Report on the Financial Statements
We have audited the accompanying fnancial statements of Mukta Arts
Limited (''the Company''), which comprise the Balance sheet as at 31
March 2013, the Statement of proft and loss and the Cash fow statement
for the year then ended, and a summary of signifcant accounting
policies and other explanatory information.
Management''s Responsibility for the Financial Statements
Management is responsible for the preparation of these fnancial
statements that give a true and fair view of the fnancial position,
fnancial performance and cash fows of the Company in accordance with
the Accounting principles generaly accepted in india. This
responsibility includes the design, implementation and maintenance of
internal control relevant to the preparation and presentation of the
fnancial 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 fnancial
statements based on our audit. We conducted our audit in accordance
with the Standards on Auditing issued by the Institute of Chartered
Accountants of India. Those Standards require that we comply with
ethical requirements and plan and perform the audit to obtain
reasonable assurance about whether the fnancial statements are free
from material misstatement.
An audit involves performing procedures to obtain audit evidence about
the amounts and disclosures in the fnancial statements. The procedures
selected depend on the auditor''s judgment, including the assessment of
the risks of material misstatement of the fnancial statements, whether
due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the Company''s preparation and
fair presentation of the fnancial statements in order to design audit
procedures that are appropriate in the circumstances. An audit also
includes evaluating the appropriateness of accounting policies used and
the reasonableness of the accounting estimates made by management, as
well as evaluating the overall presentation of the fnancial statements.
We believe that the audit evidence we have obtained is suffcient and
appropriate to provide a basis for our qualifed opinion.
Basis for Qualifed Opinion
a. As explained in Note 3.39 to the fnancial statements, the
remuneration paid to the managing director of the Company for the year
ended 31 March 2013 amounting to Rs 9,979,490 (including fees as flm
director) and for earlier fnancial years from 2005-06 to 2011-2012
aggregating to Rs 100,626,669, is in excess of the limits prescribed
under Schedule XIII to the Act. The Company has made applications to
the Central Government seeking post-facto approval for earlier years,
which is awaited; application for the current year is proposed to be
made. During the previous year, the Company had received approval for
part of the excess remuneration paid (approval received for
remuneration aggregating to Rs 25,200,000 for the fnancial years
2005-06, 2006-07and 2007-08). The Company had made an application to
authorities requesting reconsideration/ approval for the balance excess
remuneration. Pending fnal communication from the authorities in this
regard and application for the current year, no adjustment has been
made in these fnancial statements.
b. As at 31 March 2013, the Company''s investment in its subsidiary,
Whistling Woods International Limited (WWI), a joint venture between
the Company and Maharashtra Film, Stage and Cultural Development
Corporation Limited (''MFSCDCL''), aggregates to Rs 369,997,000 and
loans, advances and deposits include Rs 424,096,877 recoverable from
WWI. As more fully explained in Note 3.40 to these fnancial statements,
through its order of 9 February 2012, the High Court of Judicature at
Bombay (''High Court'') has quashed the Joint Venture Agreement (''JVA'')
between the Company and MFSCDCL and passed consequential orders. WWI''s
petition for special leave to appeal fled with the Supreme Court of
India has been dismissed. However, the Company and WWI have fled
applications to review the said order with the High Court, which have
not yet come up for hearing. During the year, the Public Works
Department (PWD) Engineer has given his valuation report based on the
Balance sheet of WWI as at 31 March 2011. Further, MAL has made an
application to the Government of Maharashtra in February 2013 to
appoint expert valuers to determine the market price. Also, WWI''s net
worth stands fully eroded as at 31 March 2013 - management is currently
evaluating plans for the future.
Having regard to the circumstances explained above and pending fnal
outcome of the matter under litigation, the Company has not made any
adjustment to the carrying value of investments in and amounts due from
WWI. Accordingly, the impact on the carrying value of investments,
recoverability of loan and advances, proft for the year and
consequentially on the dividend for the year is not determinable.
1. In our opinion and to the best of our information and according to
the explanations given to us, except for the matter relating to the
investment in and loans and advances recoverable from the Company''s
subsidiary WWIL referred to in paragraph (b) of the Basis for Qualifed
Opinion paragraph above, the outcome and consequent adjustments to the
fnancial statements of which cannot be presently determined, and for
the matter relating to the remuneration to the managing director
referred to in paragraph (a) of the Basis for Qualifed Opinion
paragraph above, the said fnancial statements give the information
required by the Act in the manner so required and give a true and fair
view in conformity with accounting principles generally accepted in
(a) in the case of the Balance sheet, of the state of affairs of the
Company as at 31 March 2013;
(b) in the case of the Statement of proft and loss, of the proft of the
Company for the year ended on that date; and
(c) in the case of the Cash fow statement, of the cash fows of the
Company for the year ended on that date.
Report on other Legal and Regulatory Requirements
2. As required by the Companies (Auditor''s Report) Order, 2003 (''the
Order''), issued by the Central Government of India in terms of
sub-section (4A) of Section 227 of the Act, we give in the Annexure a
statement on the matters specifed in paragraphs 4 and 5 of the said
3. As required by section 227(3) of the Act, we report that:
(a) we have obtained all the information and explanations which to the
best of our knowledge and belief were necessary for the purpose of our
(b) 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
(c) the Balance sheet, Statement of proft and loss and Cash fow
statement dealt with by this report are in agreement with the books of
(d) in our opinion, the Balance sheet, Statement of proft and loss and
Cash fow statement comply with the accounting standards referred to in
sub-section (3C) of Section 211 of the Act; and
(e) on the basis of written representations received from the directors
of the Company as at 31 March 2013, and taken on record by the Board of
Directors, none of the directors is disqualifed as on 31 March 2013,
from being appointed as a director in terms of clause (g) of
sub-section (1) of Section 274 of the Act.
Annexure to the Independent Auditors'' Report - 31 March 2013
(Referred to in our report of even date)
i) (a) The Company has maintained proper records showing full
particulars including quantitative details and situation of fxed assets
except that tagging of certain fxed assets is yet to be completed.
(b) The Company has a regular programme of physical verifcation of its
fxed assets by which all fxed assets are verifed annually. In our
opinion, this periodicity of physical verifcation is reasonable having
regard to the size of the Company and the nature of its assets. No
material discrepancies were noticed on such verifcation during the
(c) The Company has not disposed off any fxed assets during the year.
ii) (a) The inventory has been physically verifed by the management
during the year. In our opinion, the frequency of such verifcation is
(b) The procedures for the physical verifcation 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) The Company is maintaining proper records of inventory. The
discrepancies noticed on verifcation between the physical stocks and
the book records were not material.
(iii) The Company has neither granted nor taken any loans, secured or
unsecured, to or from companies, frms or other parties covered in the
register maintained under Section 301 of the Act.
(iv) In our opinion and according to the information and explanations
given to us, controls relating to purchase of fxed assets, customer
contracting and tracking of amounts billable need to be further
strengthened, and having regard to the explanation that certain
services rendered/ rights sold are of a specialised nature and are
rendered/ sold to specifc buyers and suitable alternative sources are
not available to obtain comparable quotations, there is an adequate
internal control system commensurate with the size of the Company and
the nature of its business with regard to purchase of inventories (food
and beverage items) and fxed assets and with regard to sale of services
and food and beverage items. We have not observed any material
weaknesses during the course of audit.
(v) In our opinion, and according to the information and explanations
given to us, there are no contracts and arrangements the particulars of
which need to be entered into the register maintained under Section 301
of the Act.
(vi) In our opinion and according to the information and explanations
given to us, Company has not complied with the provisions of Sections
58A and 58AA of the Act and the Companies (Acceptance of Deposits)
Rules, 1975 with regard to the loan taken and repaid during the year
from a director shareholder of the Company.
(vii) In our opinion, the Company has an internal audit system
commensurate with its size and the nature of its business.
(viii) The Central Government has not prescribed the maintenance of
cost records under Section 209(1)(d) of the Act for any of the services
rendered/ food and beverages sold by the Company.
(ix) (a) According to the information and explanations given to us and
on the basis of our examination of records of the Company, except for
Value added tax dues aggregating to Rs 35,592,323 amounts deducted/
accrued in the books of account in respect of undisputed statutory dues
including Provident fund, Employees'' State Insurance, Income tax, Sales
tax, Wealth tax, Service tax, and other material statutory dues have
been generally regularly deposited during the year by the Company with
appropriate authorities. As explained to us, the Company did not have
any dues on account of Excise duty, Custom duty and Investor Education
and Protection Fund.
According to the information and explanations given to us, the
following undisputed statutory dues are outstanding as at 31 March 2013
for a period of more than six months from the date they became payable:
Name of the
Statute Nature of dues Amount * Period to
which it Due date
Added Value-added tax 1,173,077 April 2005
2006 May 2005
tax Act, 2002 April 2006
Added Value-added tax 9,069,231 April 2006
2007 May 2006
tax Act, 2002 April 2007
Added Value-added tax 4,138,462 April 2007
2008 May 2007
tax Act, 2002 April 2008
Added Value-added tax 2,096,154 April 2008
2009 May 2008
tax Act, 2002 April 2009
Added Value-added tax 1,580,769 April 2009
2010 May 2009
tax Act, 2002 April 2010
Added Value-added tax 1,384,615 April 2010
2011 May 2010
tax Act, 2002 April 2011
Added Value-added tax 952,380 April 2011
2011 May 2011
tax Act, 2002 September
*Credit available Rs 12,885,786 pending adjustment.
Except for the above, there are no undisputed amounts payable in
respect of Provident fund, Employees'' State Insurance, Income tax,
Sales tax, Wealth tax, Service tax, and other material statutory dues
which were in arrears as at 31 March 2013 for a period of more than six
months from the date they became payable.
(b) According to the information and explanations given to us, the
following dues of Service tax have not been deposited by the Company on
account of dispute:
Name of the statute Nature of Amount
Chapter V of the Finance Service Tax 800,000
Chapter V of the Finance Service Tax 875,000
Name of the Statute Period to which Forum where the dispute
the amount relates pending
Chapter V of the Finance April 1999 -October Customs, Excise &
Service Tax Appellate
Chapter V of the Finance November 1996 Customs, Excise &
Service Tax Appellate
-November 2001 Tribunal
I *- excludes amount deposited under protest Rs 1,240,000
(x) The Company does not have any accumulated losses at the end of the
fnancial year and has not incurred cash losses in the current and in
the immediately preceding fnancial year.
(xi) In our opinion and according to the information and explanations
given to us, the Company has not defaulted in repayment of dues to its
bankers or to any fnancial institutions. The Company did not have any
outstanding debentures during the year.
(xii) The Company has not granted any loans and advances on the basis
of security by way of pledge of shares, debentures or other securities.
(xiii) In our opinion and according to the information and explanations
given to us, the Company is not a chit fund or nidhi/ mutual beneft
(xiv) According to the information and explanations given to us, the
Company is not dealing or trading in shares, securities, debentures and
(xv) In our opinion and according to the information and explanations
given to us, the terms and conditions on which the Company has given
guarantees for loans taken by others from banks or fnancial
institutions are not prejudicial to the interest of the Company.
(xvi) In our opinion and according to the information and explanations
given to us, the term loans taken by the Company have been applied for
the purpose for which they were raised.
(xvii) According to the information and explanations given to us and on
an overall examination of the Balance sheet of the Company, we are of
the opinion that the funds raised on short-term basis have not been
used for long-term investment.
(xviii) The Company has not made any preferential allotment of shares
during the year to companies/ frms/ parties covered in the register
maintained under Section 301 of the Act.
(xix) The Company did not have any outstanding debentures during the
(xx) The Company has not raised any money by public issues during the
(xxi) According to the information and explanations given to us, no
fraud on or by the Company has been noticed or reported during the
course of our audit.
For B S R & Co.
Firm''s Registration No: 101248W
Place : Mumbai Partner
Date : 28 May 2013 Membership No: 042070