Sterling Holiday Resorts India Ltd Auditor Reports

FOR THE YEAR ENDED 31^st MARCH 2014

TO THE MEMBERS OF STERLING HOLIDAY RESORTS (INDIA) LIMITED

REPORT ON FINANCIAL STATEMENTS

We have audited the accompanying financial statements of STERLING HOLIDAY RESORTS (INDIA) LIMITED which comprise of the Balance Sheet as at March 31, 2014, Statement of Profit & Loss and Cash Flow Statement for the year then ended and a summary of significant accounting policies and other explanatory information.

MANAGEMENTS RESPONSIBILITY FOR THE FINANCIAL STATEMENTS

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

AUDITORS RESPONSIBILITY

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

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

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

OPINION

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

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

b) in the case of the Statement of Profit and Loss, of the Loss for the year ended on that date; and

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

REPORT ON OTHER LEGAL AND REGULATORY

REQUIREMENTS

1. As required by the Companies (Auditors 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 specified in the paragraphs 4 and 5 of the said Order.

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

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

(d) in our opinion, the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement comply with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956.

(e) On the basis of written representations received from the directors as on March 31, 2014 and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2014 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956.

For V.Sankar Aiyar & Co	For R.Subramanian & Co.
Chartered Accountants	Chartered Accountants
ICAI regd. No. 109208W	ICAI regd. No. 004137S
S. Venkataraman	A. S. Ramanathan
Partner	Partner
Membership No.: 023116	Membership No.: 011072
Place: Chennai
Date: April 26, 2014

ANNEXURE REFERRED TO IN PARAGRAPH 1 OF OUR REPORT OF EVEN DATE

1. (a) The Company has maintained proper records showing full particulars including quantitative details and situation of Fixed Assets.

(b) Fixed Assets are physically verified by the management at reasonable intervals. In our opinion, the frequency of verification is reasonable having regard to the size of the Company and nature of its assets. No material discrepancies as compared to book records were noticed on such verification.

(c) Since the disposal of fixed assets during the year is not substantial, the preparation of financial statements on a going concern basis is not affected on this account.

2. (a) The inventories have been physically verified by the management during the year. In our opinion, the frequency of verification was reasonable.

(b) In our opinion and according to the information and explanations given to us, the procedures for physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and nature of its business.

(c) In our opinion, the Company has maintained proper records of inventory. The discrepancies between the physical stocks and the book stocks were not material and have been properly dealt with in the books of account.

3. (a) The Company has not granted any loans secured or unsecured to companies, firms or other parties listed in the register maintained under Section 301 of the Companies Act, 1956.

(b) The Company has taken unsecured loan of INR 2 crores from one company listed in the register maintained under Section 301 of the Companies Act 1956.

(c) The terms and conditions of such loan are not prima facie prejudicial to the interest of the company. The payment of interest has been regular.

(d) The maximum amount outstanding at any time during the year was INR 2 crores. The loan taken has been fully repaid during the year.

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

5. (a) Based on the audit procedures applied by us, to the best of our knowledge and according to the information and explanations given to us, the particulars of contracts or arrangements referred to in Section 301 of the Companies Act, 1956 have been entered in the register maintained under that section.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts and arrangements entered in the register maintained under Section 301 of the Companies Act, 1956 and exceeding the value of INR 5 lakhs, during the year, have been made at prices which are reasonable having regard to the prevailing market price at the relevant time.

6. In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from the public. We are informed by the Management that no order has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal under Sections 58A and 58AA of the Companies Act, 1956.

7. The Company has an internal audit system commensurate with the size of the Company and the nature of its business.

8. According to the information and explanations given to us and as clarified under General Circular No. 67/2011 dated 30th Nov. 2011, the Companies (Cost Accounting Records) Rules, 2011 are not applicable to the Company since the company is in hospitality sector. Hence reporting under this para does not arise.

9. a. According to the information and explanations given to us, the Company is generally regular in depositing the undisputed statutory dues in respect of Income Tax, Luxury Tax, Wealth Tax, Service Tax, VAT, Provident Fund, Employees State Insurance and Customs Duty. There is no liability to remit Excise duty and Investor Education and Protection Fund. According to the information and explanations given to us, except for the undisputed statutory dues representing Fringe Benefit Tax of INR 73.12 lakhs, no other Statutory Dues were outstanding at the year end for a period of more than six months from the date they became payable.

b. According to the information and explanations given to us and on the basis of examination of records of the Company the dues of Luxury Tax / Service Tax as at March 31, 2014 which have not been deposited on account of any dispute are as follows:

(INR In Lakhs)
Name of Statute /		Forum where dispute is pending
Nature of Dues	Period	High Court	Appellate Tribunal	Appellate Authority @	Grand Total
Service Tax Rules (Service tax including penalty & interest wherever applicable)	16.06.05 to 30.09.06	527.03	-	-	527.03
Luxury Tax (Kerala)	2006-07, 2007-08 & 2009-10	-	12.69	30.68	43.37
Luxury Tax (Tamilnadu)	1998-99, 2000-01 & 2002-03	230.98	-	454.63	685.61

@ Appellate Authority includes Commissioner Appeals, Assistant Commissioner Appeals, Deputy Commissioner Appeals and Joint Commissioner Appeals

10. The accumulated loss at the end of the financial year does not exceed 50% of net worth inclusive of "Deferred income" (other than "Entitlement Fee" which is refundable in nature). The company has incurred cash loss during the Current financial year and in the preceding financial year.

11. On the basis of verification of records and according to the information and explanations given to us, the Company has not defaulted in the repayment of dues to Financial Institutions / Banks.

12. According to the information and explanations given to us, the Company has not granted any loans and advances on the basis of security by way of pledge of Shares, Debentures and other securities.

13. The Company is not a chit fund or a nidhi or mutual fund society. Therefore, the provisions of sub-para (xiii) of para 4 of the order are not applicable to the Company.

14. In our opinion, the Company is not dealing or trading in shares, securities, debentures and other investments other than investing in mutual fund units. Proper records have been maintained in respect of these mutual fund investments and timely entries have been made therein. The investments have been held by the Company in its own name except to the extent of exemption granted under Section 49 of the Act.

15. According to the information and explanations given to us, the Company has not given any guarantee for any loan taken by others from any Bank or Financial Institution.

16. In our opinion, the term loans availed has been utilised for the purpose for which they were raised.

17. According to the information and explanations given to us, based on an overall examination of the balance sheet of the Company and related information made available, we report that funds raised on short-term basis have not been used for long-term investments.

18. According to the information and explanations given to us, the preferential allotment of shares made during the year are not made to parties covered under Register maintained under Section 301 of the Act.

19. During the year, the Company has not issued any secured debentures and accordingly no securities were required to be created.

20. During the year, the company has not raised any money by public issue. Therefore, the requirement of disclosure by the Management on the end use of money raised by public issue and verification of the same is not applicable.

21. Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and as per the information and explanations given to us by the Management, no material fraud on or by the Company has been noticed or reported during the course of our audit.

For V.Sankar Aiyar & Co	For R.Subramanian & Co.
Chartered Accountants	Chartered Accountants
ICAI regd. No. 109208W	ICAI regd. No. 004137S
S. Venkataraman	A. S. Ramanathan
Partner	Partner
Membership No.: 023116	Membership No.: 011072
Place: Chennai
Date: April 26, 2014