pyramid saimira theatre ltd Auditors report

PYRAMID SAIMIRA THEATRE LIMITED ANNUAL REPORT 2008-2009 AUDITORS REPORT The Members. Pyramid Saimira Theatre limited Chennai 1. I have audited the attached Balance Sheet of M/s. PYRAMID SAIMIRA THEATRE UMITED as at 30th June 2009 the Profit and Loss account and also the Cash Flow Statement for the period ended on that date annexed thereto. These financial statements are the responsibility of the Companys Management. My responsibility is to express an opinion on these financial statements based on my audit. 2. I have conducted my audit in accordance with auditing standards generally accepted in India. Those standards require that I 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 management, as well as evaluating the overall financial statement presentation. I believe that my audit provides a reasonable basis for my opinion. 3. As required by the Companies (Auditors Report) Order, 2003 issued by the Central Government of India in terms of sub section (4A) of section 227 of the Companies Act, 1956, and on the basis of the information and explanations given to me and the books and records examined by me in the normal course of my audit and to the best of my knowledge and belief, I give below my report on the matters specified in paragraphs 4 and 5 of the said order. 4. Further to the comments in the Annexure referred to above I report that: a) I have obtained all the information and explanations, which to the best of my knowledge and belief were necessary for the purpose of my audit. b) In my opinion, proper books of account as required by law have been kept by the Company so far as appears from my examination of those books, excepting inadequate maintenance of Daily Collection Reports (DCRs) on day by day basis from different locations refer Note No. 10 of Schedule 18 to the financial statements c) The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account. d) In my 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, subject to: i) Deviation of AS-5 in respect of prior period items-refer Note No. 14 to Schedule 18 to the financial statements ii) Non disclosure of details as required under AS-15 refer Note No.22 to Schedule 18 to the financial statements iii) Non Compliance of AS-21 and SEBI regulations regarding Consolidation of financial Statements of subsidiaries and non-compliance of Sec. 212 of the Companies Act, 1956 in relation to the subsidiaries-refer Note No.11 to schedule 18 to the financial statements e) On the basis of written representations received from the Directors, as on 30th June 2009 and taken on record by the Board of Directors, I report that none of the Directors is disqualified from being appointed as a Director in terms of clause (g) of sub section (1) of section 274 of the Companies Act, 1956 on the said date. f) In my opinion and to the best of my information and according to the explanations given to me, the said accounts, including the Balance Sheet and Profit and Loss account and Cash Flow Statement dealt with by this report read with the Notes thereon and documents annexed thereto, give the information required by the Companies Act, 1956, 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 30th June 2009, b. In the case of the Profit and Loss Account, of the loss for the period ended on that date and c. In the case of Cash Flow Statement, of the cash flows for the period ended on that date. subject to: 1. As stated in Note No 9 of Schedule 18 to the financial statements Balance confirmation certificates as on 30th June 2009 were not obtained by the Company from debtors, creditors and other parties and some of the banks and consequently adjustments required, if any, has not been carried out in the financial results. 2. As stated in Note No 10 of Schedule 18 to the financial statements internal controls needs to be improved considerably including in respect of maintaining proper books of account in time, reconciliation of accounts and balance confirmation of banks, debtors and creditors and other parties, in order to safeguard the interest of the Company Further Internal Audit Report for the period were not made available to me. 3. As stated in Note No 10 of Schedule 18 to the financial statements the Daily Collection Reports (DCRs) incorporating the Theatre Revenues and Expenses on day by day basis in the Theatres operated by the Company in different locations are not available in full for my verification. Therefore, I am not in a position to express any opinion on the Income and Expenses arising out of the theatre Operations. 4. As stated in Note No 1 1 of Schedule 18 to the financial statements the audited annual accounts of the Subsidiary Companies were not available and in the absence of the same I am not in a position to express any opinion on the value of the Investment, Advances made and Amounts Due from Subsidiaries. Owing to the nature of Company s records and significance of the matters discussed in the preceding paragraphs 1 to 4 l am not in a position to express any opinion on the impact of the above in the financial statement. 5. a) As stated in Note No 14 of Schedule 18 to the financial statements, wherein loss arising on account of investment in subsidiaries towards share capital advance pending allotment were shown as Prior Period Items and below the line which is not a Prior Period Item as per the provisions of AS 5. This has resulted in the loss for the year being understated by Rs.76.94 Crores b) As stated in Note No 15 of Schedule 18 regarding Non Provision for Doubtful Debts amounting to Rs.35,39,41,087. This has resulted in the losses for the year being understated by Rs.35,39,41,087/- The overall effect of the above is that losses for the period is being understated by Rs. 35+76 6) Attention is invited to Note No. 6 (b) of Schedule 18 to the financial statements regarding non disclosure of quantitative details in respect of the Food & Beverages, as required under part 11 of schedule VI to the Companies Act, 1956. Place: CHENNAI (R. MUGUNTHAN) Date : 25-10-2009 Chartered Accountant Membership No. 021397 ANNEXURE TO AUDITORS REPORT: Referred to in paragraph 3 of my report of even date.: i. (a) The Company has maintained proper records showing full particulars including quantitative details and situation of Fixed Assets which requires to be updated. (b) All the Assets have been physically verified by the management during the period and there is a regular programme of verification which, in my opinion, is reasonable having regard to the size of the Company and the nature of its Assets. No material discrepancies were noticed on such verification. (c) The Company has not disposed off substantial part of its Assets. ii. (a) The Company has no Inventory and hence the provision relating to physical verification and sub clauses (b) and (c) does not arise. iii. The Company had not taken/given loan from/to the Directors and other Parties listed in the Register maintained u/s 301 of the Companies Act, 1956 and hence sub clauses b,c,d,e,f and g of clause (Hi) of the said order not applicable. iv. In my opinion and according to the information and explanations given to me, the internal control system are not adequate commensurate with the size of the Company and the nature of its Business with regard to purchases of Inventory, Fixed Assets and sale of goods and services. During the course of my audit, there is continuing failure to correct major weaknesses in internal controls system. v. (a) According to the information and explanations given to me, there are no transactions that need to be entered into the register maintained under section 301 of the Companies Act, 1956. (b) In my opinion and according to the information and explanations given to me, there are no transactions made in pursuance of contracts or arrangements exceeding the value of Rupees Five Lakhs in respect of any party during the period have been made. vi. The company has not accepted any deposit from the Public. vii. In my opinion, the Company has no adequate internal audit system commensurate with the size and nature of its Business. viii. As per the information & explanations given to me the provision relating the maintenance of cost records under section 209(1) (d) of the Companies Act, 1956 does not apply to the Company. ix. (a) The Company is not regular in depositing with appropriate authorities undisputed Statutory dues including Provident Fund,, Employee s State Insurance, Income Tax, Sales Tax,, Cess and other material statutory dues applicable to it and has defaulted in their payment as listed below: Name of the Statute A B C D & Nature of Dues Income Tax 41445111/- April 08-June 09 7th of Not Paid Act, 1961 succeeding month Tax Deducted at Source Employee State 342368/- April 08-June 09 20th of Not Paid Insurance succeeding Corporation month ESI-Employer & Employee Contribution EPF & Misc. 11405062/- April 08-June 09 20th of Not Paid Provisions succeeding Act,1952 month EPF-Employer & Employee Contribution TNVAT 382848/- Mar 09 20-4-2009 Not Paid VAT Kerala Labour 168/- Dec 08-Jan 09 Not Paid Welfare Fund Labour Welfare Fund Kerala Shop & 1070/- Mar 09 Not Paid Commercial Establishments Act Shop & Commercial Establishments Fund Professional Tax 339288/- Apr 08-June 09 Not Paid Professional Tax A = Amount (Rs.) B = Period to which the amount relates C = Due Date D = Day of Payment (b) According to the information and explanation given to me, other than Income Tax, there are no dues of Sales Tax, Service Tax, Customs Duty, Wealth Tax, Excise Duty and Cess which have not been deposited on account of any dispute. Name of the Statue Nature of Dues Amount Forum Where Dispute is Pending Income Tax- Rs. 26,59,21,840/- CIT Income Tax Act Asst. Year 2008-09 x. The Company does not have any accumulated losses as at 30th June 2009. However the Company has incurred cash loss during the period. xi. In my opinion and according to the information and explanation given to me, the Company has defaulted in repayment of dues to the following financial institution and Banks. Name of the Lender Nature of Loan Amount Period of Outstanding (Rs) Default 1. ICICI Bank Term Loan 1,97,96,026/- 5 Months 2. Indus lnd Bank Term Loan 1,35,00,000/- 7 Months 3. Bank of India Term Loan 50,00,00,000/- 8 Months 4. Barclays Bank Term Loan 4,30,00,000/- 2 Months 5. Punjab National Term Loan 80,53,258/- 4 Months Bank 6. Syndicate Bank Cash Credit 14,78,26,515/- 3 Months 7. Bank of Rajasthan Cash Credit 2,13,64,357/- 5 Months 8. State Bank of Cash Credit 5,12,91,414/- 1 Month Patiala 9. Patni Financial ICD 5,00,00,000/- 7 Months Advisors P Ltd xii. In my opinion and according to the information and explanation given to me the Company has not granted any Loans and Advances on the basis of security by way of pledge of shares, debentures and other securities. xiii. In my opinion, the Company is not a Chit Fund or a Nidhi/Mutual Benefit Fund/Society. Therefore, the provisions of clause 4(xiii) of the Companies (Auditors Report) Order, 2003 are not applicable to the Company. xiv. In my opinion, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Companies (Auditors Report) Order, 2003 are not applicable to the Company. xv. In my opinion, the terms & conditions on which the Company has given guarantees for loans taken by others from Banks or Financial Institutions are not prejudicial to the interest of the company. xvi. In my opinion and according to the information and-explanations given to me the company has not availed any term loan during the period. xvii. According to the information and explanations given to me and on an overall examination of the Balance Sheet of the Company, I report that the no funds raised on short term basis have been used for long term investment. xviii. During the year the Company has not made preferential allotment of Shares to the parties covered under section 301 of the Companies act, 1956 other than the Convertible Share Warrants, after obtaining the appropriate approvals, and the terms of issue are not prejudicial to the interest of the company. xix. According to the information and explanations given to me, during the period covered by my Audit Report, the Company has not issued any Debentures and therefore the question of creating security or charge in respect thereof does not arise. xx. The Company has not raised any money by Public Issue during the period. xxi. According to the information and explanations given to me, based upon the audit procedures performed and representations made by the management no fraud on or by the Company has been noticed or reported during the course of my audit. Place: CHENNAI (R. MUGUNTHAN) Date : 25-10-2009 Chartered Accountant Membership No. 21397