| Report on the Financial Statements
We have audited the accompanying financial statements of U.P. Hotels
Limited ("the Company"), which comprise the Balance Sheet as at March
31, 2013, and the Statement of Profit and Loss and Cash Flow Statement
for the year then ended and a summary of significant accounting
policies and other explanatory information.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation of these financial
statements that give a true and fair view of the financial position,
financial performance and cash flows of the Company in accordance with
the Accounting Standards referred to in sub-section (3C) of section 211
of the Companies Act, 1956 (the 'Act'). This responsibility includes
the design, implementation and maintenance of internal control 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.
Auditor's Responsibility
Our responsibility is to express an opinion on these financial
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 financial statements are free
from material misstatement.
An audit involves performing procedures to obtain audit evidence about
the amounts and 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 control relevant to the Company's preparation and
fair presentation of the financial 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 financial
statements.
We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our audit opinion.
Opinion
In our opinion and to the best of our information and according to the
explanations given to us, the 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:
(a) in the case of the Balance Sheet, of the state of affairs of the
Company as at March 31, 2013 and;
(b) in the case of the Statement of Profit and Loss, of the profit for
the year ended on that date; and
(c) in the case of the Cash Flow Statement, of the cash flows for the
year ended on that date.
Emphasis of matter
a) We draw attention to Note 50 to the Financial Statements regarding
remuneration paid / provided in respect of whole-time directors, an
excess of the limits prescribed under section 309 (3) & section 198
read with Schedule XIII of the Act, which is subject to the approval of
Central Government. Our opinion is not qualified in respect of this
matter.
b) We draw attention to the Note 52 to the Financial Statements which
describes that the Company has applied to the Hon'ble Civil Court,
Lucknow (Sr. Division) in respect of interim order passed in the matter
of civil suit filed by some promoters against most of the promoters
(including the Company) not to undertake any such measures which may
affect the shareholding pattern inter- se amongst promoters, to give
permission to enable the Company to comply with Clause 40A of the
listing agreement and as such the Company is yet to comply with the
letter received from SEBI as regards Clause 40A. Our opinion is not
qualified in respect of this matter.
Report on Other Legal and Regulatory Requirements
1. 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 specified in paragraph 4 and 5 of the Order.
2. 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
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;
c. the Balance Sheet, Statement of Profit and Loss, and Cash Flow
Statement dealt with by this Report are in agreement with the books of
account;
d. in our opinion, the Balance Sheet, Statement of Profit and Loss,
and Cash Flow Statement comply with the Accounting Standards referred
to in subsection (3C) of section 211 of the Companies Act,1956;
e. on the basis of written representations received from the directors
as on March 31, 2013, and taken on record by the Board of Directors,
none of the directors is disqualified as on March 31, 2013, from being
appointed as a director in terms of clause (g) of sub-section (1) of
section 274 of the Companies Act, 1956.
f. since the Central Government has not issued any notification as to
the rate at which the cess is to be paid under section 441A of the
Companies Act, 1956 nor has it issued any Rules under the said section,
prescribing the manner in which such cess is to be paid, no cess is due
and payable by the Company.
1. a) The Company has generally maintained proper records showing full
particulars regarding valuation of different type of assets including
quantitative details and situation of fixed assets. The Company is
still in the process of updating its records on the new fixed assets
management software.
b) The fixed assets at Clarks Avadh, Lucknow & Clarks Shiraz, Agra have
been physically verified by a firm of Chartered Accountants during the
year. The physical verification of assets at Clarks Amer, Jaipur &
Clarks Khajuraho have not been carried out during the year. In our
opinion, the frequency of verification of fixed assets needs to be
increased in order to be reasonable having regard to the size of the
company and nature of its assets. The discrepancies noticed on such
verification carried out which were not material have been properly
dealt within the books of account.
c) The fixed assets disposed off during the year, in our opinion, do
not constitute a substantial part of the fixed assets of the Company
and such disposal has, in our opinion, not affected the going concern
status of the Company.
2. a) As explained to us, inventories are physically verified by the
Management during the year at reasonable intervals. In our opinion, the
frequency of verification is reasonable.
b) In our opinion and according to the information and explanations
given to us, the procedures for physical verification of inventories
followed by the Management were 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 inventory records of the Company,
the Company is maintaining proper records of its inventory. The
discrepancies noticed on verification between physical stock and book
records were not material and have been properly dealt with in the
books of account.
3. a) The Company has not granted any loans, secured or unsecured, to
companies, firms or other parties covered in the Register maintained
under Section 301 of the Act.
b) In view of our comments in paragraph 3 (a) above, the provisions of
Clauses iii (b), iii (c) and iii (d) of paragraph 4 of the aforesaid
Order are not applicable to the Company.
c) The Company has not taken any loan, secured or unsecured, from
companies, firms or other parties covered in the Register maintained
under Section 301 of the Act.
d) In view of our comment in paragraph 3 (c) above, clauses iii (f) and
iii (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 and having regard to the explanation that for some items
purchased for which comparable alternative quotations are not available
because of the nature/ quality of such items and delivery schedules and
also sale of services for which suitable alternative sources are not
available to obtain comparable quotations, there are generally adequate
internal control system commensurate with the size of the company and
nature of its business with regard to purchase of inventories, fixed
assets and sale of goods and services except for internal control over
purchase of provisions and reimbursement of expenses needs to be
improved. Further, during the course of our audit subject to comment
made hereinabove, we have neither come across nor have we been informed
of any continuing failure to correct major weakness in internal control
system.
5. a) On the basis of the audit procedures performed by us, and
according to the information, explanation and representations given to
us, we are of opinion that, the particulars of contracts or
arrangements in which directors were interested as contemplated under
Section 297 and sub section (6) of Section 299 of the Companies Act,
1956 and which were required to be entered in the register maintained
under Section 301 of the said Act, have been so entered.
b) In our opinion, and according to the information and explanations
given to us, there are no transactions made in pursuance of contracts
and arrangements referred to in (a) above and exceeding the value of Rs.5
lacs with any party during the year. However, in respect of other
transactions owing to the unique and specialized nature of items
involved and in the absence of any comparable prices, we are unable to
comment as to whether the transactions made in pursuance of such
contracts or arrangements have been made at prevailing market price at
the relevant time.
6. The Company has not accepted any deposits from the public and
consequently, the directives issued by the Reserve Bank of India and
the provisions of Section 58A and 58AA or any other relevant provisions
of the Act and the rules framed there under are not applicable.
Further, during the course of our audit, we have neither come across
nor have we been informed of any order passed under the aforesaid
sections by Company Law Board or National Company Law Tribunal (as
applicable) or Reserve Bank of India or any Court or any other
Tribunal.
7. In our opinion, the Company has an internal audit system
commensurate with the size of the Company and nature of its business.
8. The Central Government has not prescribed the maintenance of cost
records under clause (d) of sub section (1) of Section 209 of the
Companies Act, 1956 in respect of services carried out by the Company.
9. a) According to records of the Company, and subject to comments in
para 9 (b) below the Company is generally regular in depositing
undisputed statutory dues including provident fund, investor education
and protection fund, employees' state insurance, income tax, sales tax,
wealth tax, service tax, custom duty, excise duty, cess and other
statutory dues applicable to it with the appropriate authorities though
there have been instances of delay and non deposition/ non deduction.
Further, since the Central Government has till date not prescribed the
amount of cess payable under section 441A of the Companies Act, 1956,
we are not in a position to comment upon the regularity or otherwise of
the Company in depositing the same.
b) According to information and explanations given to us, except for
the cases stated below, there are no other undisputed amount payable in
respect of provident fund, investor education & protection fund, income
tax, employees state insurance, wealth tax, sales tax, custom duty,
service tax, excise duty, cess and other statutory dues which were
outstanding at the year end for period of more than six months from the
date they become payable.
Amount (R.)
House Tax/ Municipal Tax 2,872,250
& Water tax
Purchase Tax / VAT/Entry 288,484
tax etc.
Service Tax 224,866
Employees State 1,190,783
Insurance Dues
Luxury Tax 290,491
c) According to the information and explanations given to us, there are
no dues outstanding of custom duty, excise duty, income tax, wealth tax
and cess on account of any dispute which have not been deposited except
for:
Name of statute Nature of
dues Years Forum
where dis- Amount (Rs.)
pute is
pending
Value Added Value
Added
Tax 2007-08 VAT Tribunal,
Agra 2,972,203
Tax - UP
Income tax Income
Tax Assessment
Year CIT
(Appeals) Vara- 5,236,372
Act,1961 2009-10 &
2010-11 nasi
Reference is also invited to Note 28 A (i) (b) as regards the Income
Tax Department having appealed
to the Hon'ble High court, Allahabad against the Order of the Income
Tax Appellate Tribunal upholding the views of the Company in respect of
the claim of deduction regarding earnings in convertible foreign
exchange under Section 80 HHD (Assessment year 1989-90 to 1991-92). The
total amount disputed (excluding interest & penalties) aggregated to
Rs.5,859,000.
10. The Company has no accumulated losses and has not incurred any
cash losses during the financial year covered by our report and in the
immediately preceding financial year.
11. As per books and records maintained by the Company and according
to the information and explanations given to us, the Company has not
defaulted in repayment of dues to the financial institution / bank. The
Company has not issued any debentures.
12. The Company has not granted loans and advances on the basis of
security by way of pledge of shares, debentures and other securities.
Accordingly, clause 4 (xii) of the Order is not applicable to the
Company.
13. In our opinion, the Company is not a chit fund or a nidhi / mutual
benefit fund / society. Accordingly, clause 4 (xiii) of the Order is
not applicable to the Company.
14. The Company has maintained proper record of transaction and
contracts in respect of dealing or trading in securities and other
investments viz. mutual funds. All other investments viz. mutual funds
have been held by the Company in its own name.
15. According to the information and explanations given to us, the
Company has not given any guarantee for loans taken by others from
banks or financial institutions. Accordingly, clause 4 (xv) of the
Order is not applicable to the Company.
16. On the basis of the records examined by us, the Company has not
availed any tem loan during the year. Accordingly, clause 4 (xvi) of
the Order is not applicable to the Company.
17. According to the information and explanations given to us and on
an overall examination of the financial statements and after placing
reliance on the reasonable assumptions made by Company for
classification of long term and short term usages of funds, we are of
the opinion that prima facie no funds raised on short term basis have
been used for long term investments.
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. Accordingly, clause 4 (xviii) of the
Order is not applicable to the Company.
19. The Company has not issued any debentures during the year.
Accordingly, clause 4 (xix) of the Order is not applicable to the
Company.
20. The Company has not raised any money by public issues during the
year. Accordingly, clause 4 (xx) of the Order is not applicable to the
Company.
21. During the course of our audit of the books of accounts of the
Company, we have neither come across any instance of fraud on or by the
Company nor have we been informed of any such case by the Management.
For RAY & RAY
Chartered Accountants
Firm's Registration Number 301072 E
Sd/-
(Anil Kumar Sharma)
Partner
Membership Number 80085
Place: New Delhi
Date: 27th May, 2013
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