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Auditor Report of Royal Orchid Hotels Ltd.

Mar 31, 2015

1. We have audited the accompanying standalone financial statements of Royal Orchid Hotels Limited ("the Company"), which comprise the Balance Sheet as at 31 March 2015, the Statement of Profit and Loss,the Cash Flow Statementfor the year then ended,and a summary of the significant accounting policies and other explanatory information.

Management's Responsibility for the Standalone Financial Statements

2. 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 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, includingthe Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies(Accounts) Rules, 2014 (as amended). This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act; safeguarding the assets of the Company; preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor's Responsibility

3. Our responsibility is to express an opinion on these standalone financial statements based on our audit.

4. 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 theRules made thereunder.

5. We conducted our audit in accordance with the Standards on Auditingspecified 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 standalone financialstatements are free from material misstatement.

6. 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 controls 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, but not for the purpose of expressing an opinion on whether the Company has in place an adequate internal financial controls system over financial reporting and the operating effectiveness ofsuch controls. 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.

7. 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

8. 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 31 March 2015, and its profit and its cash flows for the year ended on that date.

Emphasis of Matter

9. We draw attention to note 2 of the financial statements wherein the management has explained its reasons for preparing the financial statements on a going concern basis. As at 31 March 2015, the Company's current liabilities exceeded its current assets by Rs. 93.98 million. Further, the Company is committed to provide necessary financial and operating support to certain Joint Venture entities and subsidiaries. These conditions alongwith matters set forth in the said note indicate the existence of a material uncertainty that may cast significant doubt about the Company's ability to continue as a going concern. Our opinion is not qualified in respect of this matter.

Report on Other Legal and Regulatory Requirements

10. As required by the Companies (Auditor's Report) Order, 2015 ("the Order") issued by the Central Government of India in terms of Section 143(11) of the Act, we give in the Annexure a statement on the matters specified in paragraphs 3 and 4 of the Order.

11. As required by Section 143(3) of the Act, we report that:

a. we have sought andobtainedall the information and explanations which to the best of our knowledge and belief were necessary for the purpose 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 standalone financial statementsdealt 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 underSection 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014 (as amended);

e. the matter described in paragraph 10under the Emphasis of Matters paragraph, 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 31 March 2015 and taken on record by the Board of Directors, none of the directors is disqualified as on 31 March 2015 from being appointed as a director in terms of Section1 64(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. as detailed in note 26 to the standalone financial statements, the Company has disclosed the impact of pending litigations on its standalone financialposition;

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

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 Independent Auditors' Report

Annexure to the Independent Auditors' Report of even date to the members of Royal Orchid Hotels Limited, on the financial statements for the year ended 31 March, 2015

Based on the audit procedures performed for the purpose of reporting a true and fair view on the financial statements of the Company and taking into consideration the information and explanations given to us and the books of account and other records examined by us in the normal course of audit, we report that:

(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets. (b) All fixed assets have not been physically verified by the management during the year, however, there is a regular program of verification once in three years, which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verification. (ii) (a) The management has conducted physical verification of inventory at reasonable intervals during the year.

(b) The procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) The Company is maintaining proper records of inventory and no material discrepancies between physical inventory and book records were noticed on physical verification.

(iii) The Company has granted unsecured loans to eight wholly owned subsidiaries covered in the register maintained under Section 189 of the Act; and with respect to the same:

(a) the principal amounts are repayable on demand and since the repayment of such loans has not been demanded, in our opinion, receipt of the principal amount is regular. However, the receipt of interest, where applicable, is not regular; and

(b) there is no overdue amount in respect of loans granted to such companies, firms or other parties as the same are repayable on demand.

(iv) In our opinion, there is an adequate internal control system commensurate with the size of the Company and the nature of its business for the purchase of inventory and fixed assets and for the sale of goods and services. During the course of our audit, no major weakness has been noticed in the internal control system in respect of these areas. (v) The Company has not accepted any deposits within the meaning of Sections 73 to 76 of the Act and the Companies (Acceptance of Deposits) Rules, 2014 (as amended). Accordingly, the provisions of Clause 3(v) of the Order are not applicable. (vi) To the best of our knowledge and belief, the Central Government has not specified maintenance of cost records under sub-section (1) of Section 148 of the Act, in respect of Company's products/services. Accordingly, the provisions of Clause 3(vi) of the Order are not applicable. (vii) (a) Undisputed statutory dues including employees' state insurance, value added tax, and other material statutory dues, as applicable, have generally been regularly deposited with the appropriate authorities, except for income tax, service tax, provident fund, professional tax, luxury tax as applicable which have not been regularly deposited with the appropriate authorities and there have been delays (ranging upto 173 days in each individual cases) in many cases.

Undisputed amounts payable in respect thereof, which were outstanding at the year-end for a period of more than six months from the date they became payable pertain to taxes deducted at source under Income-tax Act, 1961 amounting to Rs. 74,015 (for months of April 2013 - August 2013 that were due on 7th of the following month), luxury taxes under Delhi Tax on Luxuries Act, 1996 amounting to Rs. 3,450,154 (for months of November 2012 - March 2013 that were due on 20th of the following month) and value added taxes under Delhi Value Added Tax Act, 2004 amounting to Rs. 8,179,328 (for months of April 2012 - March 2013 that were due on 20th of the following month).

(b) Disputed statutory dues amounting tot1 98.7 4 lakhs in respect of income-tax matters under the Income tax Act, 1961 pertaining to fiscal year ended 31 March, 2011 is pending with the Commissioner of Income tax - Appeals.

(c) The Company has transferred the amount required to be transferred to the investor education and protection fund in accordance with the relevant provisions of the Companies Act, 1956 (1 of 1956) and rules made there under within the specified time.

(viii) In our opinion, the Company has no accumulated losses at the end of the financial year and it has not incurred cash losses in the current year; however it had incurred cash losses in the immediately preceding financial year.

(ix) There are no dues payable to debenture-holders. The Company has generally not defaulted in repayment of principal and interest amounts due to any bank or financial institution during the year.

(x) In our opinion, the terms and conditions on which the Company has given guarantee for loans taken by others from banks or financial institutions are not, prima facie, prejudicial to the interest of the Company.

(xi) In our opinion, the Company has applied the term loans for the purpose for which these loans were obtained.

(xii) No fraud on or by the Company has been noticed or reported during the period covered by our audit.

For Walker Chandiok & Co LLP Chartered Accountants Firm's Registration No.: 001076N/N500013

per Sanjay Banthia Partner Membership No.: 061068 Place: Bengaluru Date: 30 May 2015


Mar 31, 2013

1 Report on the Financial Statements

We have audited the accompanying fnancial statements of Royal Orchid Hotels Limited, ("the Company"), which comprise the Balance Sheet as at 31 March 2013, the Statement of Proft and Loss and the Cash Flow Statement for the year then ended, and a summary of signifcant accounting policies and other explanatory information.

2 Management''s Responsibility for the Financial Statements

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

3 Auditors'' Responsibility

Our responsibility is to express an opinion on these fnancial 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 fnancial statements are free from material misstatement.

4 An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the fnancial statements. The procedures selected depend on the auditors'' judgment, including the assessment of the risks of material misstatement of the fnancial 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 fnancial 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 management, as well as evaluating the overall presentation of the fnancial statements.

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

6 Opinion

In our opinion and to the best of our information and according to the explanations given to us, the fnancial 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: i) in the case of the Balance Sheet, of the state of afairs of the Company as at 31 March 2013; ii) in the case of Statement of Proft and Loss, of the proft for the year ended on that date; and iii) in the case of the Cash Flow Statement, of the cash fows for the year ended on that date.

Report on Other Legal and Regulatory Requirements

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

8 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 purpose of our audit;

b. in our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of those books;

c. the fnancial statements dealt with by this report are in agreement with the books of account;

d. in our opinion, the fnancial statements comply with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Act; and

e. on the basis of written representations received from the directors, as on 31 March 2013 and taken on record by the Board of Directors, none of the directors is disqualifed as on 31 March 2013 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Act.

Annexure to the Independent Auditors'' Report of even date to the members of Royal Orchid Hotels Limited, on the fnancial statements for the year ended 31 March 2013

Based on the audit procedures performed for the purpose of reporting a true and fair view on the fnancial statements of the Company and taking into consideration the information and explanations given to us and the books of account and other records examined by us in the normal course of audit, we report that:

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

(b) The fxed assets have not been physically verifed by the management during the year and we are therefore unable to comment on the discrepancies, if any, which could have arisen on such verifcation. In our opinion, the frequency of verifcation of the fxed assets is also not reasonable having regard to the size of the Company and nature of its assets.

(c) In our opinion, a substantial part of fxed assets has not been disposed of during the year.

(ii) (a) The management has conducted physical verifcation of inventory at reasonable intervals during the year.

(b) The procedures of physical verifcation of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) The Company is maintaining proper records of inventory and no material discrepancies between physical inventory and book records were noticed on physical verifcation.

(iii) (a) The Company has granted unsecured loans to nine subsidiaries covered in the register maintained under Section 301 of the Act. The maximum amount outstanding during the year is Rs.167,768,874 and the year-end balance is Rs.110,112,527.

(b) In our opinion, the rate of interest and the interest free nature where applicable and other terms and conditions of such loans are not, prima facie, prejudicial to the interest of the Company.

(c) In respect of loans given, the principal amounts are repayable on demand and since the repayment of such loans has not been demanded, in our opinion, receipt of the principal amount is regular. The payment of interest, where applicable, is regular.

(d) In respect of the said loans, the same are repayable on demand and there are no overdue amounts.

(e) The Company has taken unsecured loans from two companies and a director covered in the register maintained under Section 301 of the Act. The maximum amount outstanding during the year was Rs.78,308,989 and the year-end balance was Rs. 67,868,674.

(f) In our opinion, the rate of interest and other terms and conditions of the loans taken by the Company are not, prima facie, prejudicial to the interest of the Company.

(g) In respect of loans taken, repayment of the principal is on demand and since the repayment of such loans has not been demanded, in our opinion, repayment of the principal amount is regular. The payment of interest has been regular.

(iv) In our opinion, there is an adequate internal control system commensurate with the size of the Company and the nature of its business for the purchase of inventory and for the sale of goods and services. However, the internal control system with respect to purchase and recording of fxed assets need to be further strengthened. The management is in the process of correcting these major weakness in the internal control system relating to purchase of fxed assets, which is in our opinion represents a continuing failure to correct major weaknesses in internal controls.

(v) (a) In our opinion, the particulars of all contracts or arrangements that need to be entered into the register maintained under Section 301 of the Act have been so entered.

(b) In our opinion, the transactions made in pursuance of such contracts or arrangements and exceeding the value of ffve lakhs in respect of any party during the year have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

(vi) The Company has not accepted any deposits from the public within the meaning of Sections 58A and 58AA of the Act and the Companies (Acceptance of Deposits) Rules, 1975. Accordingly, the provisions of clause 4(vi) of the Order are not applicable.

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

(viii) To the best of our knowledge and belief, the Central Government has not prescribed maintenance of cost records under clause (d) of sub-section (1) of Section 209 of the Act, in respect of Company''s services. Accordingly, the provisions of clause 4(viii) of the Order are not applicable.

(ix) (a) Undisputed statutory dues including investor education and protection fund, sales-tax, wealth tax, custom duty, excise duty, as applicable, have been deposited generally regularly with the appropriate authorities, except for provident fund, employees'' state insurance, income-tax, service tax, cess and other statutory dues, as applicable, which have not been regularly deposited with the appropriate authorities and there have been signifcant delays in a large number of cases.

Undisputed amounts payable in respect thereof, which were outstanding at the year-end for a period of more than six months from the date they became payable pertain to income tax deducted at source amounting to Rs. 3,250,319 (for months of July and August 2012 that were due on 7th of the following month), service tax amounting to Rs. 1,977,550 (for months of April - August 2012 that were due on 5th of the following month) and value added taxes under Delhi Value Added Tax Act, 2004 amounting to Rs. 2,453,516 (for months of April - August 2012 that were due on 20th of the following month)These amounts have been settled by the Company subsequent to the Balance Sheet date.

(b) There are no dues in respect of income tax, sales tax, wealth tax, service tax, customs duty, excise duty and cess that have not been deposited with the appropriate authorities on account of any dispute.

(x) In our opinion, the Company has no accumulated losses at the end of the fnancial year and it has not incurred cash losses in the current and the immediately preceding fnancial year.

(xi) As described in Note 5(I) to the fnancial statements, the Company restructured its debt obligations during the year and executed a Master Restructuring Agreement (''MRA'') on 28 March 2013 with a cut-of date of 01 October 2012. In accordance with the MRA, the Company has not defaulted in repayment of any material dues to any bank/fnancial institution during the year. The Company has no dues payable to debenture-holders during the year.

(xii) The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities. Accordingly, the provisions of clause 4(xii) of the Order are not applicable.

(xiii) In our opinion, the Company is not a chit fund or a nidhi/ mutual beneft fund/ society. Accordingly, the provisions of clause 4(xiii) of the Order are not applicable.

(xiv) In our opinion, the Company is not dealing or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Order are not applicable.

(xv) In our opinion, the terms and conditions on which the Company has given guarantee for loans taken by others from banks or fnancial institutions are not, prima facie, prejudicial to the interest of the Company.

(xvi) In our opinion, the Company has applied the term loans for the purpose for which these loans were obtained.

(xvii) In our opinion, no funds raised on short-term basis have been used for long-term investment.

(xviii) During the year, the Company has not made any preferential allotment of shares. Accordingly, the provisions of clause 4(xviii) of the Order are not applicable.

(xix) The Company has neither issued nor had any outstanding debentures during the year. Accordingly, the provisions of clause 4(xix) of the Order are not applicable.

(xx) The Company has not raised any money by public issues during the year. Accordingly, the provisions of clause 4(xx) of the Order are not applicable.

(xxi) No fraud on or by the Company has been noticed or reported during the period covered by our audit.



For Walker, Chandiok & Co

Chartered Accountants

Firm Registration No.: 001076N



per Anupam Kumar

Partner



Bengaluru

24 May 2013


Mar 31, 2012

1 We have audited the attached Balance Sheet of Royal Orchid Hotels Limited, ('the Company1) as at 31 March 2012, and also the Statement of Profit and Loss and the Cash Flow Statement for the year ended on that date annexed thereto (collectively referred as the 'financial statements'). 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 the 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 misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3 As required by the Companies (Auditor's Report) Order, 2003 ('the Order') (as amended), issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956 ('the Act'), we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

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 appears from our examination of those books;

c. The financial statements dealt with by this report are in agreement with the books of account;

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

e. In our opinion and to the best of our information and according to the explanations given to us, the financial statements dealt with by this report comply with the accounting standards referred to in sub-section (3C) of Section 211 of the Act and 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, in the case of:

(i) the Balance Sheet, of the state of affairs of the Company as at 31 March 2012;

(ii) the Statement of Profit and Loss, of the profit for the year ended on that date; and

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

Annexure to the Auditors' Report of even date to the members of Royal Orchid Hotels Limited, on the financial statements for the year ended 31 March 2012

Based on the audit procedures performed for the purpose of reporting a true and fair view on the financial statements of the Company and taking into consideration the information and explanations given to us and the books of account and other records examined by us in the normal course of audit, we report that:

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

(b) The fixed assets have not been physically verified by the management during the year and we are therefore unable to comment on the discrepancies, if any, which would have arisen on such verification. In our opinion, the frequency of verification of the fixed assets is also not reasonable having regard to the size of the Company and nature of its assets.

(c) In our opinion, a substantial part of fixed assets has not been disposed off during the year.

(ii) (a) The inventory has been physically verified during the year by the management. In our opinion, the frequency of verification is reasonable.

(b) The procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) The Company is maintaining proper records of inventory and no material discrepancies were noticed on physical verification.

(iii) (a) The Company has granted unsecured loans to six wholly owned subsidiaries and three subsidiaries covered in the register maintained under Section 301 of the Act. The maximum amount outstanding during the year is Rs. 171,974,349 and the year-end balance is Rs. 150,676,345.

(b) In our opinion, the rate of interest and the interest free nature where applicable and other terms and conditions of such loans are not, prima facie, prejudicial to the interest of the Company.

(c) In respect of loans granted, the principal amounts are repayable on demand and since the repayment of such loans has not been demanded, in our opinion, repayment of the principal amount is regular. The payment of interest, where applicable, is regular.

(d) In respect of the said loans, the same are repayable on demand and there are no overdue amounts.

(e) The Company has taken an unsecured loan from one company covered in the register maintained under Section 301 of the Act. The maximum amount outstanding during the year was Rs. 6,962,081 and the year-end balance was Rs.5,308,989.

(f) In our opinion, the rate of interest and other terms and conditions of the loan taken by the Company are not, prima facie, prejudicial to the interest of the Company.

(g) In respect of loans taken, repayment of the principal is on demand and since the repayment of such loans has not been demanded, in our opinion, repayment of the principal amount is regular. The payment of interest has been regular.

(iv) In our opinion, there is an adequate internal control system commensurate with the size of the Company and the nature of its business for the purchase of inventory and for the sale of goods and services. However, the internal controls with respect to purchase of fixed assets need to be further strengthened. During the course of our audit, no major weakness has been noticed in the internal control system in respect of these areas, except for weaknesses in controls relating to purchase of fixed assets. However, the management is in the process of rectifying this control weakness subsequent to the Balance Sheet date.

(v) (a) In our opinion, the particulars of all contracts or arrangements that need to be entered into the register maintained under Section 301 of the Act have been so entered.

(b) In our opinion, the transactions made in pursuance of such contracts or arrangements and exceeding the value of rupees five lakhs in respect of any party during the year have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

(vi) The Company has not accepted any deposits from the public within the meaning of Sections 58A and 58AA of the Act and the Companies (Acceptance of Deposits) Rules, 1975. Accordingly, the provisions of clause 4(vi) of the Order are not applicable.

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

(viii) To the best of our knowledge and belief, the Central Government has not prescribed maintenance of cost records under clause (d) of sub-section (1) of Section 209 of the Act, in respect of the services rendered by the Company. Accordingly, the provisions of clause 4(viii) of the Order are not applicable.

(ix) (a) Undisputed statutory dues including investor education and protection fund, employees'state insurance, sales- tax, wealth-tax, custom duty, excise duty, cess and other material statutory dues, as applicable, have been regularly deposited with the appropriate authorities, other than dues relating to tax deducted at source and service tax which have been deposited with delays in multiple cases. No undisputed amounts payable in respect thereof were outstanding at the year-end for a period of more than six months from the date they became payable.

(b) There are no dues in respect of income tax, sales tax, wealth tax, service tax, customs duty, excise duty and cess that have not been deposited with the appropriate authorities on account of any dispute.

(x) In our opinion, the Company has no accumulated losses at the end of the financial year and it has not incurred cash losses in the current and the immediately preceding financial year.

(xi) There are no dues payable to financial institutions or debenture-holders. The Company has delayed in following repayment of dues to banks and institutions:

(Amount in Rs.)

Particulars Delay upto Delay upto Delay above Total 30 days 31-60 days 60 days amount

Interest payments 136,406,261 36,642,776 - 173,049,037

Principal repayment of term loans 24,656,311 44,042,020 15,500,000 84,198,331 (including consortium loan)

As at 31 March 2012, the Company is in default for payment of interest amounting to Rs. 21,654,417 (31 March 2011 -Rs. 3,833,557) and repayment of principal amounting to Rs. 9,900,000 (31 March 2011- Nil) on various term loans that were due on or before 31 March 2012. These amounts have been settled by the Company subsequent to the Balance Sheet date.

(xii) The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities. Accordingly, the provisions of clause 4(xii) of the Order are not applicable.

(xiii) In our opinion, the Company is not a chit fund or a nidhi/ mutual benefit fund/ society. Accordingly, the provisions of clause 4(xiii) of the Order are not applicable.

(xiv) In our opinion, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Order are not applicable.

(xv) In our opinion, the terms and conditions on which the Company has given guarantee for loans taken by others from banks or financial institutions are not, prima facie, prejudicial to the interest of the Company.

(xvi) In our opinion, the Company has applied the term loans for the purpose for which the loans were obtained.

(xvii) In our opinion, no funds raised on short-term basis have been used for long-term investment.

(xviii)During the year, the Company has not made any preferential allotment of shares to parties or companies covered in the register maintained under Section 301 of the Act. Accordingly, the provisions of clause 4(xviii) of the Order are not applicable.

(xix) The Company has neither issued nor had any outstanding debentures during the year. Accordingly, the provisions of clause 4(xix) of the Order are not applicable.

(xx) The Company has not raised any money by public issues during the year. Accordingly, the provisions of clause 4(xx) of the Order are not applicable.

(xxi) No fraud on or by the Company has been noticed or reported during the period covered by our audit.

For Walker, Chandiok & Co

Chartered Accountants

Firm Registration No.: 001076N

per Aashish Arjun Singh

Bengaluru Partner

30 May 2012 Membership No.: 210122


Mar 31, 2011

1. We have audited the attached Balance Sheet of Royal Orchid Hotels Limited, (the 'Company') as at 31 March 2011, and also the Profit and Loss Account and the Cash Flow Statement for the year ended on that date, annexed thereto (collectively referred as the 'financial statements'). These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on ouraudit.

2. We conducted our audit in accordance with the 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 misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditor's Report) Order, 2003 (the 'Order') (as amended), issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956 (the 'Act'), we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

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 ouraudit;

b. In our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of those books;

c. The financial statements dealt with by this report are in agreement with the books of account;

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

e. In our opinion and to the best of our information and according to the explanations given to us, the financial statements dealt with by this report comply with the accounting standards referred to in sub-section (3C) of Section 211 of the Act and the Rules framed there underand give the information required by theAct, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, in the case of:

I. the Balance Sheet, of the state of affairs of the Company as at 31 March 2011;

ii. the Profit and Loss Account, of the profit forthe year ended on that date; and

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

Annexure to the Auditors' Report of even date to the members of Royal Orchid Hotels Limited, on the financial statements for the year ended 31 March 2011

Based on the audit procedures performed for the purpose of reporting a true and fair view on the financial statements of the Company and taking into consideration the information and explanations given to us and the books of account and other records examined by us in the normal course of audit, we report that:

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

(b) The fixed assets have not been physically verified by the management during the year and we are therefore unable to comment on the discrepancies, if any, which could have arisen on such verification. In our opinion, the frequency of verification of the fixed assets is also not reasonable having regard to the size of the Company and nature of its assets

(c) In our opinion, a substantial part of fixed assets has not been disposed off during the year.

(ii) (a) The inventory has been physically verified during the year by the management. In our opinion, the frequency of verification is reasonable.

(b) The procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) The Company is maintaining proper records of inventory and no material discrepancies were noticed on physical verification.

(iii) (a) There are eight wholly owned subsidiaries and two subsidiaries covered in the register maintained under Section 301 of the Act to which the Company has granted unsecured loans. The maximum amount outstanding during the year was f 315,945,334 and the year-end balance was Rs. 138,366,315.

(b) In our opinion, the rate of interest and the interest free nature where applicable and other terms and conditions of such loans are not, prima facie, prejudicial to the interest of the Company.

(c) The principal amounts, are repayable on demand and there is no repayment schedule, the payment of interest, where applicable, has been regular.

(d) In respect of the said loans, the same are repayable on demand and there are no overdue amounts.

(e) The Company has taken loans, secured or unsecured from companies, covered in the register maintained under Section 301 of the Act. The maximum amount outstanding during the year was Rs. 33,006,444 and the year-end balance was Rs. Nil

(f) In ouropinion, the rate of interest and otherterms and conditions for such loans are not, prima facie, prejudicial to the interest of the Company.

(g) In respect of the said loans the same are repayable on demand and there are no overdue amounts. The payment of interest has been regular.

(iv) In our opinion, there is an adequate internal control system commensurate with the size of the Company and the nature of its business for the purchase of inventory and fixed assets and for the sale of goods and services.

(v) (a) In our opinion, the particulars of all contracts or arrangements that need to be entered into the register maintained under Section 301 of the Act have been so entered.

(b) Owing to the unique and specialized nature of the items involved and in the absence of any comparable prices, we are unable to comment as to whether the transactions made in pursuance of such contracts or arrangements have been made at prevailing market prices at the relevant time

(vi) The Company has not accepted any deposits from the public within the meaning of Sections 58A and 58AAof the Act and the Companies (Acceptance of Deposits) Rules, 1975. Accordingly, the provisions of clause 4(vi) of the Order are not applicable.

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

(viii) To the best of our knowledge and belief, the Central Government has not prescribed maintenance of cost records under clause (d) of sub-section (1) of Section 209 of the Act, in respect of the services rendered by the company. Accordingly, the provisions of clause 4(viii) of the Order are not applicable.

(ix) (a) 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 other material statutory dues, as applicable, have been regularly deposited other than tax deducted at source and service tax which hasnot been regularly deposited with the appropriate authorities. Further, no undisputed amounts payable in respect thereof were outstanding at the year-end for a period of more than six months from the date they become payable.

(b) There are no dues in respect of income tax, sales tax, wealth tax, service tax, customs duty, excise duty and cess that have not been deposited with the appropriate authorities on account of any dispute.

(x) In our opinion, the Company does not have accumulated losses at the end of the financial year and it has not incurred cash losses in the current and the immediately preceding financial year.

(xi) In our opinion , the Company has not defaulted in repayment of dues to any bank during the year. In respect of dues to banks, the lenders have rescheduled the repayments amounting to Rs. 151,875,000 that were due from the Company. The said approval for rescheduling the repayment was obtained from the lenders before the year end. The Company has no dues payable to financial institutions or debenture holders during the year.

(xii) The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities. Accordingly, the provisions of clause 4(xii) ofthe Order are not applicable.

(xiii) In ouropinion, the Company is nota chitfund ora nidhi/ mutual benefit fund/ society. Accordingly, the provisions of clause 4(xiii) of the Order are not applicable.

(xiv) In our opinion, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) ofthe Order are not applicable.

(xv) In our opinion, the terms and conditions on which the Company has given guarantee for loans taken by subsidiaries and joint ventures ofthe company from banks are not, prima facie, prejudicial to the interest of the Company.

(xvi) In ouropinion, the Company has applied the term loans forthe purpose for which the loans were obtained.

(xvii) In ouropinion, no funds raised on short-term basis have been used for long-term investment.

(xviii) The Company has not made any preferential allotment of shares to parties or companies covered in the register maintained under Section 301 of the Act. Accordingly, the provisions of clause 4(xviii) of the Order are not applicable.

(xix) The Company has neither issued nor had any outstanding debentures during the year. Accordingly, the provisions of clause 4(xix) of the Order are not applicable.

(xx) The Company has not raised any money by public issues during the year. Accordingly, the provisions of clause 4(xx)of the Order are not applicable.

(xxi) No fraud on or by the Company has been noticed or reported during the period covered by our audit.

For Walker, Chandiok& Co

Chartered Accountants

Firm Registration No. 001076N

per Aashish Arjun Singh

Partner

Membership No. 210122

Bengaluru

30 May 2011












Mar 31, 2010

1. We have audited the attached Balance Sheet of Royal Orchid Hotels Limited, (the Company) as at 31 March 2010, and also the Profit and Loss Account and the Cash Flow Statement for the year ended on that date, annexed thereto (collectively referred as the financial statements). 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 the 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 misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditors Report) Order, 2003 (the Order) (as amended), issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956 (the Act), we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

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 appears from our examination of those books;

c. The financial statements dealt with by this report are in agreement with the books of account;

d. On the basis of written representations received from the Directors, as on 31 March 2010 and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 31 March 2010 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Act;

e. In our opinion and to the best of our information and according to the explanations given to us, the financial statements dealt with by this report comply with the accounting standards referred to in sub-section (3C) of Section 211 of the Act and the Rules framed there under and 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, in the case of:

i. the Balance Sheet, of the state of affairs of the Company as at 31 March 2010; ii. the Profit and Loss Account, of the profit for the year ended on that date; and iii.the Cash Flow Statement, of the cash flows for the year ended on that date.

Annexure to the Auditors Report of even date to the members of Royal Orchid Hotels Limited, on the financial statements for the year ended 31 March 2010

Based on the audit procedures performed for the purpose of reporting a true and fair view on the financial statements of the Company and taking into consideration the information and explanations given to us and the books of account and other records examined by us in the normal course of audit, we report that:

(i) (a) The Company has maintained proper records showing full particul ars, 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 our opinion, this periodicity of physical verification is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verification.

(c) In our opinion, a substantial part of fixed assets has not been disposed off during the year.

(ii) (a) The inventory has been physically verified during the year by the management. In our opinion, the frequency of verification is reasonable.

(b) The procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) The Company is maintaining proper records of inventory and no material discrepancies were noticed on physical verification.

(iii) (a) There are eight wholly owned subsidiaries and two subsidiaries covered in the register maintained under Section 301 of the Act to which the Company has granted unsecured loans.The maximum amount outstanding during the year was Rs. 558,390,762 and the year-end balance was Rs 302,552,589.

(b) In our opinion, the rate of interest and the interest free nature where applicable and other terms and conditions of such loans are not, prima facie, prejudicial to the interest of the Company.

(c) The principal amounts, are repayable on demand and there is no repayment schedule, the payment of interest, where applicable, has been regular.

(d) In respect of the said loans, the same are repayable on demand and there are no overdue amounts.

(e) The Company has not taken any loans, secured or unsecured from companies, firms or other parties covered in the register maintained under Section 301 of the Act. Accordingly, the provisions of clauses 4(iii)(f) and 4(iii)(g) of the Order are not applicable.

(iv) In our opinion, there is an adequate internal control system commensurate with the size of the Company and the nature of its business for the purchase of inventory and fixed assets and for the sale of goods and services.

(v) (a) In our opinion, the particulars of all contracts or arrangements that need to be entered into the register maintained under Section 301 of the Act have been so entered.

(v) (b) Owing to the unique and specialized nature of the items involved and in the absence of any comparable prices, we are unable to comment as to whether the transactions made in pursuance of such contracts or arrangements have been made at prevailing market prices at the relevant time

(vi) The Company has not accepted any deposits from the public within the meaning of Sections 58A and 58AA of the Act and the Companies (Acceptance of Deposits) Rules, 1975. Accordingly, the provisions of clause 4(vi) of the Order are not applicable.

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

(viii) To the best of our knowledge and belief, the Central Government has not prescribed maintenance of cost records under clause (d) of sub-section (1) of Section 209 of the Act, in respect of the services rendered by the company. Accordingly, the provisions of clause 4(viii) of the Order are not applicable.

(ix) (a) The Company is generally regular in depositing the 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 other material statutory dues, as applicable, with the appropriate authorities. Further, no undisputed amounts payable in respect thereof were outstanding at the year end for a period of more than six months from the date they become payable.

(b) There are no dues in respect of income tax, sales tax, wealth tax, service tax, customs duty, excise duty and cess that have not been deposited with the appropriate authorities on account of any dispute.

(x) In our opinion, the Company does not have accumulated losses at the end of the financial year and it has not incurred cash losses in the current and the immediately preceding financial year.

(xi) In our opinion, the Company has not defaulted in repayment of dues to any bank during the year. The Company has no dues payable to financial institutions or debenture holders during the year.

(xii) The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities. Accordingly, the provisions of clause 4(xii) of the Order are not applicable.

(xiii) In our opinion, the Company is not a chit fund or a nidhi/ mutual benefit fund/ society. Accordingly, the provisions of clause 4(xiii) of the Order are not applicable.

(xiv) In our opinion, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Order are not applicable.

(xv) In our opinion, the terms and conditions on which the Company has given guarantee for loans taken by subsidiary and joint ventures from banks are not, prima facie, prejudicial to the interest of the Company.

(xvi) In our opinion, the Company has applied the term loans for the purpose for which the loans were obtained.

(xvii) In our opinion, no funds raised on short-term basis have been used for long-term investment.

(xviii) The Company has not made any preferential allotment of shares to parties or companies covered in the register maintained under Section 301 of the Act. Accordingly, the provisions of clause 4(xviii) of the Order are not applicable.

(xix) The Company has neither issued nor had any outstanding debentures during the year. Accordingly, the provisions of clause 4(xix) of the Order are not applicable.

(xx) The Company has not raised any money by public issues during the year. Accordingly, the provisions of clause 4(xx) of the Order are not applicable.

(xxi) No fraud on or by the Company has been noticed or reported during the period covered by our audit.

For Walker, Chandiok & Co

Chartered Accountants

Firm Registration No. 001076N

per Aashish Arjun Singh

Partner

Membership No. 210122

Bengaluru 27 May 2010

 
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