We have audited the accompanying standalone financial statements of 7
SEAS ENTERTAINMENT LIMITED ('the Company'), which comprise the balance
sheet as at 31 March 2015, the statement of profit and loss and the
cash flow statement for the year then ended, and a summary of
significant accounting policies and other explanatory information.
Management's Responsibility for the Financial Statements
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 and presentation 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, including the
Accounting Standards specified under Section 133 of the Act, read with
Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility
also includes maintenance of adequate accounting records in accordance
with the provisions of the Act for safeguarding the assets of the
Company and for 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
Our responsibility is to express an opinion on these standalone
financial statements based on our audit.
We have taken into account the provisions of the Act, the accounting
and auditing standards and matters which are required to be included in
the audit report under the provisions of the Act and the Rules made
there under.
We conducted our audit in accordance with the Standards on Auditing
specified under Section 143(10) of the Act. Those Standards require that
we comply with ethical requirements and plan and perform the audit to
obtain reasonable assurance about whether the financial statements are
free from material misstatement. An audit involves performing procedures
to obtain audit evidence about the amounts and the disclosures in the
financial statements. The procedures selected depend on the auditor's
judgment, including the assessment of the risks of material misstatement
of the financial statements, whether due to fraud or error. In making
those risk assessments, the auditor considers internal financial control
relevant to the Company's preparation of the financial statements that
give a true and fair view in order to design audit procedures that are
appropriate in the circumstances, 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 of such 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 Board of Directors, as
well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our audit opinion on the standalone
financial statements
Opinion
In our opinion and to the best of our information and according to the
explanations given to us, the aforesaid standalone financial statements
give the information required by the Act in the manner so required and
give a true and fair view in conformity with the accounting principles
generally accepted in India, of the state of affairs of the Company as
at 31 March 2015 and its losses and its cash flows for the year ended
on that date.
Emphasis of Matters
We draw attention to the following matters to the financial statements:
a) The financial statements indicates that the Company has accumulated
losses of Rs. 1783.61 Lakhs and its net worth has been substantially
eroded on account of the net loss of Rs.1745.13 Lakhs during the year
ended. Cash Credit and Term Loan accounts of the company have become
Non Performing Assets in bank which describes the position of the
company in the fundamental accounting assumption "Going concern".
However, the financial statements of the Company has been prepared on a
going concern.
b) Pursuant to the Schedule II of Companies Act, 2013 effective from
1st April, 2014, the company has charged depreciation on the remaining
useful life of the fixed assets w.e.f April 1, 2014. An amount of Rs.
337.76 Lakhs representing the carrying amount of the assets with
revised useful life as nil has been adjusted against the opening
balance of retained earnings.
Our opinion is not modified in respect of these matters.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor's Report) Order, 2015 ('the
Order') issued by the Central Government of India in terms of
sub-section (11) of section 143 of the Act, we give in the Annexure a
statement on the matters specified in the paragraph 3 and 4 of the
Order, to the extent applicable.
2. As required by Section 143 (3) of the Act, we report that:
a) We have sought and obtained all the information and explanations
which to the best of our knowledge and belief were necessary for the
purposes of our audit.
b) in our opinion proper books of account as required by law have been
kept by the Company so far as it appears from our examination of those
books;
c) the balance sheet, the statement of profit and loss and the cash
flow statement dealt with by this Report are in agreement with the
books of account;
d) in our opinion, the aforesaid standalone financial statements comply
with the Accounting Standards specified under Section 133 of the Act,
read with Rule 7 of the Companies (Accounts) Rules, 2014;
e) on the basis of the written representations received from the
directors as on 31 March 2015 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 Section 164 (2) of the
Act; and
f) With respect to the other matters to be included in the Auditor's
Report in accordance with Rule 11 of the Companies (Audit and Auditors)
Rules, 2014, in our opinion and to the best of our information and
according to the explanations given to us:
i. The Company does not have any pending litigations.
ii. The Company did not have any long-term contracts including
derivative contracts for which there were any material foreseeable
losses.
iii. There were no amounts which were required to be transferred to the
Investor Education and Protection Fund by the Company
Annexure to the Auditors' Report
The Annexure referred to in our Independent Auditors' Report to the
members of the Company on the financial statements for the Year ended
31 March 2015, we report that:
i. a. The Company has maintained proper records showing full
particulars, including quantitative details and situation of fixed
assets.
b. The Company has a regular programme of physical verification of its
fixed assets by which fixed assets are verified in a phased manner. In
accordance with this programme, certain fixed assets were verified
during the year and no material discrepancies were noticed on such
verification. In our opinion, this periodicity of physical verification
is reasonable having regard to the size of the Company and the nature
of its assets.
ii. a. According to the information and explanations given to us, the
management has conducted physical verification of inventories at
reasonable intervals during the year. In our opinion, the frequency of
verification is reasonable.
b. In our opinion and according to the information and explanations
given to us, the procedures followed by the management for physical
verification of inventories are reasonable and adequate in relation to
the size of the Company and the nature of its business.
c. In our opinion and according to the information and explanations
given to us, the Company is maintaining proper records of inventories.
As per the information and explanation given to us, no material
discrepancies were notice d in physical verification.
iii. The Company has not granted any loans to bodies corporate covered
in the register maintained under section 189 of the Companies Act, 2013
('the Act').
iv. In our opinion and according to the information and explanations
given to us, the Company has an adequate internal control system
commensurate with its size 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, we have not observed any
continuing failure to correct major weaknesses in such internal control
system.
v. The Company has not accepted any deposits from the public.
vi. The Central Government has not prescribed the maintenance of cost
records under section 148(1) of the Act, for any of the services
rendered by the Company.
vii. a. According to the information and explanations given to us and on
the basis of our examination of the records of the Company, amounts
deducted / accrued in the books of account in respect of undisputed
statutory dues including provident fund, employees' state insurance,
duty of excise income tax, sales tax, wealth tax, service tax, duty of
customs, value added tax, cess and other material statutory dues have
been regularly deposited during the year by the Company with the
appropriate authorities.
b. According to the information and explanations given to us, no
undisputed amounts payable in respect of provident fund, sales tax,
wealth tax, service tax, duty of customs, value added tax, cess and
other material statutory dues except income tax were in arrears as at
31 March 2015 for a period of more than six months from the date they
became payable.
c. According to the information and explanations given to us, there
are no material dues of wealth tax, duty of customs and cess which have
not been deposited with the appropriate authorities on account of any
dispute.
d. According to the information and explanations given to us the
company does not have any liability 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 there
under.
viii. The Company having accumulated losses of Rs.17,83,61,296/- at the
end of the financial year and has incurred cash losses of Rs.
1,60,79,453/- in the financial year .
ix. The Company has not paid outstanding dues and interest thereon to
banks at year ended.
x. In our opinion and according to the information and the
explanations given to us, the Company has not given any guarantee for
loans taken by others from banks or financial institutions.
xi. The company has not raised term loans during the financial year.
xii. According to the information and explanations given to us, no
material fraud on or by the Company has been noticed or reported during
the course of our audit.
For M M REDDY & Co.,
Chartered Accountants
Firm Registration No.010371S
(M Madhusudhana Reddy)
Place: Hyderabad Partner
Date : 30.05.2015 Membership No.213077
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