To the Members of Mukta Arts Limited
Report on the audit of the Standalone Indian Accounting Standards (Ind AS) FinancialStatements Qualified Opinion
We have audited the accompanying Standalone Ind AS financial statements of Mukta ArtsLimited ("the Company") which comprise the Balance Sheet as at March 312019and the Statement of Profit and Loss (including Other Comprehensive Income) the Statementof Changes in Equity and statement of cash flows for the year then ended and notes to thefinancial statements including a summary of significant accounting policies and otherexplanatory information.
In our opinion and to the best of our information and according to the explanationsgiven to us except for the possible effects of the matters described in the Basis ofQualified Opinion paragraph below the aforesaid Ind AS financial statements give theinformation required by the Act in the manner so required and give a true and fair view inconformity with the accounting principles generally accepted in India of the state ofaffairs of the Company as at March 31 2019 its profit (including other comprehensiveincome) the changes in equity and its cash flows for the year ended on that date.
Basis of Qualified Opinion
As at March 312019 the company's investment in its subsidiary(including deemedinvestment) Whistling woods International Limited (WWIL) a joint venture between thecompany and Maharashtra Film Stage and Cultural Development Corporation Limited(MFSCDCL) aggregates to द 199511218/- and loans and advances deposits interestreceivable and rent receivable aggregate to द 434948077/- recoverable from WWIL. Asfully explained in Note 43 to the accompanying audited financial statements the Order ofFebruary 9 2012 passed by the High Court of judicature at Bombay ("High Court') hadquashed the joint Venture Agreement (JVA') between the company and Maharashtra FilmStage Cultural Development Corporation (MFSCDCL'). Maharashtra Film Stage andCultural Development Corporation (MFSCDC') raised net demand of द 591966210/-and asked WWIL to vacate the premises. WWIL's petition for special leave to appeal filedwith the Supreme Court of India had also been dismissed. The Company and WWIL had filedapplication to review the said order with the High Court and an Interim stay was grantedon July 30 2014 which required deposit of Rs.100038000/- by January 2015 againstpayment of arrears of rent for the year 2000-01 to 2013-14 and payment of Rs.4500000/-per annum from Financial Year 2014-15 till the settlement of the case to MFSCDCL. As perthe terms of the said Order till financial year 2016-17 द 113538000/- has been paidby the Parent Company and for financial year 2017-18 and 2018-19 द 4500000/- per annumhas been paid by WWIL. The State Govt. of Maharashtra and MFSCDCL challenged the order ofthe High Court in the Supreme Court which was dismissed by the Supreme Court on September22 2014. The amount so paid / being paid by the Company have been accounted under Non -Current Other Financial Assets in the Standalone Financial Statements to be adjusted onthe settlement of the case. Management of WWIL informs that these will be accounted as anexpense if required on the settlement of the case.
Additionally without giving effect to the matter as stated above WWIL's net worthstands fully eroded as at March 31 2019. Management of WWIL believes that it isappropriate to prepare the Ind AS financial statements on a going concern basis based onits assessment of the merits of the case plans for the future and support provided by itsholding company.
We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder section 143(10) of the Companies Act 2013. Our responsibilities under thoseStandards are further described in the Auditor's Responsibilities for the Audit of the IndAS Financial Statements section of our report. We are independent of the Company inaccordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia together with the ethical requirements that are relevant to our audit of thefinancial statements under the provisions of the Companies Act 2013 and the Rulesthereunder and we have fulfilled our other ethical responsibilities in accordance withthese requirements and the Code of Ethics. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our qualified opinion.
Key Audit Matters
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the Ind AS financial statements of the current period. Thesematters were addressed in the context of our audit of the Ind AS financial statements as awhole and in forming our opinion thereon and we do not provide a separate opinion onthese matters.
We have determined that there are no key audit matters to communicate in our report forthe year ended 31 March 2019.
Management's Responsibility for the Standalone Ind AS Financial Statements
The Company's Board of Directors is responsible for the matters stated in section134(5) of the Companies Act 2013 ("the Act") with respect to the preparation ofthese standalone financial statements that give a true and fair view of the financialposition financial performance (changes in equity) and cash flows of the Company inaccordance with the accounting principles generally accepted in India including theaccounting Standards specified under section 133 of the Act. This responsibility alsoincludes maintenance of adequate accounting records in accordance with the provisions ofthe Act for safeguarding of the assets of the Company and for preventing and detectingfrauds and other irregularities; selection and application of appropriate accountingpolicies; making judgments and estimates that are reasonable and prudent; and designimplementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the financial statement that givea true and fair view and are free from material misstatement whether due to fraud orerror.
In preparing the financial statements management is responsible for assessing theCompany's ability to continue as a going concern disclosing as applicable mattersrelated to going concern and using the going concern basis of accounting unless managementeither intends to liquidate the Company or to cease operations or has no realisticalternative but to do so.
That Board of Directors is also responsible for overseeing the company's financialreporting process.
Auditor's Responsibilities for the Audit of the Ind AS Financial Statements
Our objectives are to obtain reasonable assurance about whether the Ind AS financialstatements as a whole are free from material misstatement whether due to fraud or errorand to issue an auditor's report that includes our opinion. Reasonable assurance is a highlevel of assurance but is not a guarantee that an audit conducted in accordance with SAswill always detect a material misstatement when it exists. Misstatements can arise fromfraud or error and are considered material if individually or in the aggregate theycould reasonably be expected to influence the economic decisions of users taken on thebasis of these Ind AS financial statements.
As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the Ind AS financialstatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentional omissions misrepresentations or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under section 143(3)(i)of the Companies Act 2013 we are also responsible for expressing our opinion on whetherthe company has adequate internal financial controls system in place and the operatingeffectiveness of such controls.
Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basisof accounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe Ind AS financial statements or if such disclosures are inadequate to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor's report. However future events or conditions may cause the Company to cease tocontinue as a going concern.
Evaluate the overall presentation structure and content of the Ind AS financialstatements including the disclosures and whether the Ind AS financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.
We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.
From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the Ind AS financial statements ofthe current period and are therefore the key audit matters. We describe these matters inour auditor's report unless law or regulation precludes public disclosure about the matteror when in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government of India in terms of sub-section (11) of section 143 ofthe Companies Act 2013 we give in the Annexure A a statement on the matters specified inparagraphs 3 and 4 of the Order to the extent applicable.
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 bestof 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 theCompany so far as it appears from our examination of those books.
(c) The Standalone Balance Sheet Standalone Statement of Profit and Loss including theStatement of Other Comprehensive Income the Standalone Cash Flow Statement and theStandalone Statement of Changes in Equity dealt with by this Report are in agreement withthe books of account;
(d) In our opinion the aforesaid Ind AS financial statements comply with the IndianAccounting Standards specified under Section 133 of the Act ;
(e) On the basis of the written representations received from the directors as on March31 2019 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2019 from being appointed as a director in terms of Section 164 (2) of theAct.
(f) With respect to the adequacy of the Internal Financial Controls over FinancialReporting of the Company and the operating effectiveness of such controls refer to ourseparate report in Annexure B and
(g) With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand 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 financialposition in its standalone Ind AS financial statements - Refer Notes No. 39.
ii. The Company does not have any long-term contracts including derivative contractsfor which there were any material foreseeable losses - Refer Note No. 45.
iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company during the year ended March 312019 - Refer Note No. 46.
For Uttam Abuwala & Co.
Chartered Accountants Firm No. 111184W
CA. Prerak Agarwal
Membership No. 158844
Date: May 21 2019 Place: Mumbai
Annexure A referred to in Report on Other Legal and Regulatory Requirements Paragraphof Independent Auditor's report of even date to the members of Mukta Arts Limited on theaccounts for the year ended March 312019
On the basis of such checks as we considered appropriate and according to theinformation and explanation given to us during the course of our audit we report that:
i) (a) The company has maintained proper records showing full particulars includingquantitative details and situation of Fixed assets except that tagging of certain fixedassets is yet to be completed.
(b) As explained by the Management fixed assets have been physically verified by themanagement at regular intervals which in our opinion is reasonable having regard to thesize of the company and nature of its business. In our opinion there were no materialdiscrepancies between book records and physical fixed assets that were noticed during theperiod.
(c) According to the information and explanation given to us and on the basis of ourexamination of the records of the company the title deeds of immovable properties areheld in the name of the company.
ii) As explained by the Management Company does not have any inventory henceinformation under this clause is not required.
iii) Based on the audit procedures applied by us and according to the information andexplanations given to us the company has not granted any loans secured or unsecured tothe firms limited liability partnerships or other parties covered in the registermaintained under section 189 of the Companies Act 2013. Accordingly the provisions ofclause
(iii) (a) (b) and (c) are not applicable to the Company.
iv) In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of Section 185 and 186 of the Act with respectto the loans and investments made.
v) In our opinion and according to the information and explanation given to us theCompany has not accepted any deposit from public within the provision of section 73 to 76and other relevant provisions of the Companies Act 2013 and the rules framed there under.
vi) As informed to us by management the Central Government has not prescribed themaintenance of cost records under sub section (1) of section 148 of the Companies Act2013 for any of services rendered by the company.
vii) (a) According to information and explanations given to us and on the basis of ourexamination of the books of account and records the Company has been generally regularin depositing undisputed statutory dues including Goods and Services Tax (GST') andany other statutory dues with the appropriate authorities except that there have been fewdelay in depositing dues pertaining to Income Tax. As explained to us the company did nothave any dues on account of Custom Duty Excise Duty.
According to information and explanations given to us there are no undisputedstatutory dues payable in respect of Provident Fund Employees' State Insurance IncomeTax Value Added Tax GST and other material statutory dues were in arrears as on March31 2019 for a period of more than 6 months from the date they became payable.
(b) According to the information and explanations given to us there are no duespayable in respect of value added tax GST customs duty and excise duty which have notbeen deposited with appropriate authorities on account of any disputes. The following duesof Service Tax & Income Tax have not been deposited by the company on account ofdispute:
|Name of the statute ||Nature of dues ||Amount (Rs.) ||Period to which the amount relates ||Forum where the dispute is pending |
|Chapter V of the Finance Act 1994 ||Service Tax ||875000/-* ||November 1996 - November 2001 ||Customs Excise & Service Tax Appelate |
| ||Service Tax ||6798000/- ||September 2014 to March 2015 ||Tribunal |
|Income Tax Act 1961 ||Income Tax ||1953900/- ||Asst year 2015-16 || |
Commissioner of Income Tax (Appeals)
| || ||15577380/- ||Asst year 2014-15 |
| || ||8808700/- ||Asst Year 2013-14 || |
| || ||1508440/- ||Asst Year 2012-13 || |
| || ||524938/- ||Asst year 2011-12 ||Income Tax Appellate Tribunal (Appeals) |
*Excludes Amount deposited under protest द 800000/-
viii) On the basis of verification of records and according to the information andexplanations given to us and based on the records made available to us the Company hasnot defaulted in repayment of any loans from Financial Institutions or from the Bank andhas not issued Debentures.
ix) On the basis of verification of records and according to the information andexplanations given to us and based on the records made available to us the company hasutilized the money raised by way of Term loan for the purpose for which they were raised.The Company did not raise any moneys by way of public issue/ follow-on offer includingdebt instruments.
x) Based upon the audit procedures performed and the information and explanations givento us we report that no fraud by the Company or any fraud on the company by its officersor employees has been noticed or reported during the year.
xi) According to the information and explanations given to us and based on theexaminations of the records of the company the managerial remuneration has been paid/provided in accordance with the requisite approvals mandated by the provisions of section197 read with Schedule V to the Companies Act 2013.
xii) The company is not a Nidhi Company. Accordingly the provisions of clause (xii) ofPara 3 of the order are not applicable to the company.
xiii) According to the information and explanations given to us all transactions withthe related parties are in compliance with Section 188 and 177 of Companies Act 2013 andthe details of such transactions have been disclosed in the Financial Statements asrequired by the accounting standards and Companies Act 2013.
xiv) On the basis of verification of records and according to the information andexplanations given to us and based on the records made available to us the company hasnot made any preferential allotment / private placement of shares or fully or partlyconvertible debentures during the year under review.
xv) In our opinion and according to the information and explanations given to us thecompany has not entered into non-cash transactions with directors or persons connectedwith him.
xvi) The company is not required to be registered under section 45 IA of the ReserveBank of lndia Act 1934.
For Uttam Abuwala & Co.
Firm No. 111184W
CA. Prerak Agarwal
Membership No. 158844
Date: May 21 2019
Annexure B to the Independent Auditor's Report of even date on the Financial Statementsof Mukta Arts Limited
Report on the Internal Financial Controls under Clause (i) of sub-section 3 of Section143 of the Companies Act 2013 ("the Companies Act")
We have audited the internal financial controls over financial reporting of Mukta ArtsLimited ("the Company") for the year ended on March 31 2019 in conjunction withour audit of the standalone Ind AS financial statements of the Company for the year endedon that date.
Management's Responsibility for Internal Financial Controls
The Company's Management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls over Financial Reportingissued by the Institute of Chartered Accountants of India. These responsibilities includethe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to the Company's policies the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the Companies Act.
Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting(the "Guidance Note") and the Standards on Auditing issued by the Institute ofChartered Accountants of India and specified under sub-section 10 of Section 143 of theCompanies Act to the extent applicable to an audit of internal financial controls bothapplicable to an audit of Internal Financial Controls and both issued by the Institute ofChartered Accountants of India. Those Standards and the Guidance Note require that wecomply with ethical requirements and plan and perform the audit to obtain reasonableassurance about whether adequate internal financial controls over financial reporting wasestablished and maintained and if such controls operated effectively in all materialrespects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgment including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls systemover financial reporting.
Meaning of Internal Financial Controls over Financial Reporting
A Company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A Company's internal financial control over financialreporting includes those policies and procedures that (1) pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the Company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures of the Company are being made only in accordance with authorizations ofmanagement and directors of the Company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorized acquisition use or disposition of theCompany's assets that could have a material effect on the financial statements.
Inherent Limitations of Internal Financial Controls over Financial Reporting
Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.
In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at March 312019 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.
For Uttam Abuwala & Co.
Chartered Accountants Firm No. 111184W
CA. Prerak Agarwal
Membership No. 158844
Date: May 212019 Place: Mumbai