Arambhan Hospitality Services Ltd Directors Report.

To The Members of Arambhan Hospitality Services Ltd

Report on the Audit of the financial statements:

Opinion

We have audited the accompanying financial statements of Arambhan Hospitality Services Ltd ("the Company"), which comprise the Balance Sheet as at March 31, 2019, the Statement of Profit and Loss, the Statement of Cash Flows for the year ended on that date, and a summary of the significant accounting policies and other explanatory information (hereinafter referred to as "the financial statements").

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 Companies Act, 2013 ("the Act") in the manner so required and give a true and fair view in conformity with the Accounting Standards prescribed under section 133 of the Act and other accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2019, the loss and its cash flows for the year ended on that date.

Basis for opinion

We conducted our audit of the financial statements in accordance with the Standards on Auditing specified under section 143(10) of the Act (SAs). Our responsibilities under those Standards are further described in the Auditors Responsibilities for the Audit of the financial statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India (ICAI) together with the independence requirements that are relevant to our audit of the financial statements under the provisions of the Act and the Rules made thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ICAIs Code of Ethics. 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.

Companys Current assets representing 30% of its current liability, which is showing symptoms of serious liquidity problems and The Companys net worth is negative and the borrowings from banks and financial institutions have been classified by the lenders as non-performing since March 2017. We were informed that the Company is also in the process of identifying alternative business plans to improve the performance of the Company and to initiate a One Time Settlement (OTS) with the banks. Pending submission of the final OTS/ other alternative resolution plans, a decision is yet to be taken by the lenders regarding restructuring of the Companys borrowings.

The above factors cast a significant uncertainty on the Companys ability to continue as a going concern. Pending the resolution of the above uncertainties, the Company has prepared the aforesaid statement on a going concern basis.

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have nothing to be the communicated in our report as key audit matter.

Information Other than the financial statements and Auditors Report Thereon

The Companys Board of Directors is responsible for the preparation of the other information. The other information comprises the information included in the Management Discussion and Analysis, Boards Report including Annexure to Boards Report, Business Responsibility Report, Corporate Governance and Shareholders Information, but does not include the financial statements and our auditors report thereon.

Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained during the course of our audit or otherwise appears to be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of this other information; we are required to report that fact. We have nothing to report in this regard.

Managements Responsibility for the financial statements

The Companys Board of Directors is responsible for the matters stated in section 134(5) of the Act with respect to 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 and other accounting principles generally accepted in India. 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 judgments 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.

In preparing the financial statements, management is responsible for assessing the Companys ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

The Board of Directors are responsible for overseeing the Companys financial reporting process.

Auditors Responsibilities for the Audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:

1. Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

2. Obtain an understanding of internal financial controls relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3) (i) of the Act, we are also responsible for expressing our opinion on whether the Company has adequate internal financial controls system in place and the operating effectiveness of such controls.

3. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

4. Conclude on the appropriateness of managements use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Companys ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors report. However, future events or conditions may cause the Company to cease to continue as a going concern.

5. Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

Materiality is the magnitude of misstatements in the financial statements that, individually or in aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user of the financial statements may be influenced. We consider quantitative materiality and qualitative factors in (i) planning the scope of our audit work and in evaluating the results of our work; and (ii) to evaluate the effect of any identified misstatements in the financial statements.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Other Matter -

1. Company has not filed GST return since June 2018 onwards due to working capital paucity.

2. One of the customers of the Company, M/s GOL Offshore Limited previously known as Great Offshore Ltd having total outstanding of Rs. 456.92 Lacs as per company books and subject to reconciliation with the party. The GOL Offshore limited is presently in liquidation process. Therefore any possible impact thereof cannot be ascertained presently and accordingly impact if any on financial position of the Company could not be quantified.

3. The Company has failed and unable to appoint Company Secretary as per Section 203 of Companies Act, 2013 and Regulation 6 of Listing obligation and Disclosure Requirements, 2015.

Our opinion is not modified in respect of these matters.

Report on Other Legal and Regulatory Requirements

1. As required by Section 143(3) of the Act, based on our audit 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 and Loss and the Statement of Cash Flow dealt with by this Report are in agreement with the relevant books of account.

d) In our opinion, the aforesaid financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

e) On the basis of the written representations received from the directors as on March 31, 2019 taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2019 from being appointed as a director in terms of Section 164 (2) of the Act.

f) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate Report in "Annexure A". Our report expresses an unmodified opinion on the adequacy and operating effectiveness of the Companys internal financial controls over financial reporting.

g) With respect to the other matters to be included in the Auditors Report in accordance with the requirements of section 197(16) of the Act, as amended: During the year Company has not paid/provided for any remuneration to directors, therefore reporting requirement for the same is not applicable.

h) 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, as amended in our opinion and to the best of our information and according to the explanations given to us :

i. The Company does not have any pending litigations which would impact its financial position except stated in CARO report.

ii. The Company did not have any long-term contracts including derivative contracts; as such the question of commenting on any material foreseeable losses thereon does not arise.

iii. There has not been an occasion in case of the Company during the year under report to transfer any sums to the Investor Education and Protection Fund.

2. As required by the Companies (Auditors Report) Order, 2016 ("the Order") issued by the Central Government in terms of Section 143(11) of the Act, we give in "Annexure B" a statement on the matters specified in paragraphs 3 and 4 of the Order.

For P S D & Associates
Chartered Accountants
Firm Registration number: 004501C
Sd/-
CA Girish Vyas
Place: Mumbai Partner
Date : 29th May, 2019 Membership number: 427738

Annexure "A" to the Independent Auditors Report

(Referred to in paragraph 1(f) under ‘Report on Other Legal and Regulatory Requirements section of our report to the Members of Arambhan Hospitality Services Ltd of even date)

Report on the Internal Financial Controls

Over Financial Reporting under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 ("the Act")

We have audited the internal financial controls over financial reporting of Arambhan Hospitality Services Ltd ("the Company") as of March 31, 2019 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 Board of Directors of the Company 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. 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 respective 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 internal financial controls over financial reporting of the Company based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the "Guidance Note") issued by the Institute of Chartered Accountants of India and the Standards on Auditing prescribed under Section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls. 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 judgment, 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 internal financial controls system over financial reporting of the Company.

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 authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the companys assets that could have a material effect on the financial statements.

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 or procedures may deteriorate.

Opinion

In our opinion, to the best of our information and according to the explanations given to us, 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 March 31, 2019 except timely Compliance with Statutory provisions related with Deduction of TDS, Employees Provident Fund, ESIC and Goods and Service Tax Act. It has been explained to us that statutory compliance is not adhered strictly by the Company due to liquidity issue being faced by the Company. We have opined as above 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 P S D & Associates
Chartered Accountants
Firm Registration number: 004501C
Sd/-
CA Girish Vyas
Place: Mumbai Partner
Date : 29th May, 2019 Membership number: 427738

Annexure "B" to the Independent Auditors Report

(Referred to in paragraph 2 under ‘Report on Other Legal and Regulatory Requirements section of our report to the Members of Arambhan Hospitality Services Limited of even date)

1. A) The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets.

B) We have been informed that the major fixed assets of the company have been physically verified by the management according to a phased program design to cover all the items over a period of 3 years during the year. In our opinion, the company has a program of verification which is reasonable having regard to the size of the company and the nature of its assets and operations, and we have been informed that no material discrepancies were noticed on such verification.

C) According to the information and explanation given to us and on the basis of our examination of the records of the Company, there is no immovable properties owned by the Company, therefore requirement of this clause is not applicable.

2. We have been informed by the Management that the physical verification of Inventory is conducted as per the present cyclical program on Half yearly basis during the year on all the Installations in operation and no material discrepancies were noticed. In our opinion the frequency of such physical verification of Inventory is reasonable.

3. The Company has not granted any loan, secured or unsecured, to Companies, firms, Limited Liability Partnerships or other parties covered in the registered maintained under Section 189 of the Act. Therefore, the provision of clause 3(iii), (iii) (a), (iii) (b) and 3(iii)(c) of the order are not applicable.

4. In our opinion and according to the information and explanations given to us, the Company has complied with the provisions of Sections 185 and 186 of the Companies Act, 2013 in respect of grant of loans, making investments and providing guarantees and securities.

5. According to the information and explanations given to us, the Company has not accepted any deposit during the year and hence compliance with the provisions of Sections 73 to 76 or any other relevant provisions of the Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2014, as amended, with regard to the deposits accepted is not applicable to the Company.

6. The requirement of maintenance of cost records under sub-section (1) of section 148 of the act in respect of the Companys activities is not applicable to the Company.

7. A) As per the information and explanations furnished to us and according to our examination of the records of the Company, the Company has not been generally regular in depositing undisputed statutory dues on account of Employee State Insurance, Provident Fund, Profession Tax, TDS, Service Tax, Sales Tax and Works Contract Tax where there have been serious delays in a number of cases as applicable to the company with the appropriate authorities during the year. Undisputed amounts payable, outstanding for a period of more than six months from the date they became payable are as stated below.

 

Name of the statute Nature of Dues Amount in INR Period to which the amount relates Due Date Date of Payment
Income Tax Act , 1961 TDS Short payment 43230.00 Prior Period Various Dates Not Yet Paid
Income Tax Act , 1961 TDS Short Deducted 7213.00 A.Y. -2015-16 Various Dates Not Yet Paid
1548 Prior Period Not Yet Paid
Income Tax Act , 1961 Interest on Payment 13344.00 A.Y.- 2018-19 Various Dates Not Yet Paid
74162.50 A.Y. -2015-16 Not Yet Paid
Default u/s 201 345721.00 Prior Period Not Yet Paid
Income Tax Act , 1961 Interest on Deduction 2372.00 A.Y. -2015-16 Various Dates Not Yet Paid
1539.00 Prior Period Not Yet Paid
Default u/s 201
Income Tax Act , 1961 Late Filing Fees 1800.00 A.Y. -2018-19 Various Dates Not Yet Paid
9800.00 AY - 2017-18 Not Yet Paid
30492.00 A.Y. -2016-17 Not Yet Paid
34200.00 A.Y. -2015-16 Not Yet Paid
19200.00 Prior Period Not Yet Paid
Income Tax Act , 1961 Interest on late payment of TDS 25254.00 A.Y. -2015-16 Various Dates Not Yet Paid
37192.00 Prior Period Not Yet Paid
Employees State Insurance Corporation act, 1948. ESIC 1,06,237 Prior to 6 months as on 31.03.2019. Various Dates Not Yet Paid
Income Tax Act , 1961 TDS 42,66,867 Prior to 6 months as on 31.03.2019. Various Dates Not Yet Paid
Sales Tax Act Sales Tax Demand 13,49,58,149 A.Y. 2012-13 Various Dates Not Yet Paid
Sales Tax Act Sales Tax Demand 8,72,54,611 A.Y. 2014-15 Various Dates Not Yet Paid

B) According to the information and explanations given to us and records of the Company examined by us, there are no dues outstanding on account of dispute related to sales tax or duty of custom or duty of excise or value added tax or cess and any other statutory dues except Sales Tax demand of Rs. 1405.65 Lakhs (Including of Interest and penalty) pertaining to FY 2013-14 against which appeal is filed by the Company and matter is pending at Joint Commissioner sales tax (Appeal), Mumbai.

8. According to information and explanation given to us and as per our verification of the records of the company, the company has defaulted in repayment of its dues to banks and financial institutions during the year. Following are the details of the default days for the financial year 2018-19 in repayment of dues:

The Company has not made any default for repayment of loans and their interest except mentioned below.

Name of Lender Overdue Amount EMI Amount No. of EMI Overdue
Deutsche Bank 2,124,757.07 169,314.00 12.55
Kotak Mahindra Bank Ltd. 883,103.82 128,296.00 6.88
Corporation Bank 264,000.00 33,000.00 8.00

Further Demand loan of Bank of India - Khar Branch is also non-performing since March 2017 and having outstanding as per Bank is Rs. 1300.00 Lakhs (Excluding unrealized Interest by Bank).

9. The Company has not raised any moneys by way of initial public offer during the year, further public offer (including debt instruments). The term loans also not obtained by the company, therefore the clause is not applicable.

10. During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instance of material fraud by the Company or on the Company by its officers or employees, noticed or reported during the year, nor have we been informed of any such case by the Management.

11. In our opinion and according to the information and explanations given to us, the Company has paid / provided managerial remuneration in accordance with the requisite approvals mandated by the provisions of Section 197 read with Schedule V to the Companies Act, 2013.

12. As the Company is not a Nidhi Company and the Nidhi Rules, 2014 are not applicable to it, the provisions of Clause 3(xii) of the Order is not applicable.

13. The Company has entered in to transactions with related parties in compliance with the provisions of Sections 177 and 188 of the Act. The details of related party transactions have been disclosed in the financial statements as required under Accounting Standard (AS) 18 —Related Party Disclosures specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts Rules), 2014.

14. The Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year. Accordingly, the provisions of Clause 3(xiv) of the Order are not applicable.

15. The Company has not entered into any non cash transactions with its directors or persons connected with him. Accordingly, the provisions of Clause 3(xv) of the Order are not applicable.

16. The Company is not required to be registered under section 45- IA of the Reserve Bank of India Act, 1934. Accordingly, the provisions of Clause 3(xvi) of the Order are not applicable to the Company.

For P S D & Associates
Chartered Accountants
Firm Registration number: 004501C
Sd/-
CA Girish Vyas
Place: Mumbai Partner
Date : 29th May, 2019 Membership number: 427738