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Inox Leisure Ltd.

BSE: 532706 Sector: Media
NSE: INOXLEISUR ISIN Code: INE312H01016
BSE 00:00 | 24 Apr 2020 Inox Leisure Ltd
NSE 05:30 | 01 Jan 1970 Inox Leisure Ltd

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OPEN 224.80
PREVIOUS CLOSE 218.85
VOLUME 12855
52-Week high 510.80
52-Week low 213.00
P/E 14.92
Mkt Cap.(Rs cr) 2,219
Buy Price 215.30
Buy Qty 3.00
Sell Price 220.00
Sell Qty 5.00
OPEN 224.80
CLOSE 218.85
VOLUME 12855
52-Week high 510.80
52-Week low 213.00
P/E 14.92
Mkt Cap.(Rs cr) 2,219
Buy Price 215.30
Buy Qty 3.00
Sell Price 220.00
Sell Qty 5.00

Inox Leisure Ltd. (INOXLEISUR) - Auditors Report


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Company auditors report

TO THE MEMBERS OF INOX LEISURE LIMITED

Report on the Audit of the Standalone Financial Statements

Opinion

We have audited the accompanying standalone financial statements ofINOX Leisure Limited (“the Company”) which comprise the Standalone BalanceSheet as at 31st March 2019 the Standalone Statement of Profit and Loss(including Other Comprehensive Income) the Standalone Statement of Changes in Equity andthe Standalone Statement of Cash Flows for the year then ended and notes to thestandalone financial statements including a summary of significant accounting policiesand other explanatory information (“the standalone financial statements”).

In our opinion and to the best of our information and according to theexplanations given to us the aforesaid standalone financial statements give theinformation required by the Companies Act 2013 (“the Act”) in the manner sorequired and give a true and fair view in conformity with the Indian Accounting Standardsprescribed under section 133 of the Act read with the Companies (Indian AccountingStandards) Rules 2015 (“Ind AS”) and other accounting principles generallyaccepted in India of the state of affairs of the Company as at 31st March2019 the profit and total comprehensive income changes in equity and its cash flows forthe year ended on that date.

Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing(SAs) specified under section 143(10) of the Act. Our responsibilities under thoseStandards are further described in the ‘Auditor's Responsibilities for the Audit ofthe Standalone Financial Statements' section of our report. We are independent of theCompany in accordance with the Code of Ethics issued by the Institute of CharteredAccountants of India (“ICAI”) together with the ethical requirements that arerelevant to our audit of the standalone financial statements under the provisions of theAct and the Rules made there under and we have fulfilled our other ethicalresponsibilities in accordance with these requirements and the ICAI's Code of Ethics. Webelieve that the audit evidence we have obtained is sufficient and appropriate to providea basis for our opinion.

Key Audit Matters

Key audit matters are those matters that in our professional judgmentwere of most significance in our audit of the standalone financial statements of thecurrent period. These matters were addressed in the context of our audit of the standalonefinancial statements as a whole and in forming our opinion thereon and we do not providea separate opinion on these matters. We have determined the matters described below to bethe key audit matters to be communicated in our report.

Independent auditor's report to the members of INOX Leisure Limited onthe standalone financial statements for the year ended 31st March 2019

Key Audit Matter Auditor's Response
1 Claims and exposure relating to indirect taxation To address this key audit matter our audit procedures included the following:
The Company has disclosed in Note 46 the contingent liabilities as at 31st March 2019 which includes amount of H 24165.67 Lakhs in respect of indirect tax matters viz. entertainment tax and service tax. • Obtained the summary of all pending indirect tax matters of the Company and assessed the management's position through discussion with the Head of Legal CEO and CFO on both the probability of success and the amounts involved.
This has been identified as a key audit matter due to magnitude of the amount involved uncertainty of the matter and the potential financial impact on the financial statements.
• Inspected external legal opinions (where considered necessary) and other evidence to corroborate management's assessment with respect to these issues.
There is significant judgement required by management in assessing the exposure of each case due to the complexities of the cases and timescales for resolution. • Assessed the relevant disclosures made within the financial statements to ensure they appropriately reflect the facts and circumstances of the potential exposures and in accordance with Ind AS 37.
We are satisfied that the treatment in respect of the potential indirect tax matters is appropriate based on our procedures performed and we conclude that the related disclosures are appropriately presented in the financial statements.
2 Carrying amount of goodwill and property plant & equipment To address this key audit matter our audit procedures included the following:
The goodwill is in respect of the one of the multiplexes and the Company is required to annually assess the carrying amount of goodwill by performing a value in use calculation based on cash flow projections of the relevant cash generating unit (CGU). As a result of performing value in use calculations there is no impairment of the goodwill either in current year or preceding year. • Obtained an external valuation report in respect of the goodwill.
• For all CGUs identified for impairment testing and the CGU with goodwill we obtained the discounted cash flow forecasts prepared by the management.
The Company has also reviewed the carrying amounts of the PPE to determine whether the recoverable amount of a CGU is estimated to be less than its carrying amount by performing a value in use calculation based on cash flow projections of the relevant cash generating unit (CGU). For this purpose each multiplex of the Company is treated as a separate CGU. Based on this analysis net impairment loss of H 82.00 lakhs is recognised during the year (H 309.55 lakhs in the preceding year). • We evaluated the appropriateness of management's model used for the impairment assessment and considered the reasonableness of the cash flow forecast judgments and assumptions used in the calculations.
• For each CGU identified for impairment testing we have checked the mathematical accuracy of the calculations.
This has been identified as a key audit matter since the value in use calculations includes key assumptions and judgments in the calculation of the recoverable amount viz. forecast revenue growth rates discount rate assumptions and the parameters used for growth forecast. On performing the above procedures we concluded that no impairment is required in case of goodwill and the impairment loss recognised by the Company in respect of PPE is appropriate and we conclude that the related disclosures are appropriately presented in the financial statements.

Information Other than the Standalone Financial Statements andAuditor's Report Thereon

The Company's Board of Directors is responsible for the preparation ofthe other information. The other information comprises the information included in AnnualReport for example Board's Report including Annexures to Board's Report ManagementDiscussion and Analysis Business Responsibility Report Corporate Governance etc. butdoes not include the standalone financial statements and our auditor's report thereon. TheBoard's Report including Annexures to Board's Report Management Discussion and AnalysisBusiness Responsibility Report and Corporate Governance etc. is expected to be madeavailable to us after the date of this auditor's report.

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

In connection with our audit of the standalone financial statementsour responsibility is to read the other information identified above when it becomesavailable and in doing so consider whether the other information is materiallyinconsistent with the standalone financial statements or our knowledge obtained in theaudit or otherwise appears to be materially misstated.

When we read the Board's Report including Annexures to Board's ReportManagement Discussion and Analysis Business Responsibility Report and CorporateGovernance etc. if we conclude that there is a material misstatement therein we arerequired to communicate the matter to those charged with governance and take necessaryactions as per the applicable laws and regulations.

Responsibilities of Management and Those Charged with Governance forthe Standalone Financial Statements

The Company's Board of Directors is responsible for the matters statedin section 134(5) of the Act with respect to the preparation of these standalone financialstatements that give a true and fair view of the financial position financial performanceincluding other comprehensive income changes in equity and cash flows of the Company inaccordance with the Ind AS and other accounting principles generally accepted in India.This responsibility also includes maintenance of adequate accounting records in accordancewith the provisions of the Act for safeguarding of the assets of the Company and forpreventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; and design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the accuracy and completeness ofthe accounting records relevant to the preparation and presentation of the standalonefinancial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.

In preparing the standalone financial statements management isresponsible for assessing the Company's ability to continue as a going concerndisclosing as applicable matters related to going concern and using the going concernbasis of accounting unless management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so.

Those Board of Directors are also responsible for overseeing theCompany's financial reporting process.

Auditor's Responsibilities for the Audit of the StandaloneFinancial Statements

Our objectives are to obtain reasonable assurance about whether thestandalone financial statements as a whole are free from material misstatement whetherdue to fraud or error and to issue an auditor's report that includes our opinion.Reasonable assurance is a high level of assurance but is not a guarantee that an auditconducted in accordance with SAs will always detect a material misstatement when itexists. Misstatements can arise from fraud or error and are considered material ifindividually or in the aggregate they could reasonably be expected to influence theeconomic decisions of users taken on the basis of these standalone financial statements.

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

• Identify and assess the risks of material misstatement of thestandalone financial statements whether due to fraud or error design and perform auditprocedures responsive to those risks and obtain audit evidence that is sufficient andappropriate to provide a basis for our opinion. The risk of not detecting a materialmisstatement resulting from fraud is higher than for one resulting from error as fraudmay involve collusion forgery intentional omissions misrepresentations or the overrideof internal control.

• Obtain an understanding of internal financial controls relevantto the audit in order to design audit procedures that are appropriate in thecircumstances. Under section 143(3)(i) of the Act we are also responsible for expressingour opinion on whether the Company has adequate internal financial controls system withreference to financial statements in place and the operating effectiveness of suchcontrols.

• Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management's use of the goingconcern basis of accounting and based on the audit evidence obtained whether a materialuncertainty exists related to events or conditions that may cast significant doubt on theCompany's ability to continue as a going concern. If we conclude that a materialuncertainty exists we are required to draw attention in our auditor's report to therelated disclosures in the standalone financial statements or if such disclosures areinadequate to modify our opinion. Our conclusions are based on the audit evidenceobtained up to the date of our auditor's report. However future events or conditions maycause the Company to cease to continue as a going concern.

• Evaluate the overall presentation structure and content of thestandalone financial statements including the disclosures and whether the standalonefinancial statements represent the underlying transactions and events in a manner thatachieves fair presentation.

We communicate with those charged with governance regarding amongother matters the planned scope and timing of the audit and significant audit findingsincluding any significant deficiencies in internal control that we identify during ouraudit.

We also provide those charged with governance with a statement that wehave complied with relevant ethical requirements regarding independence and tocommunicate with them all relationships and other matters that may reasonably be thoughtto bear on our independence and where applicable related safeguards.

From the matters communicated with those charged with governance wedetermine those matters that were of most significance in the audit of the standalonefinancial statements of the current period and are therefore the key udit matters. Wedescribe these matters in our auditor's eport unless law or regulation precludes publicdisclosure bout the matter or when in extremely rare circumstances we determine that amatter should not be communicated in ur report because the adverse consequences of doingso would reasonably be expected to outweigh the public interest benefits of suchcommunication.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order 2016(“the Order”) issued by the Central Government of India in terms of section143(11) of the Act we give in the Annexure I a statement on the matters specified inparagraphs 3 and 4 of the Order to the extent applicable.

2. As required by Section 143(3) of the Act based on our audit wereport that:

(a) We have sought and obtained all the information and explanationswhich 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 havebeen kept by the Company so far as it appears from our examination of those books.

(c) The Standalone Balance Sheet the Standalone Statement of Profitand Loss including Other Comprehensive Income Statement of Changes in Equity and theStandalone Statement of Cash Flow dealt with by this Report are in agreement with thebooks of account.

(d) In our opinion the aforesaid standalone financial statementscomply with the Ind AS specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014.

(e) On the basis of the written representations received from thedirectors as on 31st March 2019 taken on record by the Board of Directorsnone of the directors is disqualified as on 31st March 2019 from beingappointed as a director in terms of Section 164(2) of the Act.

(f) With respect to the adequacy of the internal financial controlswith reference to financial statements of the Company and the operating effectiveness ofsuch controls refer to our separate Report in Annexure II. Our report expresses anunmodified opinion on the adequacy and operating effectiveness of the Company's internalfinancial controls with reference to financial statements.

(g) With respect to the other matters to be included in the Auditor'sReport in accordance with the requirements of section 197(16) of the Act in our opinionand to the best of our information and according to the explanations given to us theremuneration paid by the Company to its director during the year is in accordance with theprovisions of section 197 of the Act.

(h) With respect to the other matters to be included in the Auditor'sReport in accordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 inour opinion and to the best of our information and according to the explanations given tous:

i. The Company has disclosed the impact of pending litigations on itsfinancial position in its standalone financial statements;

ii. The Company did not have any long-term contracts includingderivative contracts for which there were any material foreseeable losses;

iii. There were no amounts which were required to be transferred to theInvestor Education and Protection Fund by the Company.

For Kulkarni and Company
Chartered Accountants
Firm's Registration No. 140959W
A.D Talavlikar
Place: Pune Partner
Date: 13th May 2019 Membership No. 130432

Annexure I to Independent auditor's report

To the members of INOX Leisure Limited

Annexure I to Independent auditor's report to the members of INOXLeisure Limited on the standalone financial statements for the year ended 31stMarch 2019 - referred to in paragraph 1 under the heading “Report on Other Legal andRegulatory Requirements” of our report of even date.

In term of the Companies (Auditor's Report) Order 2016 (“theOrder”) on the basis of information and explanation given to us and the books andrecords examined by us in the normal course of audit and such checks as we consideredappropriate to the best of our knowledge and belief we state as under:

1. The Company has maintained proper records showing full particularsincluding quantitative details and situation of fixed assets. The fixed assets have beenphysically verified by the management at reasonable intervals and no materialdiscrepancies have been noticed on such verification. The title deeds of all immovableproperties are held in the name of the Company except as under:

Particulars No. of cases Original cost Carrying amount Remarks
Leasehold land 1 181.45 137.76 In the name of erstwhile amalgamated company and yet to be transferred in the name of the Company
Building 2 7568.81 6145.34 Conveyance deed is yet to be executed
1 828.57 629.45 In the name of erstwhile amalgamated company and yet to be transferred in the name of the Company
1 1763.73 1427.45 In the name of erstwhile amalgamated company and conveyance deed is yet to be executed
Building total 10161.11 8202.24

2. The inventories were physically verified by the management atreasonable intervals during the year and no material discrepancies were noticed onphysical verification of inventories as compared to book records.

3. The Company has not granted any loan secured or unsecured tocompanies firms Limited Liability Partnerships or other parties covered in the registermaintained under section 189 of the Companies Act 2013 and hence the provisions of clause3(iii) of the Order are not applicable to the Company

4. The Company has complied with the provisions of section 185 andsection 186 of the Act in respect of investments made and guarantees provided. The Companyhas not granted any loans or provided any security covered under section 185 and section186 of the Act.

5. The Company has not accepted any deposits within the meaning ofsection 73 to 76 of the Companies Act 2013 and the Rules framed thereunder and hence theprovisions of clause 3(v) of the Order are not applicable to the Company.

6. The Central Government has not prescribed maintenance of costrecords under section 148(1) of the Companies Act 2013 for the activities of the Companyand hence the provisions of clause 3(vi) of the Order are not applicable to the Company.

7. The Company is generally regular in depositing with appropriateauthorities undisputed statutory dues including provident fund employees' stateinsurance income-tax Goods & Service Tax duty of customs cess and other materialstatutory dues applicable to it. There are no undisputed amounts payable in respect ofsuch statutory dues which were in arrears as at 31st March 2019 for a periodof more than six months from the date they become payable.

Particulars of dues of service tax and duty of customs which have notbeen deposited on account of disputes are as under:

Name of the Statute Nature of dues and the period to which the amount relates Amount (J in Lakhs) Forum where dispute is pending
Service-tax (Finance Act 1994) Service tax on renting of immovable properties for the period August 2008 to September 2011 1035.02 Supreme Court of India
Service tax on film distributors' payments
For the period May 2009 to June 2012 549.35 Custom Excise and Service Tax Appellate Tribunal Hyderabad.
For the period May 2008 to March 2014 2853.23 Custom Excise and Service Tax Appellate Tribunal New Delhi.
For the period July 2012 to December 2014 6710.55 Custom Excise and Service Tax Appellate Tribunal Mumbai.
For the Period April 2009 to July 2013 and for period Jan 2015 to March 2015 1151.16 Custom Excise and Service Tax Appellate Tribunal Mumbai.
Service tax on Food & Beverage
For the period April 2013 to February 2014 1387.28 Custom Excise and Service Tax Appellate Tribunal Mumbai
For the period March 2014 to December 2014 723.36 Custom Excise and Service Tax Appellate Tribunal Mumbai
For the period January 2015 to September 2015 794.17 Custom Excise and Service Tax Appellate Tribunal Mumbai
For Period October 2015 to June 2017 3231.38 Custom Excise and Service Tax Appellate Tribunal Mumbai
Customs Act 1962 Custom duty Amount not ascertainable Commissioner Appeal Central Board of Excise and Customs
Custom duty for the period 2005-06 4.36 Asst. Commissioner of Customs Jawaharlal Nehru Custom House JNPT Nhava Sheva

There are no dues of income-tax value added tax sales tax or duty ofexcise which have not been deposited on account of disputes.

8. The Company has not defaulted in repayment of loans and borrowingsto banks and the Company did not have any borrowings from financial institutionsGovernment or by way of debentures.

9. The Company has applied the moneys raised by way of term loans forthe purpose for which these loans were raised. The Company did not raise moneys by way ofinitial public offer or further public offer (including debt instruments).

10. No fraud by the Company or on the Company by its officers oremployees has been noticed or reported during the course of our audit.

11. The Company has paid or provided managerial remuneration inaccordance with the requisite approvals mandated by the provisions of section 197 readwith Schedule V to the Act.

12. The Company is not a Nidhi Company and hence the provisions ofclause 3(xii) of the Order are not applicable to the Company.

13. All transactions with the related parties are in compliance withsections 177 and 188 of Companies Act 2013 and the details have been disclosed in thestandalone financial statements etc. as required by the applicable accounting standards.

14. The Company has made preferential allotment of equity shares duringthe year and the requirement of section 42 of the Act have been complied with and theamount raised have been used for the purposes for which the funds were raised. The Companyhas not made any preferential allotment or private placement of fully or partlyconvertible debentures during the year under review.

15. The Company has not entered into any non-cash transactions withdirectors or persons connected with them and hence the provisions of clause 3(xv) of theOrder are not applicable to the Company.

16. The Company is not required to be registered under section 45-IA ofthe Reserve Bank of India Act 1934 and hence the provisions of clause 3(xvi) of the Orderare not applicable to the Company.

For Kulkarni and Company
Chartered Accountants
Firm's Registration No. 140959W
A.D Talavlikar
Place: Pune Partner
Date: 13th May 2019 Membership No. 130432

Annexure II to Independent auditor's report

To the members of INOX Leisure Limited

Annexure II to Independent auditor's report to the members of INOXLeisure Limited on the standalone financial statements for the year ended 31stMarch 2019 - referred to in paragraph 2(f) under the heading ‘Report on Other Legaland Regulatory Requirements' of our report of even date

Report on the Internal Financial Controls with reference to financialstatements under Clause (i) of Sub-section 3 of Section 143 of the Companies Act 2013(“the Act”)

We have audited the internal financial controls with reference tofinancial statements of INOX Leisure Limited (“the Company”) as of 31stMarch 2019 in conjunction with our audit of the standalone financial statements of theCompany for the year ended on that date.

Management's Responsibility for Internal Financial Controls

The Company's management is responsible for establishing andmaintaining internal financial controls based on the internal control over financialreporting criteria established by the Company considering the essential components ofinternal controls stated in the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting (the “Guidance Note”) issued by the Institute of CharteredAccountants of India (“the ICAI”). These responsibilities include the designimplementation and maintenance of adequate internal financial controls that were operatingeffectively for ensuring the orderly and efficient conduct of its business includingadherence to company's policies the safeguarding of its assets the prevention anddetection of frauds and errors the accuracy and completeness of the accounting recordsand the timely preparation of reliable financial information as required under the Act.

Auditor's Responsibility

Our responsibility is to express an opinion on the Company's internalfinancial controls with reference to financial statements based on our audit. We conductedour audit in accordance with the Guidance Note and the Standards on Auditing deemed to beprescribed under section 143(10) of the Act to the extent applicable to an audit ofinternal financial controls both applicable to an audit of internal financial controlsand both issued by the ICAI. Those Standards and the Guidance Note require that we complywith ethical requirements and plan and perform the audit to obtain reasonable assuranceabout whether adequate internal financial controls with reference to financial statementswas established and maintained and if such controls operated effectively in all materialrespects.

Our audit involves performing procedures to obtain audit evidence aboutthe adequacy of the internal financial controls system with reference to financialstatements and their operating effectiveness.

Our audit of internal financial controls with reference to financialstatements included obtaining an understanding of internal financial controls withreference to financial statements assessing the risk that a material weakness exists andtesting and evaluating the design and operating effectiveness of internal control based onthe assessed risk. The procedures selected depend on the auditor's judgement includingthe assessment of the risks of material misstatement of the financial statements whetherdue to fraud or error.

We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the Company's internal financialcontrols system with reference to financial statements.

Meaning of Internal Financial Controls with reference to FinancialStatements

A company's internal financial control with reference to financialstatements is a process designed to provide reasonable assurance regarding the reliabilityof financial reporting and the preparation of financial statements for external purposesin accordance with generally accepted accounting principles. A company's internalfinancial controls with reference to financial statements includes those policies andprocedures that (1) pertain to the maintenance of records that in reasonable detailaccurately and fairly reflect the transactions and dispositions of the assets of thecompany; (2) provide reasonable assurance that transactions are recorded as necessary topermit preparation of financial statements in accordance with generally acceptedaccounting principles and that receipts and expenditures of the company are being madeonly in accordance with authorizations of management and directors of the company; and (3)provide reasonable assurance regarding prevention or timely detection of unauthorizedacquisition use or disposition of the company's assets that could have a material effecton the financial statements.

Inherent Limitations of Internal Financial Controls with reference toFinancial Statements

Because of the inherent limitations of internal financial controls withreference to financial statements including the possibility of collusion or impropermanagement override of controls material misstatements due to error or fraud may occurand not be detected. Also projections of any evaluation of the internal financialcontrols with reference to financial statements to future periods are subject to the riskthat the internal financial controls with reference to financial statements may becomeinadequate because of changes in conditions or that the degree of compliance with thepolicies or procedures may deteriorate.

Opinion

In our opinion to the best of our information and according to theexplanations given to us the Company has in all material respects an adequate internalfinancial controls system with reference to financial statements and such internalfinancial controls with reference to financial statements were operating effectively as at31st March 2019 based on the internal controls over financial reportingcriteria established by the Company considering the essential components of internalcontrol stated in the Guidance Note issued by the ICAI.

For Kulkarni and Company
Chartered Accountants
Firm's Registration No. 140959W
A.D Talavlikar
Place: Pune Partner
Date: 13th May 2019 Membership No. 130432


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