james hotels ltd Auditors report

The Members,

James Hotels Limited.

1. We have audited the accompanying financial statements of James Hotels Limited which comprise the Balance Sheet as at 31" March, 2017, the Statement of Profit & Loss and the Cash Flow Statement for the year then ended and a summary of significant accounting policies and other explanatory information.

2. The Companys Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 with respect to the preparation and presentation 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 principles generally accepted in India, including the Accounting Standards 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 the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgement 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 financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

3. Our responsibility is to express an opinion on these financial statements based on our audit. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the rules made thereunder.

4. We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. 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.

5. An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditors judgement, 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 financial control relevant to the Companys preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Companys Directors, 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 on the financial statements.

6. Attention is invited to the following points of Note 4 of the financial statements.

i) Note 4.1 - suspension of the powers of the Board of Directors and vesting of management with Interim Resolution Professional by Honble NCLT, Chandigarh.

ii) Note 4.2 - pending litigations/contingent liabilities against the Company.

iii) Note 4.3 - the Company has increased Authorised Share Capital from Rs. 140,000,000/- to Rs. 520,000,000/- by passing a special resolution dated 14" December, 2011 by way of postal ballot; however, the exact number of Equity Shares & Preference shares has not been specifically classified.

iv) Note 4.6 - defaults in repayment of dues to banks, assignment of loans granted by State Bank of India to Asset Reconstruction Company (India) Limited. United Bank of India, Punjab National Bank and Asset Reconstruction Company (India) Limited issued notices under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 against which the Company has preferred an appeal with Debt Recovery Tribunal; the matter is subjudiced. Provision for interest accrued, in absence of confirmation of balances by Banks, has been made on accrual basis.

v) Note 4.8 - non-payment of fee for increase in Authorised Share Capital.

vi) Note 4.13 - rejection of application, for approval of remuneration paid to the Managing Director, by the Central Government.

7. Net-worth of the Company has completely eroded; the management is of the opinion that the Company shall carry on its business as usual, hence the financial statements of the Company have been prepared on going concern basis; the appropriateness of the said basis is inter-alia dependent upon future performance and profitability and presently we are unable to express an opinion on the same.

8. Subject to paragraph 6 & 7 above, in our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial statements give the information required by the Act in the manner so required and give a true and fair view inconformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at 31" March, 2017 and its loss and its cash flows for the year ended on that date.

9. As required by the Companies (Auditors Report) Order. 2016 issued by the Central Government of India in terms of sub-section (11) of Section 143 of the Act, we give in the "Annexure A" a statement on the matters specified in the paragraph 3 and 4 of the Order.

10. 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 Balance Sheet, the Statement of Profit & Loss and the Cash Flow Statement dealt with by this report are in agreement with the books of account;

(d) in our opinion, the aforesaid financial statements, comply with the Accounting Standards, specified under Section 133 of the Act;

(e) on the basis of the written representations received from the directors as on 31st March, 2017 taken on record by the Board of Directors, none of the directors is disqualified as on 31st March. 2017 from being appointed as a director in terms of Section 164(2) of the Act;

(1) with respect to the adequacy of internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate report in "Anncxure B"; and

(g) 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 on its financial position in its financial statements (Refer notes 4.1,4.2,4.5 & 4.6).

ii. the Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses;

iii. there were no amounts which were required to be transferred, to the Investor Education and Protection Fund by the Company; and

iv. the Company has provided requisite disclosures, in its financial statements, as regards its holdings and dealings in Specified Bank Notes, as defined in the Notification S.O. 3407(E) dated 08th November, 2016 of the Ministry of Finance, during the period from 08" November, 2016 to 30" December, 2016, and these are in accordance with the books of accounts maintained by the Company (Refer note 4.20).

	For VASUDEVA & ASSOCIATES
	CHARTERED ACCOUNTANTS
	Firm Registration No. - 022239N
	(PRATEEK PURI)
Dated : 30th November, 2017	PARTNER
Place : Chandigarh	Membership No - 524431

"AMNKXUKK A" TO THE INDEPENDENT ALDITORS REPORT

(Referred to in paragraph 9 of our report of even date on accounts of James Hotels Limited for the year ended 31" March, 2017).

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

b) The Company has a programme for phased physical verification of all its fixed assets which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. As informed no material discrepancies were noticed on such verification.

c) According to the information and explanations given by the management & on the basis of examination of the records of the Company, the Title Deed of immovable property (Land - on 99 years lease) is held in the name of the Company (Formerly Mehlll Restaurants & Hotels Ltd.)

ii. As explained to us, the inventories were physically verified during the year by the Management at reasonable intervals and no material discrepancies were noticed on physical verification.

iii. According to the information and explanations given to us, the Company has not granted any loans, secured or unsecured to Companies, Firms, Limited Liability Partnerships or other parties covered in the register maintained under Section 189 of the Companies Act, 2013. Accordingly, the provisions of clause 3(iii) (a), (b) and (c) of the Order are not applicable to the Company and hence not commented upon.

iv. According to the information and explanations given to us, the Company has neither granted loans or provided guarantees or securities nor made investments or provided guarantees or securities to the parties covered under Sections 185 & 186 of the Companies Act, 2013. Accordingly, the provisions of clause 3(iv) of the Order are not applicable to the Company.

v. The Company has not accepted any deposits from the public.

Unsecured loan taken from the Promoter, in earlier years, in pursuance of the stipulations of the Banks had been fully repaid, by the Company without the consent of the lending Banks.

vi. The Central Government has not prescribed maintenance of cost records under Section 148 of the Companies Act, 2013, read with the Companies (Cost Records and Audit) Amendment Rules, 2016. Accordingly, the provisions of clause 3(vi) of the Order are not applicable to the Company.

vii. a) According to the infonnation & explanations given to us and on the basis of our examination of the records of the Company, amounts deducted/accrued in the books of account in respect of undisputed statutory dues including Provident Fund, Employees State Insurance, Income Tax, Sales Tax, Service Tax, Excise Duty, Value Added Tax, Cess and other material statutory dues, have not been regularly deposited, during the year, by the Company with the appropriate authorities. According to the information and explanations given to us. no undisputed amounts payable, in respect of Provident Fund, Employees State Insurance Income Tax, Sales Tax, Service Tax, Excise Duty, Value Added Tax, Cess and other material statutory dues, were in arrears as at 31" March, 2017 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, Excise Duty, Value Added Tax and Cess which have not been deposited with appropriate authorities on account of any dispute, except as mentioned herein below:

Name of the Statue	Nature of dues	Amount Involved	Amount deposited under protest	Assessment Year	Forum where dispute is pending
Income Tax Act, 1961	Penalty (u/s.271D)	17,500,000	2,625,000	2012-2013	CIT (Appeals), Chandigarh

viii. According to the information & explanations given to us and on the basis of verification of records, the Company has not defaulted in repayment of dues to Financial Institution; however the Company has defaulted in repayment of principal amount and interest due to State Bank of India, Punjab National Bank and United Bank of India; resultantly the accounts were classified as NPA; the amount of default remained unconfirmed (refer note 4.6).

The Company has not borrowed/raised Loans from the Government and has not issued any debentures

ix. The Company has not raised any money by way of initial public offer or further public offer (including debt instruments) during the year. Term loans availed by the Company, were prima-facie, applied by the Company for the purposes for which loans were obtained.

x. According to the information & explanations given to us, no material fraud by the Company or on the Company by its officers or employees has been noticed or reported during the course of our audit.

xi. According to the information and explanations given to us and based on our examination of the records of the Company, Managerial Remuneration paid by the Company is in violation of Part II of Schedule-V of the Companies Act, 2013 due to default in repayment of dues to Banks.

The Company has not taken the prior approval of the Central Government, as per the applicable provisions of Section 197 read with Schedule-V of the Companies Act, 2013 and Application for approval of Remuneration paid to the Managing Director has been rejected by the Central Government, vide its order dated 15th March, 2017 (refer note 4.13).

xii. The Company is not a Nidhi Company and hence reporting under clause 3(xii) of the Order is not applicable.

xiii. According to the information and explanations given to us and based on our examination of the records of the Company, transactions with the related parties are in compliance with Sections 177 and 188 of the Act, where applicable, and details of such transactions have been disclosed in the financial statements as required by the applicable accounting standards.

xiv. According to the information and explanations given to us and based on our examination of the records of the Company, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year.

xv. According to the information and explanations given to us, during the year, the Company has not entered into any non-cash transactions with its Directors or persons connected to its Directors and hence provisions of Section 192 of the Companies Act, 2013 are not applicable. Accordingly, the provisions of clause 3(xv) of the Order are not applicable to the Company.

xvi. The Company is not required to be registered under Section 45-IA of the Reserve Bank oflndiaAct, 1934.

	For VASLIDEVA & ASSOCIATES
	CHARTERED ACCOUNTANTS
	Firm Registration No. - 022239N
	(PRATEEK PURI)
Dated : 1st November, 2017	PARTNER
Place : Chandigarh	Membership No. - 524431

ANNKXI RI. B" TO THE INDEPENDENT AUDITORS REPORT

Report on the Internal Financial Controls under Clause (i) of Sub Section 3 of Section 143 of the Companies Act, 2013.

We have audited the internal financial controls over financial reporting of James Hotels Limited as of 3 I^s March, 2017 in conjunction with our audit of the financial statements of the Company for the year ended on that date.

Managements Responsibility for Internal Financial Controls

The Companys management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting 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 (ICAI). 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 Companys 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 Companys internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls over Financial Reporting and the Standards on Auditing, issued by ICAI and deemed to be prescribed under Section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls, both applicable to an audit of Internal Financial Controls and, both issued by the Institute of Chartered Accountants of India. 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 over financial reporting was established and maintained and if 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 over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, 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 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 Companys internal financial controls system over financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

A Companys internal financial control over financial reporting 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 Companys internal financial control over financial reporting includes 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 Companys assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls over Financial Reporting

Because of the inherent limitations of internal financial controls over financial reporting, 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 over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies orprocedures may deteriorate.

Opinion

In our opinion, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at 31" March 2017, based on the internal control over financial reporting 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.

	For VASUDEVA & ASSOCIATES
	CHARTERED ACCOUNTANTS
	Firm Registration No. - 022239N
	(PRATEEK PURI)
Dated : 01st November, 2017	PARTNER
Place : Chandigarh	Membership No.-524431