tax department

3.20

-

Oct-2006 to Apr 2008

Assistant Commissioner of Service Tax, Hyderabad

MVAT Act, 2002

Joint Commissioer has included Service Tax in the Gross Turnver and charged VAT on the same demand is not included in the Demand Notice as the same is covered under section 23 (8) of MVAT Act

9.35

-

2012-13

Joint Commissioner Appeals LTU-2

MVAT Act, 2002

Demanding VAT on

1.59

0.40

FY

Deputy Commissioner,

Sale of cocktail

2010-11 to 2012-16

Hyderabad

MVAT Act, 2002

Demanding VAT on

1.76

0.22

FY

Asst.Commissioner

Sale of cocktail

2013-14 to FY 15-16

(CT) LTU

Income Tax Act, 1961

Entire Expenses debited to Profit & Loss account capitalised to WIP and Interest income assessed as “Income from Other Sources”.

3.73

-

2010-11

ITAT

Income Tax Act, 1961

Entire Expenses debited to Profit & Loss account capitalised to WIP and Interest income assessed as “Income from Other Sources”.

6.54

-

2012-13

CIT(A)

Foreign Trade Policy

Recovery of SFIS benefits

5.74

-

2017

Karnataka High Court

(Duty of Customs) Foreign Trade Policy

granted to foreign brands Foreign brands not

218.33

-

2009-14

Gujrat High Court

(Duty of Customs)

eligible for SFIS duty credit scripts

(viii) In our opinion and according to the information and explanations given to us, the Company has not defaulted during the year in repayment of loans or borrowings to banks or financial institutions. The Company does not have any loans or borrowings from government and dues to debenture holders during the year.

(ix) During the year Company has raised monies by way of initial public offering of equity shares. According to the information and explanations given to us and based on our examination of the records of the Company, monies were applied for the purpose for which those were raised. The monies raised by way of term loan has been applied for the purpose for which it was raised.

(x) During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instance of material fraud by the Company or on the Company by its officers or employees, noticed or reported during the year, nor have we been informed of any such case by the management.

(xi) According to the information and explanations given to us and based on our examination of the records of the Company, due to inadequate profits during the current year, the managerial remuneration paid to the directors of the company is in excess of the limits specified under Section 197 of the Act read with Schedule V to the Act. The Company is in the process of obtaining approval from Shareholders for such excess remuneration paid. Refer note 49 of the Standalone Ind AS Financial Statements.

(xii) In our opinion and according to the information and explanations given to us, the Company is not a Nidhi company and the Nidhi Rules, 2014 are not applicable to it. Accordingly, paragraph 3(xii) of the Order is not applicable to the Company.

(xiii) In our opinion and according to the information and explanations given to us, the Company has entered into transactions with related parties in compliance with the provisions of Sections 177 and 188 of the Act. The details of such related party transactions have been disclosed in the standalone Ind AS financial statements as required by Indian Accounting Standard (Ind AS) 24, Related Party Disclosures specified under Section 133 of the Act.

(xiv) According to the information and explanations given to us and based on our examination of the records of the Company, the Company has made preferential allotment of Zero% Non-cumulative, Non-convertible redeemable preference shares during the year in compliance with the requirements of Section 42 of the Act. The total money raised aggregating to Rs. 510,000,000 has been fully utilised by the Company for the purpose for which it was raised. The Company has not made any other private placement or preferential allotment of shares or fully or partly convertible debentures during the year.

(xv) According to the information and explanations given to us and on the basis of our examination of the records of the Company, the Company has not entered into any non-cash transactions with directors or persons connected with them. Accordingly, paragraph 3(xv) of the Order is not applicable to the Company.

(xvi) In our opinion and according to the information and explanations given to us, the Company is not required to be registered under Section 45-IA of the Reserve Bank of India Act, 1934. Accordingly, paragraph 3(xvi) of the Order is not applicable to the Company.

Annexure B to the Independent Auditors’ Report - 31 March 2019

Report on the Internal Financial Controls with reference to the aforesaid Standalone Ind AS Financial Statements under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 (“the Act”)

(Referred to in paragraph (A) (f) under ‘Report on Other Legal and Regulatory Requirements’ section of our report of even date) Opinion

We have audited the internal financial controls with reference to Standalone Ind AS Financial Statements of Chalet Hotels Limited (formerly known as Chalet Hotels Private Limited) (“the Company”) as of 31 March 2019 in conjunction with our audit of the Standalone Ind AS Financial Statements of the Company for the year ended on that date.

In our opinion, the Company has, in all material respects, adequate internal financial controls with reference to Standalone Ind AS Financial Statements and such internal financial controls were operating effectively as at 31 March 2019, based on the internal financial controls with reference to standalone Ind AS financial statements criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India (the “Guidance Note”).

Management’s Responsibility for Internal Financial Controls

The Company’s management and the Board of Directors are responsible for establishing and maintaining internal financial controls based on the internal controls with reference to standalone Ind AS financial statements criteria established by the Company considering the essential components of internal control stated in the Guidance Note.

These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to the Company’s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.

Auditors’ Responsibility

Our responsibility is to express an opinion on the Company’s internal financial controls with respect to standalone Ind AS financial statements based on our audit. We conducted our audit in accordance with the Guidance Note and the Standards on Auditing, prescribed under Section 143 (10) of the Act, to the extent applicable to an audit of internal financial controls with reference to standalone Ind AS financial statements. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls with reference to standalone Ind AS financial statements were established and maintained and whether such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system with respect to standalone Ind AS financial statements and their operating effectiveness. Our audit of internal financial controls with respect to standalone Ind AS financial statements included obtaining an understanding of internal financial controls with respect to standalone Ind AS financial statements, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditors’ judgement, including the assessment of the risks of material misstatement of the standalone Ind AS financial statements, whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company’s internal financial controls system with reference to standalone Ind AS financial statements.

Meaning of Internal Financial Controls with reference to Standalone Ind AS Financial Statements

A company’s internal financial controls with reference to financial statements is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal financial controls with reference to financial statements include those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorisations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls with reference to Standalone Ind AS Financial Statements

Because of the inherent limitations of internal financial controls with reference to standalone Ind AS financial statements, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls with reference to standalone Ind AS financial statements to future periods are subject to the risk that the internal financial control with reference to standalone Ind AS financial statements may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

For B S R & Co. LLP

Chartered Accountants

Firm’s Registration No: 101248W/W-100022

Aniruddha Godbole

Mumbai Partner

10 May 2019 Membership No: 105149

Source : Dion Global Solutions Limited
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