| 1. We have audited the attached Balance Sheet of INDAGE RESTAURANTS AND
LEISURE LIMITED ("the Company"), as at 31st March 2011, and also
the Profit and Loss Account and the Cash Flow Statement for the year
ended on that date both 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.
2. We conducted our audit in accordance with the standards of audit
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 the management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable
basis for our opinion.
3. 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, we enclose in the Annexure, a
statement on the matters specified in paragraphs 4 &
5 of the said Order.
4. Further to our comments in the Annexure referred to in Paragraph 3
above, we report that:
a) We have obtained all the information and explanation, 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 appears from our examination of those
books and proper returns adequate for the purposes of our audit have
been received from the branches not visited by us;
c) The Balance Sheet, Profit and Loss Accounts and Cash Flow Statement
dealt with by this report are in agreement with the books of accounts;
d) In our opinion, the Balance Sheet, Profit and Loss Account and Cash
Flow Statement dealt with by this report comply with the Accounting
Standards referred to in sub- section (3C) of Section 211 of the
Companies Act, 1956, except for AS-2 "Valuation of Inventories,
As-13 Accounting for Investments, AS-15 Employee Benefits
and AS-28 Impairment of Assets.
e) On the basis of written representations received from the Directors,
as on 31st March 2011 and taken on record by the Board of Directors, we
report that none of the Directors is disqualified as on 31st March 2011
from being appointed as a director in terms of clause (g) of
sub-section (1) of section 274 of the Companies Act, 1956.
f) Attention is invited to the following :
i. Capital Work in Progress of Rs. 36,138,350 represents amounts paid
for incomplete projects of the Company carried forward since last
several years. We are unable to opine on the viability or
recoverability of the same as an amount of Rs. 33,186,800 is on account
of Advances given for Projects which are no longer in existence.
ii. During the year, an amount of Rs. 74,217,758 on account of
Investment in Subsidiary Company has been written off. However, we are
unable to ascertain the basis on which this write off was done.
In the absence of any information, we are unable to opine on the fall
in the value of Investments in subsidiary / associate companies costing
Rs. 34,281,242 (AS-13)
Certificates of Investments costing Rs. 34,389,442 were unavailable for
our verification.
iii. In the absence of any information / records, we are unable to
opine on the realisability of Stock valued in the books at Rs.
24,808,334. (AS-2)
iv. Sundry Debtors considered good includes Rs. 4,240,947 over 6 months
which are subject to reconciliations/confirmations. We are unable to
opine on the recoverability of the same.
v Deposits- Long Term to companies under the same group amounting to
Rs. 82,500,000, other deposits (Long Term) amounting to Rs. 6,500,000,
and other deposits (Short Term) amounting to Rs. 390,915, advances to
Companies under the same group amounting to Rs. 78,857,090 and other
advances amounting to Rs. 1,581,429 are all subject to reconciliation
and confirmation. We are unable to opine on the recoverablility of the
said amounts.
vi. The balances lying with banks in Current and Deposit Accounts
amounting to Rs. 694,393 under Cash and Bank" have not been
confirmed by the respective Banks.
Consequently, although the above amounts shown under clauses i to vi
have been shown as good and recoverable by the Management, no provision
has been made for the same.
vii. Secured Loans from Banks amounting to Rs. 339,760,894 have not
been confirmed by the Respective Banks. Hence we are unable to
ascertain the exact liability due to these Banks.
viii. Unsecured Loans from Companies under the same Group and from
Directors amounting to Rs. 114,216,543 is subject to reconciliation and
confirmation. Hence we are unable to ascertain the exact liability
which may arise on this account.
ix. The Company has not obtained Actuarial Valuation for the gratuity
and leave encashment liability as required under AS-15 Employee
Benefit. No liability for Gratuity and Leave encashment has been
provided.
x. The Company has repaid to certain Existing Employees the P.F.
contribution of
2008-2009 for Employer as well as Employee amounting to Rs. 116,288
(Rs. 59,442 Employer Contribution and Rs. 56,846 Employee
Contribution) which is in Contravention of the Provident Fund Rules and
Act.
xi. In the absence of any supporting documents / vouchers we are unable
to ascertain whether expenses aggregating to Rs. 1,001,387 incurred by
the Directors/ Employees on travel etc. and debited to the Profit and
Loss Account are in the nature of Personal Expenses.
xii. Saraswat Bank has served upon the Company a Notice under Section
13(2) of the Securitization and Reconstruction of Financial Assets and
Enforcement of Security Act, 2002 for repayment of its dues as well as
those of UCO Bank.
xiii. Legal Action has been initiated against the Company under Sec.
138 of the Negotiable Instruments Act and other Acts by various
parties, the outcome of which cannot be currently ascertained.
xiv. During the year certain Fixed Assets of one unit at Written Down
Value have been transferred to a Partnership Firm. However, in absence
of any details, the basis on which these Assets have been transferred
could not be verified by us. Consequently, no entry for Profit/Loss on
transfer of these Assets has been booked in the Accounts. We are unable
to express any opinion on this transaction. We are informed that the
books of account of this Partnership Firm have not been finalized to
date and consequently, the company's share of profits or losses from
the partnership firm have not been accounted for while finalizing the
accounts.
xv. In the absence of any valuation reports for Fixed Assets and
records to show the Cash Generating capacity of the Companys Fixed
Assets, we are unable to opine whether there is any impairment of the
Fixed Assets of the Company (AS-28)In view of the above weare unable to
express an opinion on the recoverability / realisability of the above
mentioned items, the impact of the same on the Loss for the year as
well as the future viability of the Company as a going concern.
g) On the basis of what has been mentioned in Paragraph (f) above and
also our comments in the Annexure referred to in Paragraph 3, we are
unable to express an opinion whether the said accounts read together
with the notes thereon give the information required by the Companies
Act, 1956, in the manner so required and also 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 affairs of the
Company as at 31st March 2011.
ii. In the case of the Profit & Loss Account, of the Loss of the
Company for the year ended on that date.
iii. In the case of the Cash Flow Statement, of the Cash Flows for the
year ended on that date.
ANNEXURE TO THE AUDITORS' REPORT
Referred to in paragraph 3 of our Report of even date
i.a. The Company has not maintained proper records showing full
particulars including quantitative details and situation of its fixed
assets.
b. The Fixed Assets have not been physically verified by the management
during the year. Under these circumstances, we are unable to opine
whether there are any material discrepancies.
c. According to the information and explanations give to us, the
Company has not disposed off a substantial part of its fixed assets
during the year.
ii.a. The inventory has been physically verified during the year by the
management.
b. In our opinion and according to the informations given to us, the
procedures of physical verification of inventories followed by the
management needs improvement in relation to the size of the Company and
the nature of its business.
c. In absence of detailed stock records we are unable to ascertain
whether there were any material discrepanies between stock records and
physical inventories.
iii. In absence of proper records we are unable to ascertain whether,
the Company has granted/ taken any loans, secured or unsecured to /
from companies, firms or other parties covered in the register
maintained under Section 301 of the Companies Act, 1956 and hence no
disclosure is being made.
iv. In our opinion and according to the information and explanations
given to us, the internal control system is not adequate in relation to
the size of the Company and the nature of its business for the
purchases of inventory and fixed assets and for the sale of goods and
services and other transactions.
v. The Company has not maintained the Register required to be mainted
in pursuance of Sec. 301 of the Companies Act, 1956. Hence, we are
unable to ascertain whether there were any transations entered into by
the Company as specified in clause v of the Order and if so whether the
same have been made at prices which are reasonable having regard to the
prevailing market prices at the relevant time.
vi. In our opinion and according to the information and explanations
given to us, the Company has not accepted deposits from the public.
vii. In our opinion and according to the information and explanation
given to us, the Company does not have any internal audit system.
vii. We are infored that 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 Company's Products.
ix.a. According to the information and explanations given to us and on
the basis of our examination of the records of the Company, undisputed
statutory dues including Provident Fund, Investor Education and
Protection Fund, Employees' State Insurance, Sales Tax, Income
Tax,Custom Duty, Excise Duty, Wealth Tax, Service Tax and other
statutory dues have not been regularly deposited with the appropriate
authorities. The undisputed amounts outstanding as on 31st March 2011
for a period of more than six months from the date they became payable
as given by the Management are as under :
Statutory Dues Amount in Rs.
Provident Fund 962,625
ESIC 1,047,526
Professional Tax 723,025
VAT 24,408,288
FBT 722,409
Luxury Tax 111,265
TDS 973,249
b. According to the information and explanations given to us and on the
basis of our examination of the records of the Company, as at 31st
March 2011, the following are the particulars of disputed dues as given
by the Management on account of Income Tax matters which have not been
deposited by the Company :
Name of the Name of Amount Period to Forum where
Statute Dues (Rs.) which dispute is
the amount pending
relates
Income Tax Income Tax 8,529,928 A.Y. 2006-
2007 ITAT
Act, 1961
x. The accumulated losses of the Company at the end of the financial
year are more than fifty percent of its net worth. The Company has
incurred cash losses, both in the present financial year, and in the
immediately preceding financial year.
xi. Based on our audit procedures and as per the information and
explanations given by the management, we are of the opinion that the
Company has defaulted in repayment of its dues to banks during the
year. Total amount of dues to Banks amounting to Rs. 339,760,894/ -
have been recalled by the Banks, Refer Note 2.11 in Schedule 18.
xii. Based on our examination of the records and the information and
explanations given to us, the Company has not granted any loans and
advances on the basis of security by way of pledge of shares,
Debentures or any other securities.
xiii In our opinion, the Company is not a chit fund or a nidhi/mutual
benefit fund/ society. Therefore, the provisions of clause (xiii) of
Paragraph 4 of the Companies (Auditors Report) Order, 2003 are not
applicable to the company.
xiv. In our opinion and according to the information and explanations
given to us, the Company is not dealing in or trading in shares,
securities, debentures and any other investments, Accordingly, the
provisions of clause (xiv) of Paragraph 4 of the Companies (Auditors
Report) Order, 2003 are not applicable to the Company.
xv. In our opinion and according to the information and explanations
given by the management, the Company has not given any guarantee for
loans taken by others from banks or financial institutions.
xvi. During the year no fresh term loans have been taken by the
Company. On the basis of the records examined by us, and relying on the
information compiled by the Company for co- relating the funds raised
to the end use of term loans, we state that the Company has, prima
facie, applied the term loans for the purpose for which they were
obtained.
xvii. We are unable to opine whether funds raised on short term basis
have been used for long term investment.
xviii. According to the information and explanations given to tus, 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.
xix. The Company has not issued any debentures during the year.
Accordingly, the provisions of clause (xix) of paragraph 4 of the
Companies (Auditors Report) Order, 2003 are not applicable to the
Company.
xx. According to the information and explanations given to us, the
Company has not made any public issues during the year.
xxi. Based upon the audit procedures performed and information and
explanations given by the management, we report that no fraud on or by
the Company has been noticed or reported during the year.
For SORAB S. ENGINEER & CO.
Chartered Accountants
Firm Regn. No. 110417W
sd/-
M.P. ANTIA
Partner
Membership No. 7825
PLACE : Mumbai
DATE : 11th April, 2012
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