Auditor Report of HLV Ltd.

Mar 31, 2017

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 31 March 2017, the Statement of Profit and Loss and 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 provisions of the Act for safeguarding of the assets of the Company and preventing and detecting frauds and other irregularities; the selection and application of appropriate accounting policies; making judgements 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 thereunder.

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 requirement 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 31st March 2017 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 standalone financial statements:

i. Note 29.1(c) relating to non-provision of Sacrifice amount, interest and penal interest payable to Asset Reconstruction Companies (ARCs) amounting Rs.73,327 lakhs for the year (Previous Year Rs.72,704 lakhs), cumulatively amounting to Rs.2,24,272 lakhs. (Previous Year Rs.1,50,945 lakhs.)

ii. Note 29.2(a) relating to enhancement in rentals and unilateral termination of lease agreement of the Mumbai Hotel by Airports Authority of India (AAI) and eviction proceedings initiated by them which the Company is contesting. No provision is made for enhanced rent amounting Rs.1,657 lakhs (Previous year Rs.1,615 lakhs) and cumulatively amounting Rs.3,898 lakhs (Previous Year Rs.2,241 lakhs). Further, the accounts are prepared on the assumption that the lease would be renewed and no provision is made for losses on account of such eviction, if any, which is not ascertainable.

iii. Note 29.2(b) relating to non-provision of disputed amounts to AAI amounting to Rs.28,538 lakhs towards 11,000 sq. meters of land at Mumbai and the additional cost the Company may have to incur towards restoration of FSI , which is not ascertainable.

iv. If interest and other costs as notified by the Asset Reconstruction Companies and disputed payments of AAI referred above were provided for in the books, the loss for the year would have been higher by Rs.1,03,522 lakhs (Previous Year Rs.74,319 lakhs), liabilities and negative net worth would have been higher by another Rs.2,56,708 lakhs (Previous Year Rs.1,53,186 lakhs). Further, losses and negative net worth will increase to the extent of cost that the Company may have to incur on account of termination of lease agreement of Mumbai Hotel and cost of vacating 11,000 sq.meters of land at Mumbai

v. The above issues raises question on whether the Company can be considered as a “Going Concern”. However, as the Company is hopeful of a viable restructuring package and favourable judgement / settlement relating to AAI disputes, as explained by them in the notes, it 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, 2016 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 “Annexure A” 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 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, 2017, taken on record by the Board of Directors. None of the directors is disqualified as on March 31st, 2017 from being appointed as a director in terms of Section 164 (2) of the Act.

(g) With respect to the adequacy of the internal finance controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate report in “ Annexure B” and

(h) 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 29.2 to the standalone financial statements;

ii. The Company has made provisions as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long-term 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,

iv. The Company had provided requisite disclosures in its financial statements as to holdings as well as dealings in Specified Bank Notes during the period from 8^th November, 2016 to 30th December, 2016 and the same are in accordance with the books of accounts maintained by the Company. Refer Note 17 to the standalone financial statements.

The Annexure referred to in Independent Auditors’ Report to the members of the Company on the standalone financial statements for the year ended 31 March 2017, we report that:

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

(b) The Company has a regular programme of physical verification of its fixed assets by which fixed assets are verified in a phased manner over a period of three years. In accordance with this programme, certain fixed assets were verified during the year and no material discrepancies were noticed on such verification. In our opinion, this periodicity of physical verification is reasonable having regard to the size of the Company and the nature of its assets.

(c) Except disputes relating to the title deeds /renewal of lease agreement as detailed hereunder, according to the information and explanations given to us and on the basis of our examination of the records of the Company, the title deeds of immovable properties disclosed in Note 9 to the standalone financial statements are held in the name of the Company.

Particulars	Number of cases	Gross value as on 31st March 2017 (Rs. in Lakhs)	Written down value as on 31st March 2017 (Rs. in Lakhs)	Remarks
Land-Freehold	Five	1,269.01	1,269.01	Title deeds are under dispute.
Building constructed on leasehold Land	One	30,036.65	23,204.63	Lease agreement not renewed since 11th January, 2016 (refer note 29.2 (a) to the Standalone Financial Statements).

ii. As explained to us, inventories were physically verified during the year by the Management at reasonable intervals. In our opinion the frequency of such verification is reasonable. We have been informed that discrepancies noticed on such verification between the physical stock and book records are not material and have been properly dealt in the books of account.

iii. In our opinion and according to the information and explanations given to us, the Company has not granted secured/unsecured loans to Companies, firms, Limited Liability Partnerships, or parties covered in the register maintained under Section 189 of the Companies Act, 2013 (‘the Act’). Accordingly, paragraph 3 (iii) of the Order is not applicable to the Company.

iv. Attention is drawn to Note 29.10 to the standalone financial statements relating to overdue receivables from two private limited Companies amounting 185.61 lakhs in which directors are interested. Other than these two receivables, the Company has not granted any loans or provided any guarantees or security to the parties covered in Section 185 of the Act. The Company has complied with the provisions of Section 186 of the Act in respect of investments.

v. The Company has not accepted any deposits from the public in accordance with the provisions of Section 73 to 76 of the Act and the rules framed thereunder.

vi. The Central Government has not prescribed the maintenance of cost records under Section 148 (1) of the Act, for any of the services rendered by the Company.

vii. (a) According to the information and 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, value added tax, duty of customs, excise duty, service tax, cess and other material statutory dues have been regularly deposited during the year by the Company with the appropriate authorities except certain delays in depositing value added tax, luxury tax and service tax in one of the units.

(b) 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, value added tax, duty of customs, duty of excise, service 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.

(c) According to the information and explanations given to us, details of disputed sales tax, income tax, customs duty, wealth tax, service tax, excise duty and cess which have not been deposited with the appropriate authorities as on 31st March 2017 on account of any dispute are given below:

Name of the statute	Nature of Dues	Amount (Rs. in lakhs)*	Period to which the amount relates	Forum where dispute is pending
Karnataka VAT Act, 2003	VAT with interest and penalty	133.92	F.Y 2005-06 to 2009-10	Matter remanded to joint Commissioner of Commercial Taxes (Appeals) Bangalore by High Court of Karnataka.
Finance Act, 1994	Service Tax and Interest	9.72	FY 2010-11 to 2014-15	Commissioner of Service Tax and Excise (Appeals), Jaipur
Rajasthan VAT Act, 2006	VAT with interest	82.24	2011-12 to 2014-15	Rajasthan Tax Board, Ajmer
Goa Tax on Luxuries Act	Luxury Act	5.65	2005-06	Additional Commissioner of Commercial Taxes (Appeals), Margao
Goa Tax on Luxuries Act	Luxury Act	33.93	2007-08	Matter remanded back to the Assessing Officer by Additional Commissioner of Commercial Taxes (Appeals) Margo for fresh assessment.
Finance Act,1994	Service Tax, interest and penalty	2490.56	2006-07 to 2011-12	CESTAT, Bangalore
Maharashtra VAT 2002	VAT with interest and penalty	826.35	2007-08,2009-10 to 2012-13	Jt. Commissioner of Appeals-VAT Mumbai

Kerala Agriculture Income Tax	Agriculture Income Tax and interest	17.30	2004-05 to 2008-09	Tribunal, Kerala Agricultural and Commercial Tax
Kerala Tax on Luxury 1976	Luxury Tax, interest and penalty	81.12	2010-11, 2011-12	Deputy Commissioner of (Appeals), Thiruvananthapuram

*Net of amounts paid under protest.

viii. (a) According to the explanations and information given to us, the Company has defaulted in repayment of dues to a debenture holder / banks / financial institutions during the year under review, the period and amount of defaults are as under.

Name of the Lender	Amount of default as at the balance sheet date (Rs. In lakhs)	Period of Default
LIC- Debentures	2725.35	Principal and interest due since September 2016.
Bank of Baroda, London	1553.20	Principal due since May 2016 and interest since February 2014
State Bank of India, Paris	3228.47	Principal due since |une 2016 and Interest since December 2016.
HDFC Limited	521.90	Interest for the month of February and March 2017.

(b) As per the information furnished to us, the Company has not taken any loan from the Government.

(c) With reference to the debts assigned to Asset Restructuring Companies (ARC) refer note 29.1 to the standalone financial statements relating to debt restructuring, wherein it is stated that the Company is pursuing with ARCs for certain concessions in interest and repayment terms. Total amount outstanding to ARCs including finance cost not recognised in the accounts as at 31st March 2017 is Rs.5,23,140 lakhs.

ix. The Company did not raise any money by way of initial public offer or further public offer (including debt instruments) and term loans during the year. Accordingly, paragraph 3 (ix) of the Order is not applicable.

x. According to the information and 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, the Company has paid/provided for managerial remuneration in accordance with the requisite approvals mandated by the provisions of Section 197 read with Schedule V to the Act.

xii. In our opinion and according to the information and explanations given to us, the Company is not a nidhi company. Accordingly, paragraph 3(xii) of the Order is not applicable.

xiii. Based on our examination of the records of the Company, transactions with the related parties are in compliance with Section 177 and 188 of the Act. The details of related party 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 and based on our examination of the records of the Company, the Company has not entered into noncash transactions with directors or persons connected with them. Accordingly, paragraph 3(xv) of the Order is not applicable.

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

For PICARDO & CO.

Chartered Accountants

Registration No: 107917W

K.V. Gopalakrishnayya

Partner

Membership No. 21748

Mumbai, 25th May, 2017

---

Mar 31, 2015

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 thereunder.

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 realised 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 long-term 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.

ANNEXURE TO THE INDEPENDENT AUDITORS' REPORT

[referred to in paragraph (1) under the heading of "Report on Other Legal and Regulatory Requirements" of our report of even date]

(i) (a) In our opinion and based on the information made available to us, the Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets.

(b) As explained to us, all the fixed assets were physically verified by the Management in a phased periodical manner, which in our opinion is reasonable, having regard to the size of the Company and nature of its assets. According to the information and explanations given to us, no material discrepancies were noticed on such verification.

(ii) (a) As explained to us, inventories were physically verified during the year by the Management at reasonable intervals.

(b) In our opinion and according to the information and explanation given to us, the procedures of physical verification of inventories followed by the Management were reasonable and adequate in relation to the size of the Company and nature of the business.

(c) In our opinion and according to the information and explanation given to us, the Company has maintained proper records of inventories. As explained to us, there were no material discrepancies noticed on physical verification of inventories, compared to the book records.

(iii) The Company has not granted secured/unsecured loans to firms or parties covered in the register maintained under Section 189 of the Act except an interest free unsecured advance made to a subsidiary which was later fully converted in to equity.

(iv) In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and nature of its business with regard to purchase of inventories and fixed assets and sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal controls.

(v) In our opinion and according to the information and explanations given to us, the Company has not accepted deposits in terms of the provisions of Sections 73 and 74 of the Act and the rules framed thereunder to the extent notified.

(vi) The central Government has not prescribed maintenance of cost records under Section 148(1) of the Act in respect of any of the activities of the Company. (vii) (a) Based on information and explanation furnished to us, there were delays in depositing undisputed statutory dues, including Provident Fund, Employees' State Insurance, Income-Tax, Wealth Tax, Sales-Tax, Service Tax, Cess and other material statutory dues with the appropriate authorities during the year under review. There are no undisputed amounts payable in respect of the aforesaid dues which were outstanding as on 31st March 2015 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us, details of disputed Sales Tax, Income Tax, Custom Duty, Wealth Tax, Service Tax, Excise Duty and Cess which have not been deposited with appropriate authorities as on 31st March, 2015 on account of dispute are given below:

Name of the Statute Nature of Dues Amount (Rs. in Lakhs)

Karnataka VAT Act VAT with interest and 133.92 2003 penalty

Customs Act Customs Duty and 75.09 penalty

Customs Act Customs Duty and 2.00 penalty

Goa Tax on Luxuries Luxury Tax 33.93 Act

Maharashtra VAT, VAT with interest and 27.90 2002 penalty

Maharashtra VAT, VAT with interest and 153.30 2002 penalty

Maharashtra VAT, VAT & CST with interest 246.47 2002 and penalty

Kerala Tax on Luxury Luxury Tax 34.31 1976

Kerala Government Sales Tax and interest 26.80 Sales Tax Act

Kerala Agricultural Agricultural Income Tax 25.77 Income Tax Act and interest

Finance Act,1994 Service Tax, interest and 2,490.48 penalty

Central Excise Penalty under Excise Act 3.12 Act,1944

Name of the Statute Period to which the Forum where dispute amount relates is pending

Karnataka VAT Act Financial Year Matter remanded to 2003 2005-06 to2009-10 Assessing Officer by High Court of Karnataka.

Customs Act 1989-90 Customs, Excise & Service and 2000-01 Tax Appellate Tribunal, Mumbai.

Customs Act 1990-91 Commissioner of Customs, Mumbai.

Goa Tax on Luxuries 2007-08 Appellate Authority, Act The Assistant Commissioner of Commercial Taxes, Margao

Maharashtra VAT, 2008-09 Maharashtra Sales Tax 2002 Tribunal.

Maharashtra VAT, 2006-07, Joint Commissioner of Sales 2002 2007-08 and tax,Appeals Mumbai. 2009-10

Maharashtra VAT, 2010-11 Appeal to be filed before 2002 Joint Commissioner of Sales tax, Appeals, Mumbai

Kerala Tax on Luxury 2006-07 Sales Tax Tribunal, 1976 Ernakulam.

Kerala Government 2005-06 Deputy Commissioner Sales Tax Act (Appeals), Thiruvananthapuram

Kerala Agricultural 2004-09 Tribunal, Kerala Income Tax Act Agricultural and Commercial Tax.

Finance Act,1994 2007-12 Customs, Excise & Service Tax Appellate Tribunal, Bangalore.

Central Excise 2003-05 CESTAT -WZB, Mumbai Act,1944

(c) The amount required to be transferred to Investor Education and Protection Fund has been transferred within the stipulated time in accordance with the provisions of the Companies Act,1956 (1 of 1956) and the rules made thereunder.

(viii) The accumulated losses of the Company exceeds 50% of its net worth. The Company has incurred cash losses during the financial year covered by our audit and in the immediately preceding financial year.

(ix) According to the explanation and information given to us, the Company has defaulted in repayment of dues to banks/financial institutions/debenture holders during the year under review, the period and amount of defaults are as under :

a. The Company had defaulted in its repayment commitments to its erstwhile Corporate Debt Restructuring (CDR) lenders, pursuant to which, on 30th June, 2014, the CDR lenders with exposure of 96.6% assigned their debt to Asset Reconstruction Companies (ARC). (Refer Note 31.3 of the standalone financial statements).

b. Company had defaulted in repayment of Rs. 2250 lakhs to Life Insurance Corporation of India (LIC) which was due on March 31,2014 and subsequent interest payments. Pursuant to Company's request, LIC, during March 2015 has rescheduled the repayment terms and accordingly there is no principal or interest accrued and due for payment as at the end of the year.

c. There were also defaults in repayment of principal and interest to other banks and financial institutions. The overdue instalments and interest accrued and due as at March 31,2015, was Rs. 665.42 lakhs and Rs. 1132.03 lakhs respectively.

(x) According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from bank or financial institutions..

(xi) To the best of our knowledge and belief and according to the information and explanations given to us, in our opinion, term loans availed by the Company were, prima facie, applied by the Company during the year for the purposes for which the loans were obtained.

(xii) To the best of our knowledge and belief and according to the information and explanations given to us, we have neither come across any instance of material fraud on or by the Company, noticed or reported during the year, nor have been informed of any such case by the Management.

For PICARDO & CO. Chartered Accountants Registration No: 107917W

K.V. Gopalakrishnayya Partner Membership No.21748 Mumbai, 27th May 2015

---

Mar 31, 2014

We have audited the accompanying financial statements of Hotel Leelaventure Limited ("the Company") which comprises the Balance Sheet as at 31st March, 2014 the Statement of Profit and Loss and the Cash Flow statement for the year then ended and a summary of significant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards notified under the Companies Act, 1956 ("the Act") read with the General Circular 15/2013 dated 13th September, 2013 of the Ministry of Corporate Affairs in respect of section 133 of the Companies Act, 2013 and in accordance with the accounting principles generally accepted in India. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors'' Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company''s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

(a) In the case of Balance Sheet, of the state of affairs of the Company as at 31st March, 2014;

(b) In the case of Profit and Loss Account, of the loss for the year ended on that date; and

(c) In the case of the Cash Flow Statement, of the Cash Flows for the year ended on that date.

Emphasis of Matter

Without qualifying our Report, we draw attention to:

(a) Note No 4 and 8 regarding the Company''s liabilities and Note No 30.3 regarding Management''s plans for meeting the same. Impairment loss of assets which the Company is planning to sell for deleveraging the Balance Sheet is not recognised. Pending receipt of binding offers, we are unable to comment on the consequential effects on the financial statements.

(b) Note 30.1 relating to non–recognition of impairment loss relating to a project in Mumbai held up for substantial period amounting to Rs. 13,805 lakhs on the basis of Management''s assessment that an amicable settlement would be reached and project would be implemented.

Report on Other Legal and Regulatory Requirements

1 As required by the Companies (Auditor''s Report) Order, 2003(" the Order") issued by the Central Government of India in terms of Section 227(4A) of the Act, we give in the Annexure, a statement on the matters specified in paragraphs 4 and 5 of the Order.

2 As required by Section 227(3) of the Act, we report that:

a) We have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the 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 Balance Sheet, the Statement of Profit and Loss and the Cash Flow Statement comply with the Accounting Standards notified under the Act read with the General Circular 15/2013 dated 13th September, 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013, to the extent applicable, referred to in Section 211(3C) of the Act.

e) On the basis of written representations received from the directors as on 31st March, 2014, taken on record by the Board of Directors, none of the directors is disqualified as at 31st March, 2014 from being appointed as a director in terms of Section 274(i) (g) of theAct.

ANNEXURE TO THE AUDITORS'' REPORT [referred to in paragraph (1) under the heading of "Report on Other Legal and Regulatory Requirements" of our report of even date]

(i) In respect of its Fixed assets:

(a) The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets, on the basis of available information.

(b) As explained to us, all the fixed assets were physically verified by the Management in a phased periodical manner, which in our opinion is reasonable, having regard to the size of the Company and nature of its assets. According to the information and explanations given to us, no material discrepancies were noticed on such verification.

(c) The fixed assets disposed of during the year, in our opinion, do not constitute a substantial part of the fixed assets of the Company and such disposal has, in our opinion, not affected the going concern status of the Company.

(ii) In respect of its Inventories:

(a) As explained to us, inventories were physically verified during the year by the Management at reasonable intervals.

(b) In our opinion and according to the information and explanation given to us, the procedures of physical verification of inventories followed by the Management were reasonable and adequate in relation to the size of the Company and nature of the business.

(c) In our opinion and according to the information and explanation given to us, the Company has maintained proper records of inventories. As explained to us, there were no material discrepancies noticed on physical verification of inventories, compared to the book records.

(iii) In respect of loans, secured or unsecured, granted or taken by the Company to/from Companies, firms or other parties covered in the register maintained under Section 301, of the Companies Act,1956:

(i) (a) The Company has given interest free unsecured advances in the nature of loans to two subsidiaries. In respect of the said loans, the maximum amount outstanding at any time during the year and the year- end balance is Rs. 5560.95 Lakhs.

(b) In our opinion and according to the information and explanations given to us, terms and conditions of these interest free unsecured advances are not prima facie prejudicial to the interest of the Company.

(c) As informed to us, there is no stipulation for repayment of principal amount and there are no overdue amounts.

(ii) (a) The Company has taken unsecured loans from two private limited Companies listed in the register maintained under Section 301 of the Act. The maximum balance outstanding at any time during the year was Rs. 3000 lakhs and outstanding as at the end of the year is Nil.

(b) The rate of interest and other terms and conditions of these unsecured loans are in our opinion, prima facie not prejudicial to the interest of the Company.

(c) In respect of the said loans and the interest thereon, there are no overdue amounts.

(iv) In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and nature of its business with regard to purchase of inventories and fixed assets and sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal controls.

(v) (a) To the best of our knowledge and belief and according to the information and explanations given to us, transactions to be entered in the register maintained under Section 301 of the Act, have been entered in the register.

(b) According to the information and explanation given to us, the Company has not entered into any contracts /arrangements which need to be entered in the register maintained under Section 301 of the Act, and exceeding the value of Rs. 5 Lakhs in respect of each party during the year.

(vi) In our opinion and according to the information and explanations given to us, the Company has not accepted deposits in terms of the provisions of Sections 58A and 58AA or any other relevant provisions of the Act. Therefore, the provisions of Clause (vi) of the paragraph 4 of the Order are not applicable to the Company.

(vii) In our opinion, the Company has an adequate internal audit system commensurate with the size and nature of its business.

(viii) The central Government has not prescribed maintenance of cost records under Section 209 (1) (d) of the Act in respect of any of the activities of the Company.

(ix) (a) Based on information and explanation furnished to us there are delays in depositing undisputed statutory dues, including Provident Fund, Employees'' State Insurance, Income-Tax, Wealth Tax ,Sales-Tax, Service Tax, Cess and other statutory dues with the appropriate authorities during the year under review. There are no undisputed amounts payable in respect of the aforesaid dues which were outstanding as on 31st March, 2014 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us, details of disputed Sales Tax, Income Tax, Custom Duty, Wealth Tax, Service Tax, Excise Duty and Cess which have not been deposited with appropriate authorities as on 31st March, 2014 on account of dispute are given below:

Name of the Statute Nature of Dues Amount Period to which the (Rs.in Lakhs) amount relates

Karnataka VAT Act 2003 VAT with interest and 133.92 Financial Year 2005-06 to penalty 2009-10

Customs Act Customs Duty and Penalty 75.09 1989 -90 and 2000-01

Customs Act Customs Duty and Penalty 2.00 1990-1991

Name of the Statue Forum where dispute is pending

Karnataka VAT Act 2003 Matter remanded to Assessing Officer by High Court of Karnataka.

Customs Act Customs, Excise & Service Tax Appellate Tribunal, Mumbai

Customs Act Commissioner of Customs, Mumbai



Name of the Statute Nature of Dues Amount Period to which the (Rs.in Lakhs) amount relates

Goa Tax on Luxuries Act Luxury Tax 33.92 2007-08

Maharashtra VAT, 2002 VAT with interest and 39.73 2008-09 penalty

Maharashtra VAT, 2002 VAT with interest and 99.48 2009-10 penalty

Central Excise Act, 1944 Penalty under Excise Act 3.12 2003-2005

Kerala Tax on Luxuries Luxury Tax 34.31 2006-07 Act, 1976

Kerala Gneral Sales Tax Sales tax and interest 26.80 2005-06 Act

Kerala Agricultural Agricultural Income Tax 25.77 2004-09 Income Tax Act and Interest



Name of the Statue Forum where dispute is pending

Goa Tax on Luxuries Act Appellate Authority, The Assistant Commissioner of Commercial Taxes, Margao

Maharashtra VAT, 2002 Maharashtra Sales Tax Tribunal

Maharashtra VAT, 2002 Joint Commissioner of Sales Tax, Appeals, Mumbai

Central Excise Act,1944 CESTAT -WZB,Mumbai

Kerala Tax on Luxuries Act, 1976 Deputy Commissioner (Appeals) Thiruvananthapuram

Kerala Gneral Sales Tax Act Do

Kerala Agricultural Income Tax Act Tribunal, Kerala Agricultural and Commercial Tax

(x) The accumulated losses of the Company exceeds 50% of its net worth. The Company has incurred cash losses during the financial year covered by our audit and in the immediately preceding financial year.

(xi) According to the information and explanations given to us, the Company has defaulted in repayment of dues to banks/financial institutions/debenture holders during the year under review. Rs. 6,369.68 Lakhs of Interest due from January 2014 onwards and Rs. 1,94,843.66 Lakhs of principal due as on 31st March, 2014 is not paid.

(xii) In our opinion and according to the information and explanations given to us, no loans and advances have been granted by the Company on the basis of securities by way of pledge of shares, debentures and other securities.

(xiii) The Company is not a chit fund / nidhi / mutual benefit fund / society. Accordingly, clause 4 (xiii) of the Order is not applicable to the Company during the year under audit.

(xiv) The Company during the year under review has not dealt or traded in shares, securities, debentures and other investments except investment in mutual funds, for which proper records of the transactions and contracts are maintained. All investments have been held by the Company in its own name.

(xv) The Company has not given any guarantee for loans taken by others from financial institutions or banks.

(xvi) To the best of our knowledge and belief and according to the information and explanations given to us, in our opinion, term loans availed by the Company were, prima facie, applied by the Company during the year for the purposes for which the loans were obtained.

(xvii) According to the information and explanations given to us, and on an overall examination of the Balance Sheet of the Company, funds raised on short term basis have not been used during the year for long term investment.

(xviii) The company has made preferential allotment of shares to companies covered in the Register maintained under section 301 of the Act and the price at which shares have been issued is prima facie not prejudicial to the interest of the Company.

(xix) The Company has created securities / charges in respect of secured debentures issued.

(xx) The Company has not raised any monies by way of public issue during the year.

(xxi) To the best of our knowledge and belief and according to the information and explanations given to us, no material fraud on or by the Company has been noticed or reported during the year.

For PICARDO & CO. Chartered Accountants Registration No: 107917W

K. V. Gopalakrishnayya

Partner

Membership No.21748

---

Mar 31, 2013

Report on the Financial Statements

We have audited the accompanying financial statements of Hotel Leela venture Limited ("the Company") which comprises the Balance Sheet as at 31st March 2013, the Statement of Profit and Loss and the Cash Flow statement for the year then ended and a summary of significant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India including Accounting Standards referred to in Section 211(3C) of the Companies Act,1956 (''the Act").This responsibility includes the design, implementation and maintenance of the internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors'' Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatements.

An audit involves performing procedures to obtain audit evidences about the amounts and disclosures in the financial statements. The procedure selected depends on auditor''s judgement, including the assessment of the risks of the material misstatements of the financial statements whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

a In the case of Balance Sheet, of the state of affairs of the Company as at 31st March 2013;

b. In the case of Profit and Loss Account, of the loss for the year ended on that date; and

c. In the case of the Cash Flow Statement, of the Cash Flows for the year ended on that date.

Report on Other Legal and Regulatory Requirements

1 As required by the Companies (Auditor''s Report) Order, 2003 (" The Order") issued by the Central Government of India in terms of Section 227(4A) of the Act, we give in the Annexure, a statement on the matters specified in paragraphs 4 and 5 of the Order.

2. As required by Section 227(3) of the Act, we report that:

a. We have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the 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 Balance Sheet, the Statement of Profit and Loss and the Cash Flow Statement comply with the Accounting Standards, to the extent applicable, referred to in Section 211 (3C) of the Act;

e. On the basis of written representations received from the directors as on March 31st, 2013, taken on record by the Board of Directors, none of the directors is disqualified as at March 31st, 2013 from being appointed as a director in terms of Section 274 (i) (g) of the Act.

ANNEXURE TO THE AUDITORS'' REPORT [referred to in paragraph (1) under the heading of "Report on Other Legal and Regulatory Requirements" of our report of even date]

i In respect of its Fixed assets:

a. The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets, on the basis of available information.

b. As explained to us, all the fixed assets were physically verified by the Management in a phased periodical manner, which in our opinion is reasonable, having regard to the size of the Company and nature of its assets. According to the information and explanations given to us, no material discrepancies were noticed on such verification.

c. The fixed assets disposed off during the year, in our opinion, do not constitute a substantial part of the fixed assets of the Company and such disposal has, in our opinion, not affected the going concern status of the Company.

ii In respect of its Inventories:

a. As explained to us, inventories were physically verified during the year by the Management at reasonable intervals.

b. In our opinion and according to the information and explanation given to us, the procedures of physical verification of inventories followed by the Management were reasonable and adequate in relation to the size of the Company and nature of the business.

c. In our opinion and according to the information and explanation given to us, the Company has maintained proper records of inventories and no material discrepancies were noticed on physical verification.

iii Loans from/to related parties:

a. According to the information and explanations given to us, the Company has not granted secured or unsecured loans to companies, firms or other parties covered in the Register maintained under Section 301 of the Act.

b. The Company has taken unsecured loans from four private limited Companies listed in the register maintained under Section 301 of the Act. The maximum balance outstanding during the year was Rs. 3,770 lakhs and the outstanding as at the end of the year is Rs.1501.81 Lakhs.

c. The rate of interest and other terms and conditions of these unsecured loans are in our opinion prima facie not prejudicial to the interest of the Company.

d. In respect of the said loans and the interest thereon, there are no overdue amounts.

iv. In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and nature of its business with regard to purchase of inventories and fixed assets and sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal controls.

v. a. To the best of our knowledge and belief and according to the information and explanations given to us, transactions to be entered in the register maintained under Section 301 of the Act, have been entered in the register.

b. According to the information and explanation given to us, the Company has not entered into any contracts / arrangements which need to be entered in the register maintained under Section 301 of the Act, exceeding the value of Rs. 5 Lakhs in respect of each party during the year under review.

i. In our opinion and according to the information and explanations given to us, the Company has not accepted deposits in terms of the provisions of Sections 58A and 58AA or any other relevant provisions of the Act.

vii In our opinion, the Company has an adequate internal audit system commensurate with the size and nature of its business.

viii The central Government has not prescribed maintenance of cost records under section 209 (1) (d) of the Act in respect of any of the activities of the Company.

ix a. Based on information and explanation furnished to us there are delays in depositing undisputed statutory dues, including Provident Fund,

Employees'' State Insurance, Income-Tax, Wealth Tax, Sales Tax, Service Tax, Cess and other material statutory dues with the appropriate authorities during the year under review. As at the end of the financial year there are no undisputed amounts payable in respect of the aforesaid dues which were outstanding as on 31st March 2013 for a period of more than six months from the date they became payable except wealth tax dues of Rs. 2.37 lakhs.

b. According to the information and explanations given to us, details of disputed Sales Tax, Income Tax, Custom Duty, Wealth Tax, Service Tax, Excise Duty and Cess which have not been deposited with appropriate authorities as on 31st March, 2013 on account of dispute are given below:

Name of the Statute Nature of Dues Amount (? in Lakhs)

Karnataka VAT Act, 2003 VAT with interest and 145.25 penalty

Customs Act Customs Duty and Penalty 75.09

Customs Act Customs Duty and Penalty 2.00

Goa Tax on Luxuries Act Luxury Tax 33.93

Maharashtra VAT, 2002 VAT with interest and 39.72 penalty

Name Period to which the Forum where dispute is pending amount relates

Customs Act Financial Year 2005-06 to Commissioner Of Appeals III, Bangalore 2009-10

Customs Act 1989 -90 and 2000-2001 Customs ,Excise &Service Tax Appellate

Customs Act Tribunal , Mumbai 1990-1991 Commissioner of Customs, Mumbai Customs Act 2007-08 Appellate Authority, The Assistant Commissioner of Commercial Taxes,Margao

Customs Act 2008-09 Joint Commissioner of Sales Tax Appeals II ,Mumbai

x The accumulated losses of the Company do not exceed 50% of its net worth. The Company has incurred cash losses during the financial year covered by our audit and has not incurred cash losses in the immediately preceding financial year.

xi. In our opinion, on the basis of audit procedures and according to the explanation and information given to us, the Company has not defaulted in repayment of dues to banks/financial institutions/debenture holders in view of the debt restructuring approved under CDR mechanism. The Foreign Currency Convertible Bonds including redemption premium amounting to Rs.34,063.26 lakhs which were due for redemption on 25th April 2012 were redeemed on 25th May 2012.

xii. In our opinion and according to the information and explanations given to us, no loans and advances have been granted by the Company on the basis of securities by way of pledge of shares, debentures and other securities.

xiii. The Company is not a chit fund / nidhi / mutual benefit fund / society. Accordingly, clause 4 (xiii) of the Order is not applicable to the Company during the year under audit.

xiv. The Company during the year under review has not dealt or traded in shares, securities, debentures and other investments except investment in mutual funds, for which proper records of the transactions and contracts are maintained. All investments have been held by the Company in its own name.

xv. The Company has not given any guarantee for loans taken by others from financial institutions or banks.

xvi. To the best of our knowledge and belief and according to the information and explanations given to us, in our opinion, term loans availed by the Company were, prima facie, applied by the Company during the year for the purposes for which the loans were obtained.

xvii. According to the information and explanations given to us, and on an overall examination of the Balance Sheet of the Company, funds raised on short term basis have not been used during the year for long term investment.

xviii. The company has made preferential allotment of shares to companies covered in the Register maintained under section 301 of the Act and the price at which shares have been issued is prima facie not prejudicial to the interest of the Company.

xix. The Company has created securities / charges in respect of secured debentures issued.

xx. The Company has not raised any monies by way of public issue during the year.

xxi. To the best of our knowledge and belief and according to the information and explanations given to us, no material fraud on or by the Company has been noticed or reported during the year. For PICARDO & CO.

Chartered Accountants

Registration No: 107917W

K.V. Gopalakrishnayya

Partner

Membership No.21748

Mumbai, 20th May, 2013

---

Mar 31, 2012

1 We have audited the attached Balance Sheet of Hotel Leela venture Limited as at 31st March 2012, and also the Profit and Loss Account and the Cash Flow statement for the year ended as on that date, both annexed thereto. These financial statements are the responsibility of the Company's Management. Our responsibility is to express an opinion on these financial statements based on our audit.

2 We conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. 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 the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3 As required by the Companies (Auditor's Report) Order, 2003 as amended by the Companies (Auditor's Report) (Amendment) Order, 2004 (the 'order') issued by the Central Government in terms of Section 227(4A) of the Companies Act, 1956 we give in the annexure, a statement on the matters specified in paragraphs 4 and 5 of the said order to the extent applicable.

4 Further to our comments in the Annexure referred to above, we report that :

a. We have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the 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 Profit and Loss Account and the Cash Flow Statement dealt with by this report are in agreement with the books of account;

d. In our opinion, the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report comply with the accounting standards, to the extent applicable, referred to in subsection (3C) of Section 211 of the Companies Act, 1956;

e. On the basis of written representations received from the directors and taken on record by the Board of Directors, we report that none of the directors is disqualified as at 31st March 2012 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act 1956; and

f. In our opinion, and to the best of our information and according to the explanations given to us, they said Accounts read with other notes, give information required by the Companies Act, 1956 in the manner so required and give a true and fair view;

i. in the case of Balance Sheet, of the state of affairs of the Company as at 31st March 2012;

ii. in the case of Profit and Loss Account, of the profit of the Company for the year ended on that date; and

iii. in the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

(i) (a) The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets on the basis of available information.

(b) As explained to us, all the fixed assets were physically verified during the year by the Management in a phased periodical manner, which in our opinion is reasonable, having regard to the size of the Company and nature of its assets. According to the information and explanations given to us, no material discrepancies were noticed on such verification.

(c) The fixed assets disposed off during the year, in our opinion, do not constitute a substantial part of the fixed assets of the Company and such disposal has, in our opinion, not affected the going concern status of the Company.

(ii) (a) As explained to us, inventories were physically verified during the year by the Management at reasonable intervals.

(b) In our opinion and according to the information and explanation given to us, the procedures of physical verification of inventories followed by the Management were reasonable and adequate in relation to the size of the Company and nature of the business.

(c) In our opinion and according to the information and explanation given to us, the Company has maintained proper records of inventories and no material discrepancies were noticed on physical verification.

(iii) According to the information and explanations given to us, the Company has not granted/ taken secured or unsecured loans to / from companies, firms or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956.

(iv) In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and nature of its business with regard to purchase of inventories and sale of goods and services. In our opinion, internal control systems for purchase of fixed assets needs to be strengthened. During the course of our audit, except for weakness in internal control system for purchase of fixed assets, we have not observed any continuing failure to correct major weaknesses in internal controls.

(v) (a) To the best of our knowledge and belief and according to the information and explanations given to us, transactions to be entered in the register maintained under Section 301 of the Companies Act, 1956 have been entered in the register.

(b) According to the information and explanation given to us, the Company has not entered into any contracts / arrangements which need to be entered in the register maintained under Section 301 of the Companies Act, 1956 exceeding the value of Rs. 5 lakhs in respect of each party during the year under review.

(vi) In our opinion and according to the information and explanations given to us, the Company has not accepted deposits in terms of the provisions of Sections 58A and 58AA or any other relevant provisions of the Companies Act, 1956.

(vii) In our opinion, the Company has an adequate internal audit system commensurate with the size and nature of its business.

(viii) The Central Government has not prescribed maintenance of cost records under section 209 (1) (d) of the Companies Act, 1956 in respect of any of the activities of the Company.

(ix) (a) According to the information and explanations given to us, except wealth tax, the Company has generally been regular in depositing undisputed statutory dues, including Provident Fund, Investor Education and Protection Fund, Employees' State Insurance, Income-Tax, Sales-Tax, Service Tax, Custom Duty, Excise Duty, Cess and any other material statutory dues with the appropriate authorities during the year under review and no undisputed amounts payable in respect of the aforesaid dues were outstanding as on 31st March 2012 for a period of more than six months from the date they became payable. Wealth Tax dues outstanding for more than six months as at the end of the year amounted Rs 12.76 lakhs.

(b) According to the information and explanations given to us, details of disputed Sales Tax, Income Tax, Custom Duty, Wealth Tax, Service Tax, Excise Duty and Cess which have not been deposited with appropriate authorities as on 31st March, 2012 on account of dispute are given below :

Name of the Statute Nature of Dues Amount

(Rs. lakhs)

Karnataka VAT Act 2003 VAT with interest and 145.25 penalty

Income Tax Act 1961 Income Tax 30.14

Wealth Tax Act, 1957 Wealth Tax 81.72

Customs Act Customs Duty and Penalty 75.09

Customs Act Customs Duty and Penalty 2.00



Name of the Statute Period to which the amount Forum where dispute is pending relates

Karnataka VAT Act 2003 2005-06, 2006-07, 2007-08 and High Court of Karna taka 2008-09

Income Tax Act 1961 Assessment Year 2008-09 Commissioner of Income Tax (Appeals)

Wealth Tax Act 1957 Mumbai

Assessment Year 2004-05 Income Tax Appellate Tribunal Mumbai.

Customa ACT 1989 -90 and 2000-01 Customs, Excise & Service Tax

Costoms Act Appellate Tribunal, Mumbai 1990-91 Commissioner of Customs, Mumbai

(x) The Company does not have accumulated losses. The Company has not incurred cash losses during the financial year covered by our audit and in the immediately preceding financial year.

(xi) As per the information and explanations given to us, the Company has defaulted in repayment of interest and term loan installment to banks, financial institutions and debenture holders relating to February and March 2012 amounting to Rs 15,446.52 lakhs.

(xii) In our opinion and according to the information and explanations given to us, no loans and advances have been granted by the Company on the basis of securities by way of pledge of shares, debentures and other securities.

(xiii) The Company is not a chit fund / nidhi / mutual benefit fund / society. Accordingly, clause 4 (xiii) of the Companies (Auditor's Report) Order, 2003 is not applicable to the Company during the year under audit.

(xiv) The Company during the year under review has not dealt or traded in shares, securities, debentures and other investments except investment in mutual funds for which proper records of the transactions and contracts are maintained. All investments have been held by the Company in its own name.

(xv) The Company has not given any guarantee for loans taken by others from financial institutions or banks.

(xvi) To the best of our knowledge and belief and according to the information and explanations given to us, in our opinion, term loans availed by the Company were, prima facie, applied by the Company during the year for the purposes for which the loans were obtained.

(xvii) According to the information and explanations given to us, and on an overall examination of the Balance Sheet of the Company, funds raised on short term basis to the extent of Rs. 4,972 lakhs have been used during the year for long term investment.

(xviii) During the year, the Company has not made preferential allotment of shares.

(xix) The Company has created securities / charges in respect of secured debentures issued.

(xx) The Company has not raised any monies by way of public issue during the year.

(xxi) To the best of our knowledge and belief and according to the information and explanations given to us, no material fraud on or by the Company has been noticed or reported during the year.

For PICARDO & CO.

Chartered Accountants

Registration No: 107917W

K.V. Gopalakrishnayya

Partner

Membership No.21748

Mumbai, 29th May, 2012

---

Mar 31, 2011

1 We have audited the attached Balance Sheet of Hotel Leelaventure Limited as at 31st March 2011, and also the Profit and Loss Account and the Cash Flow statement for the year ended as on that date, both annexed thereto. These financial statements are the responsibility of the Company’s Management. Our responsibility is to express an opinion on these financial statements based on our audit.

2 We conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. 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 the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3 As required by the Companies (Auditor’s Report) Order, 2003 as amended by the Companies (Auditor’s Report) (Amendment) Order, 2004 (the ‘order’) issued by the Central Government in terms of Section 227(4A) of the Companies Act, 1956 we give in the annexure, a statement on the matters specified in paragraphs 4 and 5 of the said order to the extent applicable.

4 Further to our comments in the Annexure referred to above, we report that:

a. We have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the 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 Profit and Loss Account and the Cash Flow Statement dealt with by this report are in agreement with the books of account;

d In our opinion, the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report comply with the accounting standards, to the extent applicable, referred to in subsection (3C) of Section 211 of the Companies Act, 1956;

e On the basis of written representations received from the directors, taken on record by the Board of Directors, we report that none of the directors is disqualified as at 31st March 2011 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956; and

f In our opinion, and to the best of our information and according to the explanations given to us, the said Accounts read with other notes, give the information required by the Companies Act, 1956 in the manner so required, subject to our inability to express an opinion on the impact of disputed interest income recognised as referred to in note 8 of schedule K to the accounts, and give a true and fair view

i. in the case of Balance Sheet, of the state of affairs of the Company as at 31st March 2011.

ii in the case of Profit and Loss Account, of the profit of the Company for the year ended on that date; and

iii. in the case of the Cash Flow Statement, of the Cash Flows for the year ended on that date.

ANNEXURE TO THE AUDITORS’ REPORT [referred to in paragraph (3) of our report of even date]

(i) a. The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets on the basis of available information.

b. As explained to us, all the fixed assets were physically verified during the year by the Management in a phased periodical manner, which in our opinion is reasonable, having regard to the size of the Company and nature of its assets. According to the information and explanations given to us, no material discrepancies were noticed on such verification.

c. The fixed assets disposed off during the year, in our opinion, do not constitute a substantial part of the fixed assets of the Company and such disposal has, in our opinion, not affected the going concern status of the Company.

(ii) a. As explained to us, inventories were physically verified during the year by the Management at reasonable intervals.

b. In our opinion and according to the information and explanation given to us, the procedures of physical verification of inventories followed by the Management were reasonable and adequate in relation to the size of the Company and nature of the business.

c. In our opinion and according to the information and explanation given to us, the Company has maintained proper records of inventories and no material discrepancies were noticed on physical verification.

(iii) According to the information and explanations given to us, the Company has not granted / taken secured or unsecured loans to / from companies, firms or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956

(iv) In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and nature of its business with regard to purchase of inventories and sale of goods and services. In our opinion internal control systems for purchase of fixed assets needs to be strengthened. During the course of our audit, except for weakness in internal control system for purchase of fixed assets, we have not observed any continuing failure to correct major weaknesses in internal controls.

(v) To the best of our knowledge and belief and according to the information and explanations given to us, transactions to be entered in the register maintained under Section 301 of the Companies Act, 1956 have been entered in the register. Transactions made in pursuance of such contracts or arrangements have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

vi) In our opinion and according to the information and explanations given to us, the Company has not accepted deposits in terms of the provisions of Sections 58A and 58AA or any other relevant provisions of the Companies Act, 1956.

(vii) In our opinion, the Company has an adequate internal audit system commensurate with the size and nature of its business.

(viii) The central Government has not prescribed maintenance of cost records under section 209 (1) (d) of the Companies Act, 1956 in respect of any of the activities of the Company.

(ix) (a) According to the information and explanations given to us, the Company has generally been regular in depositing undisputed statutory dues, including Provident Fund, Investor Education and Protection Fund, Employees’ State Insurance, Income-Tax, Sales-Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and any other material statutory dues with the appropriate authorities during the year under review.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of the aforesaid dues were outstanding as on 31st March, 2011 for a period of more than six months from the date they became payable.

(c) According to the information and explanations given to us, details of disputed Sales Tax, Income Tax, Custom Duty, Wealth Tax, Service Tax, Excise Duty and Cess which have not been deposited with appropriate authorities as on 31st March, 2011 on account of dispute are given below:

Name of the Statute Nature of Dues Amount Period to which the amount (Rs in Lakhs) relates

Karnataka VAT Act 2003 VAT with interest and 72.62 2005-06, 2006-07,2007-08 and penalty 2008-09

Income Tax Act 1961 Income Tax 30.14 Assessment Year 2008-09

Wealth Tax Act,1957 Wealth Tax 81.72 Assessment Year 2004-05

Kerala Agriculture Income Agriculture Income Tax 17.30 Financial Year 2003 to 2009 Tax Act

Kerala VAT VAT 6.07 Financial Year 2005-06

Customs Act Customs Duty and Penalty 50.00 2000-01

Customs Act Customs Duty and Penalty 35.00 1990-1991



Name of the Statute Forum where dispute is pending

Karnataka VAT Act 2003 High Court of Karnataka

Income Tax Act 1961 Commissioner of Income Tax (Appeals) Mumbai

Wealth Tax Act,1957 Commissioner of Income Tax (Appeals) Mumbai

Kerala Agriculture Income Tribunal, Commercial Taxes, Trivandrum Tax Act

Kerala VAT Deputy Commissioner of Appeals (VAT),Trivandrum

Customs Act Commissioner of Customs ,Mumbai

Customs Act Commissioner of Customs ,Mumbai

x. The Company does not have accumulated losses. The Company has not incurred cash losses during the financial year covered by our audit and in the immediately preceding financial year.

xi. In our opinion and according to the information and explanations given to us, the Company has not defaulted in the repayment of dues to the financial institutions, banks, or debenture holders

xii. In our opinion and according to the information and explanations given to us, no loans and advances have been granted by the Company on the basis of securities by way of pledge of shares, debentures and other securities.

xiii. The Company is not a chit fund / nidhi / mutual benefit fund / society. Accordingly, clause 4 (xiii) of the Companies (Auditor’s Report) Order, 2003 is not applicable to the Company during the year under audit.

xiv In our opinion and according to the information and explanations given to us, the Company is not dealing in or trading in shares, securities, debentures and other investments. Therefore the provisions of clause (4)(iv) of The Companies (Auditors Report) Order 2003 are not applicable to the Company.

xv The Company has not given any guarantee for loans taken by others from financial institutions or banks.

xvi. To the best of our knowledge and belief and according to the information and explanations given to us, in our opinion, term loans availed by the Company were, prima facie, applied by the Company during the year for the purposes for which the loans were obtained.

xvii According to the information and explanations given to us, and on an overall examination of the Balance Sheet of the Company, funds raised on short term basis have, prima facie, not been used during the year for long term investment.

xviii During the year, the Company has made preferential allotment of shares to a Company covered in the Register maintained under Section 301 of the Act. In our opinion the price at which the said allotment was made is prima facie not prejudicial to the interest of the Company.

xix The Company has created securities/charges in respect of secured debentures issued.

xx. The Company has not raised any monies by way of public issue during the year.

xxi To the best of our knowledge and belief and according to the information and explanations given to us, no fraud on or by the Company was noticed or reported during the year.

For PICARDO & CO. Chartered Accountants

K.V. Gopalakrishnayya Partner Membership No.21748 Firm Registration No: 107917W Mumbai, 23rd May 2011

---

Mar 31, 2010

1 We have audited the attached Balance Sheet of Hotel Leelaventure Limited as at 31st March 2010, and also the Profit and Loss Account and the Cash Flow statement for the year ended as on that date, both annexed thereto. These financial statements are the responsibility of the Companys Management. Our responsibility is to express an opinion on these financial statements based on our audit.

2 We conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. 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 the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3 As required by the Companies (Auditors Report) Order, 2003 as amended by the Companies (Auditors Report) (Amendment) Order, 2004 (the order) issued by the Central Government in terms of Section 227 (4A) of the Companies Act, 1956 we give in the annexure, a statement on the matters specified in paragraphs 4 and 5 of the said order to the extent applicable.

4 Further to our comments in the Annexure referred to above, we report that:

a. We have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary

for the purposes of our audit. b In our opinion, proper books of account as required by law has been kept by the company so far as it appears from our

examination of those books; c The Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report are in agreement with the books of account; d In our opinion, the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report comply with the accounting standards, to the extent applicable, referred to in subsection (3C) of the Section 211 of the Companies Act, 1956; e On the basis of written representations received from the directors, taken on record by the Board of Directors, we report that none of the directors is disqualified as at 31st March 2010 from being appointed as a director in terms of clause (g) of sub- section (1) of Section 274 of the Companies Act, 1956; and f In our opinion, and to the best of information and according to the explanation given to us, the said Accounts, give the information required by the Companies Act, 1956 in the manner so required, subject to our inability to express an opinion on the impact of disputed interest income recognised as referred to in note 9 of schedule L to the accounts and read with other notes, give a true and fair view

i. in the case of Balance Sheet, of the state of affairs of the company as at 31st March 2010.

ii in the case of Profit and Loss Account, of the profit of the Company for the year ended on that date; and

iii. in the case of the Cash Flow Statement, of the Cash Flows for the year ended on that date.

ANNEXURE TO THE AUDITORS REPORT [referred to in paragraph (3) of our report of even date]

(i) a. The Company has maintained proper records showing full particulars including quantitative details of fixed assets except that of Udaipur unit. However location particulars in respect of Mumbai and Goa units are not updated.

b. Fixed assets other than Udaipur unit were physically verified during the year by the Management in accordance with a programme of verification, which in our opinion provides for physical verification of all the fixed assets at reasonable intervals. According to the information and explanations given to us, no material discrepancies were noticed on such verification.

c. The fixed assets disposed off during the year, in our opinion, do not constitute a substantial part of the fixed assets of the Company and such disposal has, in our opinion, not affected the going concern status of the Company.

(ii) a. As explained to us, inventories were physically verified during the year by the Management at reasonable intervals.

b. In our opinion and according to the information and explanation given to us, the procedures of physical verification of inventories followed by the Management were reasonable and adequate in relation to the size of the company and nature of the business.

c. In our opinion and according to the information and explanation given to us, the Company has maintained proper records of inventories and no material discrepancies were noticed on physical verification.

(iii) According to the information and explanations given to us, the Company has not granted /taken secured or unsecured loans to/from companies, firms or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956.

(iv) In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and nature of its business with regard to purchase of inventories and sale of goods and services. In our opinion internal control systems for purchase of fixed assets needs to be strengthened During the course of our audit, except for weakness in internal control system for purchase of fixed assets we have not observed any continuing failure to correct major weaknesses in internal controls.

(v) To the best of our knowledge and belief and according to the information and explanations given to us, transactions to be entered in the register maintained under Section 301 of the Companies Act, 1956 have been entered in the register.

Transactions made in pursuance of such contracts or arrangements have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

vi) In our opinion and according to the information and explanations given to us, the Company has not accepted deposits in terms of the provisions of Sections 58A and 58AA or any other relevant provisions of the Companies Act, 1956.

(vii) In our opinion, the company has an adequate internal audit system commensurate with the size and nature of its business.

(viii) The central Government has not prescribed maintenance of cost records under section 209 (1) (d) of the Companies Act, 1956 in respect of any of the activities of the activities of the company.

(ix) (a) According to the information and explanations given to us, the Company has generally been regular in depositing undisputed statutory dues, including Provident Fund, Investor Education and Protection Fund, Employees State Insurance, Income-Tax, Sales-Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and any other material statutory dues with the appropriate authorities during the year under review.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of the aforesaid dues were outstanding as on 31st March, 2010 for a period of more than six months from the date they became payable.

(c) According to the information and explanations given to us, details of disputed Sales Tax, Income Tax, Custom Duty, Wealth Tax, Service Tax, Excise Duty and Cess which have not been deposited with appropriate authorities as on 31st March, 2010 on account of dispute are given below:

Name of Statute Nature of the dues Amount Period to which the Forum where

(Rs.in Crores) amount re- lates dispute is (Assessme- nt years) pending Customs Act Custom Duty and 0.50 2000-2001 Customs,Exc- ise, Penalty Service Tax Appellate Tribunal

Customs Act Custom Duty and 0.35 1990-1991 Customs,Exc- ise,Penalty Service Tax Appellate Tribunal

Karnataka VAT ,penalty 1.34 2005-06, 2006- Deputy K-VAT and interest 07,2007-08 & Commissioner, 2008-09 Comml Taxes.

x. The Company does not have accumulated losses. The Company has not incurred cash losses during the financial year covered by our audit and in the immediately preceding financial year.

xi. In our opinion and according to the information and explanations given to us, the Company has not defaulted in the repayment of dues to the financial institutions, banks, and debenture holders

xii. In our opinion and according to the information and explanations given to us, no loans and advances have been granted by the Company on the basis of securities by way of pledge of shares, debentures and other securities.

xiii. The Company is not a chit fund/nidhi/mutual benefit fund/society. Accordingly, clause 4 (xiii) of the Companies (Auditors Report) Order, 2003 is not applicable to a company during the year under audit.

xiv. In our opinion and according to the information and explanations given to us the Company is not dealing in or trading in shares , securities, debentures and other investments. Therefore the provisions of clause (4)(iv) of The Companies (Auditors Report) Order 2003 are not applicable to the Company.

xv. The Company has not given any guarantee for loans taken by others from financial institutions or banks.

xvi. To the best of our knowledge and belief and according to the information and explanations given to us, in our opinion, term loans availed by the Company were, prima facie, applied by the Company during the year for the purposes for which the loans were obtained.

xvii. According to the information and explanations given to us, and on an overall examination of the Balance Sheet of the Company, funds raised on short term basis have, prima facie, not been used during the year for long term investment. xviii. During the year, the Company has not made any preferential allotment of shares to parties and Companies covered in the Register maintained under Section 301 of the Act.

xix. The Company has not issued debentures during the year under review. For the debentures issued during the previous year securities have not been created as on date. We have been informed that the Company is in the process of creation of securities.

xx. The Company has not raised any money by public issues during the year.

xxi. To the best of our knowledge and belief and according to the information and explanations given to us, no fraud on or by the Company was noticed or reported during the year.

For PICARDO & CO Chartered Accountants

K. V. Gopalakrishnayya Partner Membership No.21748 Firm Registration No : 107917W

Mumbai, 24th May 2010