The LeelaVenture Hotel

Introduction
Hotel Leela Venture (HLV) is the promoter of the 5star deluxe hotels in Mumbai, Goa,
Bangalore and Kovalam. Hotel LeelaVenture Ltd owns and manages hotels under The Leela
Palaces & Resorts brand in India. It has a management alliance with Kempinski, the oldest
hotel group in Europe. All the hotels of the company are cobranded with Kempinski.
HLV is one of the leading players in hospitality sector. The company was incorporated in
1981 to set up and operate 5star hotels. For this HLV, in the same year it entered into
collaboration with Penta Hotels of UK that was transferred to Kempinski Hotels and operates
European chain of 5star deluxe hotels and is owned by Lufthansa, a German airline. This
collaboration with Penta was for sales, marketing and technical knowhow for the period of
ten years. In 1986 the company launched its first 5star deluxe hotel, Leela Penta, in Bombay
that later was renamed as Leela Kempinski in 1988.
In 1987 the hotel delinked itself from Penta and entered into technical, sales, and marketing
agreement with Kempinski, hotel. In the same year it was assigned 5 star deluxe status.
Recently, Hotel Leelaventure signed a memorandum of understanding with Travancore
Enterprises Private, a company owned by Dr. B. Ravi Pillai, to sell its luxury hotel property
in Kovalam, Kerala to Travancore Enterprises (TEPL) for Rs 500 crore, in an effort to reduce
its debt. The sale will be structured in such a manner that Leelaventure will transfer the hotel
undertaking to a special purpose vehicle (SPV), which will be then acquired fully by TEPL.

Hotel Leela Venture Ltd., incorporated in the year 1981, is a Mid Cap company (having a
market cap of Rs 923.88 Cr.) operating in Hospitality sector.
Hotel Leela Venture Ltd. key Products/Revenue Segments include Income (Room Rent)
which contributed Rs 379.53 Cr to Sales Value (52.82% of Total Sales), Beverages & Food
which contributed Rs 252.50 Cr to Sales Value (35.14% of Total Sales), Other Services which
contributed Rs 53.69 Cr to Sales Value (7.47% of Total Sales), Service (Hotel) which

contributed Rs 32.72 Cr to Sales Value (4.55% of Total Sales), for the year ending 31-Mar2014.
For the quarter ended 30-Jun-2015, the company has reported a Standalone sales of Rs.
161.81 Cr., down -29.15% from last quarter Sales of Rs. 228.37 Cr. and up 4.10% from last
year same quarter Sales of Rs. 155.44 Cr. Company has reported net profit after tax of Rs.
-57.67 Cr. in latest quarter.
The companys management includes Mr.Vivek Nair, Mrs.Anna Malhotra, Mrs.Madhu Nair,
Ms.K Hemalatha, Mr.Anandghan Bohra, Dr.K U Mada, Mr.Anandghan Bohra, Mr.Anil
Bhatia, Mr.Anil Harish, Mr.Dinesh Nair, Mr.Indur Kirpalani, Mr.Krishna Deshika, Mr.M
Madhavan Nambiar, Mr.R Venkatachalam, Mr.V P Shetty, Mr.Vijay Amritraj.
Company has Picardo & Co. as its auditors. As on 30-Jun-2015, the company has a total of
466,608,307 shares outstanding.

PRODUCTS AND SERVICES OFFERED BY THE HOTEL

The Subsidiaries of Hotel Leelaventure Limited are:

Leela Realty Limited

Leela Palaces and Resorts Limited

Services offered

Rooms (for stay)

Food and Beverages
Other services

INTRODUCTION
Meaning And Definition
1.Accounting: Systematic examination and verification of
transaction

records,

other relevant documents,

and

firm's books
physical

of
of

account
inventory

by qualified accountants (called auditors).

2. A formal inspection of the accounting procedures and records and the financial situation of
an individual, business, organization, or government entity to verify the accuracy and
completeness of the records or their compliance with another set of standards.

Features Of Auditing
Some characteristics of auditors that should be considered when making a selection include:

Professional competence

Ability to maintain independence and a high degree of integrity

Understanding of cooperative law, philosophy and methods

Familiarity with cooperative accounting practices and the industry in which the
cooperative operates

Ability to develop and conduct an efficient audit program

Ability to communicate with the board and management

Ability to provide competent suggestions for improving financial accounting

practices

Understanding the responsibility of their reporting directly to the board

Willingness to correct any oversights occurring during the audit program.

TYPES OF AUDIT
1. SECRETARIAL AUDIT:
Secretarial Audit is introduced by recently enacted Companies Act, 2013. It is a process to
check compliances made by the Company under Corporate Law & other laws, rules,
regulations, procedures etc. It is a mechanism to monitor compliance with the requirements
of stated laws and processes. Periodically examination of work is necessary to point out
errors & mistakes and to make a robust compliance mechanism system in an organization.
Every company needs to comply hundreds of Laws, rules, regulations. These laws are
complex and non-compliances would attract major risk to company. Periodically inspecting
the records of company gives exact information whether, and if so, to what extent Company
has complied with the laws applicable to the Company.
Secretarial Audit gives comfort to the regulators, stakeholders and management that company
has disciplined approach to evaluate and improve effectiveness of risk management, control,
and governance processes.
TO WHICH COMPANIES SECRETARIAL AUDIT IS MANDATORY?
As per section 204 of the Companies Act, 2013 read with Companies (Appointment and
Remuneration of Managerial Personnel) Rules, 2014, following companies are required to
obtain Secretarial Audit Report form independent practicing company secretary;

(1) Every listed company

(2) Every public company having a paid-up share capital of Fifty Crore rupees or more; or
(3) (b) Every public company having a turnover of Two Hundred Fifty Crore rupees or
more.

Turnover means the aggregate value of the realization of amount made from the
sale, supply or distribution of goods or on account of services rendered, or both, by the
company during a financial year. [Section 2(91)]

Secretarial Audit is also mandatory to a private company which is a subsidiary of a

public company, and which falls under the prescribed class of companies.

WHO CAN BE APPOINTED AS SECRETARIAL AUDITOR?

Only a member of the Institute of Company Secretaries of India holding certificate of practice
(company secretary in practice) can conduct Secretarial Audit and furnish the Secretarial
Audit Report to the Company.
APPOINTMENT OF SECRETARIAL AUDITOR
As per Rule 8 of the Companies (Meetings of Board and its powers) Rules, 2014, Secretarial
Auditor is required to be appointed by means of resolution passed at a duly convened Board
meeting and resolution for appointment shall be filed with Registrar of Companies within 30
days in E-form MGT-14.
It is advisable for Secretarial Auditor to get the letter of engagement from the company.
Secretarial Auditor should formally accept the letter of engagement. Further, as a prudent
corporate practice, it is advisable that change in the Secretarial Auditor during the year is
reported to the members in the Boards Report.
SCOPE OF SECRETARIAL AUDIT
A secretarial auditor has to check compliances by the company under the following laws and
rules made there-under;
i. The Companies Act, 2013 (the Act) and the rules made there-under;

ii. The Securities Contracts (Regulation) Act, 1956 (SCRA) and the rules made there-under;
iii. The Depositories Act, 1996 and the Regulations and Bye-laws framed there-under;
iv. Foreign Exchange Management Act, 1999 and the rules and regulations made there-under
to the extent of Foreign Direct Investment, Overseas Direct Investment and External
Commercial Borrowings;
v. The following Regulations and Guidelines prescribed under the Securities and Exchange
Board of India Act, 1992 (SEBI Act):a. The Securities and Exchange Board of India (Substantial Acquisition of Shares and
Takeovers) Regulations, 2011;
b. The Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations,
1992;
c. The Securities and Exchange Board of India (Issue of Capital and Disclosure
Requirements) Regulations, 2009;
d. The Securities and Exchange Board of India (Employee Stock Option Scheme and
Employee Stock Purchase Scheme) Guidelines, 1999;
e. The Securities and Exchange Board of India (Issue and Listing of Debt Securities)
Regulations, 2008;
f. The Securities and Exchange Board of India (Registrars to an Issue and Share Transfer
Agents) Regulations, 1993 regarding the Companies Act and dealing with client;
g. The Securities and Exchange Board of India (Delisting of Equity Shares) Regulations,
2009; and
h. The Securities and Exchange Board of India (Buyback of Securities) Regulations, 1998;
vi. Secretarial Standards issued by The Institute of Company Secretaries of India.
vii. The Listing Agreements entered into by the Company with Stock Exchange(s), if
applicable;
Format of Secretarial Audit Report also requires reporting on whether

The Board of Directors of the Company is duly constituted with proper balance of
Executive Directors, Non-Executive Directors and Independent Directors.

The changes in the composition of the Board of Directors that took place during the
period under review were carried out in compliance with the provisions of the Act.

Adequate notice is given to all directors to schedule the Board Meetings, agenda and
detailed notes on agenda were sent at least seven days in advance, and a system exists for
seeking and obtaining further information and clarifications on the agenda items before the
meeting and for meaningful participation at the meeting.

Majority decision is carried through while the dissenting members views are
captured and recorded as part of the minutes.

There are adequate systems and processes in the company commensurate with the size
and operations of the company to monitor and ensure compliance with applicable laws, rules,
regulations and guidelines.
Moreover Secretarial Auditor is required to report and provide details of specific events and
actions occurred during the reporting period having major bearing on the affairs of the
Company in pursuant to above referred laws/ rules & regulations. Few events were also given
as example in the format of audit report.
However in case of financial laws like tax laws and Customs Act etc., Secretarial Auditor
may rely on the Reports given by Statutory Auditors or other designated professional.
POWER TO SECRETARIAL AUDITOR
The Companies Act, 2013 has empowered secretarial auditor and has given him all rights and
powers as given to statutory auditor. As per section 204 of the Companies Act, 2013, the
secretarial auditor company shall be entitled to require from the officers of the company such
information and explanation as he may consider necessary for the performance of his duties
as auditor.
PUNISHMENT FOR DEFAULT
Sub-Section 4 of Section 204 of the Companies Act, 2013, provides that if a company or any
officer of the company or the company secretary in practice, contravenes the provisions of
section 204 of the Act, the company, every officer of the company or the company secretary
in practice, who is in default, shall be punishable with fine which shall not be less than 1 lakh
rupees but which may extend to 5 lakh rupees.
Moreover as per sub section (15) of section 143 of the Companies Act, 2013, if a secretarial
auditor, has reason to believe that an offence involving fraud is being or has been committed

against the company by officers or employees of the company, he shall immediately report
the matter to the Central Government within such time and in such manner as may be
prescribed. Failure to do so shall attract a fine which shall not be less than 1 lakh rupees but
which may extend to 25 lakh rupees.

2. INDEPENDENT AUDIT:
The terms audit" or "audited financial statements in this Nonprofit Audit Guide refer to the
work product resulting from the independent examination of a nonprofits financial records
by a licensed certified public accountant (also referred to in this Guide as the auditor, or the
"auditing firm").
An independent audit is an examination of the financial records, accounts, business
transactions, accounting practices, and internal controls of a charitable nonprofit by an
"independent" auditor. "Independent" refers to the fact that the auditor/CPA is not an
employee of the nonprofits but instead is retained through a contract for services, and hence
is "independent."
During the independent audit, the auditor will review the organizations financial statements
to determine whether they adhere to generally accepted accounting principles (commonly
referred to as GAAP). These accounting principles are created by the "Financial
Accounting Standards Board," known as "FASB." While not law, these standards carry
weight - when they are not followed, the auditors are required to note that in their report.
INDEPENDENT AUDITING STANDARDS

The auditing process is based on standards, concepts, procedures, and reporting practices that
are primarily imposed by the American Institute of Certified Public Accountants (AICPA).
The auditing process relies on evidence, analysis, conventions, and informed professional
judgment. General standards are brief statements relating to such matters as training,
independence, and professional care. AICPA general standards declare that:

External audits should be performed by a person or persons having adequate technical

training and proficiency as an auditor.

The auditor or auditors maintain complete independence in all matters relating to the
assignment.

The independent auditor or auditors should make sure that all aspects of the
examination and the preparation of the audit report are carried out with a high
standard of professionalism.

Standards of fieldwork provide basic planning standards to be followed during audits. AICPA
standards of field work stipulate that:

The work is to be adequately planned and assistants, if any, are to be properly

supervised.

Independent auditors will carry out proper study and evaluation of the existing
internal controls to determine their reliability and suitability for conducting all
necessary auditing procedures.

External auditors will make certain that they are able to review all
relevant evidential materials, whether obtained through inspection, observation,
inquiries, or confirmation, so that they can form an informed and reasonable opinion
regarding the quality of the financial statements under examination.

Standards of reporting describe auditing standards relating to the audit report and its
requirements. AICPA standards of reporting stipulate that the auditor indicate whether the
financial statements examined were presented in accordance with generally accepted
accounting principles; whether such principles were consistently observed in the current

period in relation to the preceding period; and whether informative disclosures to the
financial statements were adequate. Finally, the external auditor's report should include 1) an
opinion about the financial statements/records that were examined, or 2) a disclaimer of
opinion, which typically is included in instances where, for one reason or another, the auditor
is unable to render an opinion on the state of the business's records.

PROCESS OF AUDIT

Initial Meeting
Auditors begin the audit process by meeting with the Hotel top management. This
allows the auditors to understand which type of audit they will conduct and which
areas will be included in the audit. Audits typically fall under the financial or
compliance designation. Financial audits include a review of the hotels financial
statements, internal controls and accounting procedures. Compliance audits review
the business operations of a hotel, which primarily includes the functions or processes
outside of the hotels financial processes.

Plan
An audit plan outlines the specific steps or information for the hotel audit. Auditors
will also create and request a sample of information from the hotel to test against
national accounting standards or the companys operating procedures. An audit time
line is another feature of the audit plan; this ensures auditors will complete all
functions within a certain time period and do not drag the audit on too long and
hamper the hotels operations.

Fieldwork
Fieldwork is where the majority of audit work takes place. Auditors will review how
the hotel records income, expenses and handles its cash management functions.
Hotels with gift shops, recreation centers or other facilities will also have these items
included in the audit. Auditors will attempt to measure and assess how the hotel
manages financial information. Auditing a hotel franchise is typically different than
auditing the entire hotel operation. Franchisees usually have less information and are
more inclusive than the entire corporate organization. Corporate hotel audits usually
focus on corporate-level information rather than individual franchise figures.

Follow-up
Audits typically end with a follow-up meeting with corporate management. Auditors
will discuss any variation or improprieties that create misstatements on the hotels
financial or business reports. External audits will typically result in an official opinion
that is released to outside business stakeholders. Internal audits report information for
management use and does not usually require an official audit report unless requested
by management
Standard operating procedures help audit specialists review a firm's operating
environment, controls, processes and policies. Such procedures also aid an auditor in
ensuring that corporate policies adhere to regulatory standards and industry practices.
An internal or external auditor also reviews financial records to ensure that such
records are accurate and complete.

An auditor evaluates the hotel business entity's operating environment to detect

important factors that materially, i.e., significantly, affect its operations. Such factors
could be external or internal and short- or long-term. An audit specialist also
reviews the hotel's activities to ensure that such activities are legal and comply with
regulatory rules. External factors influencing the hotel's business may include
governmental mandates, industry trends, business practices and economic sector
outlooks. Internal elements that could affect a company's activities are senior
management's leadership style and ethics, human resource procedures and
occupational health or safety policies.

Understand Controls
An audit specialist reviews the hotel's controls and processes to understand how such
controls function. Processes function properly if the operating environment is
adequate. A control may be a list of instructions or policies that a firm's managers put
into place to avoid losses due to fraud, error or technological problems. An auditor
may learn about a firm's controls by reading prior years' reports and working papers,
talking with departmental and segment-level employees, reviewing industry
publications and evaluating an organization's Risks and Controls Self-Assessment
(RCSA) reports. An RCSA is a periodic (quarterly or yearly) document that explains a
firm's appraisal and ranking of internal risks. For example, a company might rank
risks as "High," "Medium" or "Low" or "Risk 1," "Risk 2" or "Risk 3" based on
expected losses.

Test Controls
An external or internal auditor applies generally accepted auditing standards to ensure
that the Hotel's internal controls, processes and procedures are adequate and operating
effectively. A control is adequate when it shows a detailed list of instructions for
employees to carry out duties, report operating problems and understand decisionmaking mechanisms. An effective control rectifies internal problems properly. An
auditor focuses on "critical" controls, i.e., controls that are important to major
processes or mechanisms.

Test Account Balances

An auditor tests account balances if the operating environment of the hotel is
inadequate or not functioning properly. An audit expert ensures that such balances are
fair, accurate and in compliance with industry standards, regulatory criteria and
Generally Accepted Accounting Principles (GAAP). "Fair" means objective and
accurate in accounting or finance terminology. A complete financial report includes
four summaries: a balance sheet (statement of financial position), a statement of profit
and loss (statement of income) a statement of cash flows and a statement of
shareholders' equity.

VOUCHING
A. Advertisement expenses:
The auditor should understand the norms for a particular industry, such as FMCG, and
acquire sufficient knowledge of the norms (AAS 20).

The auditor should call for the advertisement policy of the entity and satisfy himself about
complying with the norms.
The auditor should examine the agreements with the advertising agencies, if any, to ensure
the rates for advertising. At random, check the proof copy of the particular media where the
advertisement has appeared. If an ad campaign was launched, say for the launch of a new
product, the expenditure should be considered as deferred revenue expenditure.
In this case, the basis on which the period over which it is proposed to be written off would
constitute a complex estimate (AAS 18) and the auditor should examine it carefully and be
satisfied with its justification.
The auditor should examine the budget for advertisement expenditure and allocation for each
media such as press, TV, and so on.
Vouch entries in the cashbook with the relevant receipts issued by the advertising agency or
the media in which it is issued.
The advertisement should be properly classified as marketing, recruitment of staff, legal
requirements, such as quarterly results, and disclosed accordingly as staff costs, and so on.
Obtain a management representation justifying the expenditure.
B. Goodwill:
Goodwill is the monetary value of the reputation enjoyed by an entity. The auditor should
adopt following procedure to verify goodwill:
Check the method of valuation of goodwill.
If goodwill arises due to admission or retirement of a partner, check the valuation of
goodwill.
Ensure that goodwill is either brought in or paid out in cash by the partner/s.
Obtain management representation about the value of goodwill.
Vouch entries in the books with the receipts issued for the amount of goodwill paid.

If goodwill is paid in a scheme of amalgamation, the auditor should study the court orders, if
any, to substantiate goodwill.
Verify the minutes books for the necessary resolutions passed in this regard.
Ensure compliance with AS 10 and AS 26. AS 10 does not permit goodwill to be recorded in
the books unless it has been paid for in cash. Goodwill should be amortised within a
reasonable period in accordance with requirements of AS 26.
Verify minutes of the meeting of the board of directors where it was decided to amortize
goodwill.

SECRETARIAL AUDIT REPORT

The Board of Directors
Hotel Leelaventure Limited
Mumbai
We have conducted the secretarial audit of the compliance of applicable statutory provisions
as given below and the adherence to good corporate practices by Hotel Leelaventure Limited

CIN: L55101MH1981PLC024097 (the Company) for the financial year ended on March
31, 2014. Based on our verification of the Companys books, papers, minute books, forms
and returns filed and other records maintained by the Company and also the information
provided by the Company, its officers, RTA and other representatives during the conduct of
secretarial audit, we hereby report that:
1. In our opinion, the Company has, during the period under review complied with the
statutory provisions listed hereunder and also that the Company has proper Boardprocesses and compliance-mechanism in place to the extent and in the manner
reported hereinafter.
The Companies Act, 1956 and 2013 wherever applicable and the Rules made

under that Acts;

The Securities Contracts (Regulation) Act, 1956 (SCRA) and the Rules

made under those Act;

The Depository Act, 1996 and the Regulations and Bye-Laws framed under

that Act;
The SEBI (Substantial Acquisition of Shares And Takeovers) Regulation,

2011;
The SEBI of India (Prohibition of Insider Trading) Regulation, 1992;
The SEBI of India (Issue of Capital and Disclosure Requirements)

Regulation, 2009;
The SEBI of India (Issue and Listing Debt Securities) Regulation, 2008 and;
The Equity Listing Agreements with BSE Limited and National Stock
Exchange of India Limited and Debt Listing Agreement with BSE Limited.

The Foreign Exchange Management Act, 1999 and the Rules and Regulations
made under that Act to the extent applicable to Overseas Direct Investment
(ODI), Foreign Direct Investment (FDI) and External Commercial

Borrowings (ECB);
2. The requisite statutory registers and other records required under the Act and the
Rules made there under have been maintained in accordance with the Act either in
physical or electronic mode as applicable.
3. The requisite forms, returns and documents required under the Act and the Rules
made there under to be filed with the Registrar of Companies and other authorities
have been duly complied with.

4. The Company has a Board consisting of 14 members and it met 6 times during the
year under review and the minutes of the meetings have been recorded properly in the
minutes book maintained for the purpose.
5. As required under the Listing Agreements and Companies Act, the Company has the
following Committees:
Audit Committee: The Committee met 4 times during the year under review

and the minutes are properly recorded.

Shareholders/ Investors Grievances Committee: The Committee met 2 times

during the year under review and the minutes are properly recorded.
Remuneration Committee: The Committee met 2 times during the year under
review and the minutes are properly recorded.

6. The Annual General Meeting for the financial year 2012 - 13 was held on 20th
September, 2013. The minutes of the said meeting has been properly recorded in the
minutes book maintained for the purpose.
7. The re-appointment of Directors, who retire by rotation, has been made in accordance
with the Act. Mr. A. K. Dasgupta did not opt for re-appointment at the last Annual
General Meeting held on 20th September, 2013. Mrs. Uttara Dasgupta joined the
Board effective from 20th May, 2013 as a nominee of State Bank of India. Mr. T.
Ravindranath joined the Board effective from 13th August, 2013 as a nominee of
Syndicate Bank. Mr. M. Narasimham resigned from the Board with effect from 13th
February, 2014.
8. A. Due disclosures under the provisions of the applicable statutes have been made by
the Company. The Company has also complied with the requirements of the Listing
Agreements with the Stock Exchanges. The Company has complied with SEBI
(Substantial Acquisition of Shares and Takeovers) Regulations 2011 and SEBI (Issue
of Capital and Disclosure Requirements) Regulations, 2009, as amended from time to
time.
B. The promoters of the Company have filed statements with the Stock Exchanges
under the Regulation 30 (3) of the Takeover Regulations within the prescribed time.
9. The Company has complied with the requirements of the Depositories Act, 1996 as
amended, pertaining to dematerialization of shares and wherever required, share

certificates have been issued and delivered to shareholders within the statutory period
and the transfers / transmissions thereof have been carried out and registered as per
the requirements.
10. The new share certificates in respect of the sub-divided shares of ` 2 each were
exchanged for those shareholders who submitted their old share certificates in
physical mode.
11. Transfer of monies lying in unclaimed dividend account to the Investor Protection and
Education Fund wherever applicable have been duly complied with as per the
requirements of the Act.
12. The Company has complied with the requisite provisions of the Companies Act 1956
till notification of the Companies Act, 2013 and thereafter of the new act in respect of
monies borrowed from Banks and Financial Institutions.
13. Charges created / modified / satisfied by the Company were notified to the ROC and
were entered in the Register maintained for the purpose.
14. The Company has, wherever required, obtained the necessary approvals of the Board,
Committee thereof, shareholders, the Central Government or other authority (ies) as
per the requirements of the Act.
15. The Company has not accepted any Fixed Deposits during the year under review. The
Annual Return and the Annual Report have been filed with the ROC as required under
the Act. The Company has not defaulted in respect of the Provisions of Section 274
(1) (g) of the Act, which would otherwise disqualify the Directors of the Company
from acting as Directors of any other Company.
16. The Company has complied with the relevant clauses of the Listing Agreement with
the Stock Exchanges pertaining to submissions of the statements, documents,
disclosure requirements, publication in newspapers, press releases, and conditions of
Corporate Governance as required under clause 49 within the prescribed time limit.
17. The Company has complied with the relevant provisions of SEBI (Prohibition of
Insider Trading) Regulations 1992 as amended, from time to time. The Company has
within the time limit specified in the Regulations, submitted the information received
from the employees / Directors / stakeholders as shareholders with regard to any
purchase or sale in excess of requisite percentage of the paid up share capital to the
Stock Exchanges.
18. The Directors of the Company have made proper disclosures of their interest in other
companies and the same have been noted in the Register maintained under section
301 of the Companies Act 1956.
19. The Company has complied with the provisions of section 372A of the Companies
Act, 1956 in respect of investments made by way of Equity Shares in subsidiaries and

other companies during the year ended 31st March, 2014. The necessary entries have
20.

been made as per the statutory requirements.

The Company has been taking adequate measures with regard to Risk Management
and is being deliberated on the concerned issues and the same is being placed before

21.

the board. The company periodically apprises various issues.

The Company has also instituted the Code of Conduct for Directors and Senior
Executives of the Company and has complied with the said Code as required under
the Clause 49 of the Listing Agreement.

INDEPENDENT AUDITORS' REPORT

TO THE MEMBERS OF HOTEL LEELA VENTURE LIMITED

REPORT ON THE STANDALONE FINANCIAL STATEMENTS

We have audited the accompanying standalone financial statements of Hotel Leelaventure

Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2015, the
Statement of Profit and Loss, and the Cash Flow statement for the year then ended, and a
summary of the significant accounting policies and other explanatory information.
Management's Responsibility for the Standalone Financial Statements
The Company's Board of Directors is responsible for the matters stated in Section 134(5) of
the Companies Act, 2013 ("the Act") with respect to the preparation of these standalone
financial statements that shall 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, read with Rule 7 of the Companies (Accounts ) Rules, 2014. This responsibility
also includes maintenance of adequate accounting records in accordance with the provisions
of the Act for safeguarding of the assets of the Company and for preventing and detecting
frauds and other irregularities; the selection and application of appropriate accounting
policies; making judgments and estimates that are reasonable and prudent; and the 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.
Auditor's Responsibility
Our responsibility is to express an opinion on these standalone 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 there under.
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.
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 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 financial control relevant to the Company's 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
Company's 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 standalone financial statements.
Opinion
In our opinion and to the best of our information and according to the explanations given to
us, the aforesaid standalone 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, of the state of affairs of the Company as at March 31,
2015 and its loss and its cash flows for the year ended on that date. Emphasis of Matter

We draw attention to the following matters in the Notes to the financial statements: Note
31.3 regarding the Company's liabilities, net worth and interest provision. The negative net
worth as on March 31, 2015 was Rs. 38,602.98 lakhs. The loss for the year and negative net
worth would have been higher by another Rs. 78,240.90 lakhs, if interest and other finance
cost as notified by Asset Reconstruction Companies were provided for in the books of the
current year. The negative net worth could go up further if the amount realized on sale of
assets is less than the book value. This raises question on whether the Company can be
considered as a '' Going Concern''. However, as the Company is hopeful of a viable
restructuring package as explained by them in the note and accordingly has prepared the
financial statements on a going concern basis.
Report on Other Legal and Regulatory Requirements
1 As required by the Companies (Auditor's Report) Order, 2015 issued by the Central
Government of India in terms of subsection (11) of Section 143 of the Act, (hereinafter
referred to as the ''Order'') and on the basis of such checks of the books and records of the
Company as we considered appropriate and according to the information and explanations
given to us, we give in the Annexure, a statement on the matters specified in paragraphs 3 and
4 of the Order.
2 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 and 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 standalone 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) The going concern matter described under the Emphasis of Matters paragraph above, in
our opinion, may have an adverse effect on the functioning of the Company.
f) On the basis of the written representations received from the directors as on March 31st,
2015, taken on record by the Board of Directors, none of the directors is disqualified as on
March 31st, 2015 from being appointed as a director in terms of Section 164(2) of the Act.
g) With respect to the other matters to be included in the Auditor's 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 Note 31.1, 31.2 and 31.4 (a) and (b) to the financial statements;
ii. The Company has made provision, as required under the applicable law or accounting
Standards, for material foreseeable losses, if any, on longterm contracts. We have been
informed that the Company did not have any pending derivative contracts.
iii. There has been no delay in transferring amounts, required to be transferred, to the Investor
Education and Protection Fund by the Company.

STATEMENT OF PROFIT AND LOSS FOR THE YEAR ENDED 31

MARCH, 2014
Particulars

INCOME
Revenue from operations
Other income
Total income

Note No.

23
24

Year ended
31 March,

`lakhs
Year ended
31 March,

2014

2013

71,844.24
4,973.38

64,471.62
669.03

76,817.62

65,140.65

EXPENSES
(a) Cost of materials consumed
(b) Employee benefit expenses
(c) Finance costs
(d) Depreciation and amortization
(e) Other expenses

25
26
27
28
29

Total expenses
Profit / (Loss) before exceptional items and tax
Exceptional items

30.4

Profit / (Loss) after exceptional items

Tax Expense:
(a) MAT credit asset written down
(b) Net current tax expense relating to prior years
(c) Deferred tax
Profit / (Loss) for the year
Earnings per share (of ` 2 each):
Basic and diluted
Notes forming part of the Financial Statements

6,187.02
19,761.72
50,163.00
18,065.31
31,375.21

5,102.42
18,641.38
40,534.25
13,867.33
29,461.52

1,25,552.26

1,07,606.90

(48,734.64)
-

(42,466.25)
(329.35)

(48,734.64)

(42,136.90)

422.22
(5,009.67)
(4,587.45)
(44,147.19)

3,301.81
217.28
(2,310.18)
1,208.91
(43,345.81)

(10.15)

(10.82)

1 to 30

BALANCE SHEET FOR THE YEAR ENDED 31 MARCH, 2014

` lakhs
Particulars

Note No.

As at

As at

31 March, 2014

31 March, 2013

EQUITY AND LIABILITIES

Shareholders funds
(a) Share capital

9,032.25

8,373.02

(b) Reserves and surplus

74,471.06

1,13,887.62

83,503.31

1,22,260.64

3,500.00

Share application money pending allotment

30.15

Non-current liabilities
(a) Long term borrowings

2,57,885.89

2,71,431.88

(b) Deferred tax liabilities (net)

7,243.25

12,252.92

(c) Other long term liabilities

2,267.08

2,111.83

(d) Long term provisions

1,842.84

2,017.39

2,69,239.06

2,87,814.02

Current liabilities
(a) Short term borrowings

52,232.96

33,372.14

(b) Trade payables

6,431.91

4,488.75

(c) Other current liabilities

10

(d) Short term provisions

11

TOTAL

2,13,087.87

1,86,709.84

514.95

513.54

2,72,267.69

2,25,084.27

6,28,510.06

6,35,158.93

ASSETS
Non-current assets
(a) Fixed assets
(i) Tangible assets

12

5,28,749.91

5,43,397.46

(ii) Intangible assets

13

941.81

947.28

15,817.47

16,603.30

(iii) Capital work-in-progress

30.1

(iv) Fixed assets held for sale

30.14

23,620.62

15,591.13

5,69,129.81

5,76,539.17

14

4,624.38

4,624.38

(c) Foreign currency monetary translation difference

15

12,007.48

8,762.94

(d) Long term loans and advances

16

19,273.05

19,875.48

(e) Other noncurrent assets

17

3,575.42

3,575.42

6,08,610.14

6,13,377.39

(b) Noncurrent investments

Current Assets
(a) Inventories

18

6,400.41

7,133.70

(b) Trade receivables

19

7,158.86

5,884.49

(c) Cash and cash equivalents

20

2,768.45

3,542.62

(d) Short term loans and advances

21

3,211.41

4,705.80

(e) Other current assets

22

360.79

514.93

19,899.92

21,781.54

6,28,510.06

6,35,158.93

TOTAL
Notes forming part of the financial statements

1 to 30

CONCLUSION
The goal of an audit is to form and express an opinion on financial statements. The audit is
performed to get reasonable assurance on whether the financial statements are free of
material misstatement. An audit also includes assessing the accounting principles used and
the significant estimates made by the management. Audit conclusions and reporting are one
of the principles governing an audit. Reporting is the last procedure of the process of an audit.
Such analyses help the auditor to draw conclusions regarding various aspects of the line items
of the financial statements. These conclusions should be independent and factual, and not
based on assumptions. A set of such conclusions leads to forming an opinion.

The audit noted a strengthening, in 2009, of the controls and governance in place over the
management of the Project Gateway system. Many elements of an effective project
management framework are in place to manage current and future investments in Project
Gateway. However, opportunities exist to further strengthen the current practices and
processes as outlined in the recommendations in this report. If not addressed, the auditors feel
that these gaps present moderate to high residual risk to management.
In the professional judgment of the Chief Audit Executive, sufficient and appropriate audit
procedures have been conducted and evidence gathered to support the accuracy of the
conclusion provided and contained in this report. The conclusion is based on a comparison of
the conditions as they existed at the time, against pre-established audit criteria that were
agreed with management. The evidence was gathered in accordance with the Government of
Canada internal audit standards, the Treasury Board of Canada Policy on Internal Audit and
its associated directives.
Audit findings or nonconformities might be generated throughout the audit, but audit
conclusions can be determined only at the end of the investigation.
For audits taking one day or less, generating of audit findings and conclusions might take
place at the same review meeting. For external audits, the review meeting normally takes
place immediately at the end of the data gathering phase.
For internal audits, the review meeting could be scheduled at a later date to accommodate
organizational needs. However, sooner is better so individual auditors still can recall or
decipher notes clearly from situations encountered during the audit.
Auditors should review findings and any other information relevant to the audit objectives.
Examples include:

Two areas still must be audited before certification or license can be granted.

The organizations only certified technician is retiring at the end of the week with no
replacement identified.

Factual information is needed to qualify or quantify a particular audit conclusion.

Reviewing findings and other relevant information brings the audit full circlewhen outputs
are compared to input requirements.

BIBLIOGRAPHY
WEBSITES

http://profit.ndtv.com/stock/hotel-leela-venture-ltd_hoteleela/reports-auditor-

report
file:///C:/Users/user/Downloads/Hotel-Leelaventure_ANNUAL-REPORT-

2013-14.pdf
https://en.wikipedia.org/wiki/The_Leela_Palaces,_Hotels_and_Resorts

http://www.indiainfoline.com/markets/company/background/companyprofile/hotel-leela-venture-ltd/257

BOOKS

Manan Prakashan (Text Book)

Auditing and Assurance (ICAI)
Secretarial Audit (Neha Publishers & Distributors)

Advanced Audit (University Of Mumbai)