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Meaning and definition of Audit Report

Audit report, as recorded in the annual report, examines to check
the compliance of a companys financial statements with GAAP.
The audit report is, sometimes, also referred as the clean opinion.
An audit report includes three paragraphs the first stating the
responsibilities of the auditor and directors; the second stating the
use of GAAP; and finally the third paragraph stating the auditors
opinion.
An audit report is, therefore, an official evaluation of an
organizations financial status, in combination with the opinion of
the auditor and collected data on the companys financial
transactions and situation. This is a general process for companies
it use while evaluating their records and providing financial info to
present as well as future investors.
Constituents of Audit Report
It is important to know about what is contained in an audit report.
Besides, it is also important for the auditor to examine the financial
statements of a company prior to issuing the audit report. These
financial statements are required to be presented fairly in terms of
cash flows, results of operations, and financial status in compliance
with GAAP.


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In addition to the letterhead of the auditing firm, the key elements
included in an audit report are as follows:
a title indicative of the word independent, that the financial
statement, which is the subject of the report, was audited, a
statement stating that the financial statements are a responsibility
of the management and the auditor is just giving his opinion, the
audit was created in line with the generally accepted auditing
standards, a statement that the auditor planned and accomplished
the audit
In addition to the aforesaid constituents, an audit report must
feature a declaration that the auditor believes that there is a
reasonable basis for the opinion. Also, it should state an opinion
that the financial statements are presented fairly in all material
aspects. Moreover, in the closing part, the report should essentially
contain the signature of the auditors firm, either manually or
printed form, and the date on which the audit report was created.






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Accounting Principles of Hotel Industry
The lodging industry was reportedly one of the first industries to
develop definitive standards to provide specific guidance to
accountants and operators. The standards evolved because
uniformity of layout and presentation were, and are, still not
stressed under U.S.
Generally Accepted Accounting Principles (GAAP). Those
standards were and are contained in the Uniform System of
Accounts for the Lodging Industry (USALI), which is published by
the American Hotel and Motel Association.
While the accounting profession may not have seen fit to develop
GAAP standards specifically applicable to the lodging industry,
the USALI has been widely adopted within the industry. Although
there is no requirement that a lodging operator use the USALI, the
degree of compliance with this time-tested, turnkey system is
substantial. The primary reason for widespread adoption of the
USALI has been comparability. Lodging operators tend to use
financial statement data generated by competitors as a benchmark
against which to measure their own operations. If comparability is
lacking, then there are no benchmarks.
Additionally, while the system was developed for use within the
United States, many hotel operators around the world have adopted
the USALI.

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Financial statements prepared for external users, are based on
GAAP. In addition to other items commonly found in most
financial statements, lodging industry financials are likely to report
on such items as China, Glassware, Silver, Linen, and Uniforms
(CGSLU), and the House Bank.
The USALI is a highly departmentalized system of accounting, and
includes Departmental Statements of Income. There are two main
department classifications in a hotel: operating and overhead. The
operating (revenue-producing) departments include rooms, food
and beverage, telecommunications, and similar departments. The
overhead departments include administrative and general, data
processing, human resources, transportation, marketing, guest
entertainment, energy costs, and property operation and
maintenance.
The USALI itself provides for up to 30 departmental statements,
which include, in addition to those already mentioned:
telecommunications, garage and parking, golf shop, golf pro shop,
guest laundry, health center, swimming pool, tennis, tennis pro
shop, other operated departments, rentals and other income, human
resources, information services, security, franchise fees,
management fees, rent, property taxes and insurance, interest
expense, depreciation and amortization, income taxes, house

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laundry, salaries and wages and payroll taxes and employee
benefits.
The principal differences between a hotels transactions and
internal control and those of other businesses are found in the
revenue cycle. Room revenue is the most important source of
income to a hotel. The front desk is the center of the hotels
operation and the place where the guest ledger, which summarizes
and accumulates all charges to guests using the hotel facilities, is
maintained. Some of the functions performed by front desk
personnel are registering guests, recording room revenue,
recording food and beverage and other guest charges, checking out
guests, and settling guests bills. There are numerous articles and
books that further explain the hotel business. For more
information, refer to Montgomerys Auditing by OReilly,Vincent
M., et al., Twelfth Edition. New York: Wiley, 1998.
Montgomerys Auditing recommends the following substantive
tests for room revenue for financial statement purposes:
Review reconciliations of rooms occupied per the front desk to the
housekeepers daily inspection report or the exception report
Compare the room rate charged on the guest folio with that on the
guest registration and room rack for a selected number of folios
Trace room charges to guest folios and compare with established
rates

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Trace cash receipts to the cashiers report and the cash receipts
journal
Montgomerys Auditing recommends the following for revenue
deductions (allowances):
Determine that adjustments (credits) made to guests accounts in
connection with overcharges, disputed charges or rate changes
were properly approved
Review supporting documentation for propriety
Trace credit postings to individual guest folios
From a tax audit standpoint, the available descriptions of hotel
operations would seem to suggest considerable opportunity for
manipulation of both revenue and expenses. Room rates vary
considerably depending on a variety of factors - e.g., group rates
versus individual rates, etc. The occupancy rate would appear to
be another area of potential concern.
While these concerns may not be overly great in the case of
publicly traded companies who have to undergo an audit in the
post Sarbanes-Oxley atmosphere, there may be of considerable
concern with non-publicly traded companies.
Additionally, one of the newest areas that is gaining significance in
the industry is the barter transaction. A barter transaction occurs
when a property agrees to provide accommodation and/or other
services in exchange for external services, for example advertising.

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While USALI recognizes barter transactions as executory contracts
that do not need to be recorded in the financial statements until
service is provided or received, it suggests that to provide more
complete information for decision-making, the internal records
reflect the transaction by recording an asset and a liability at the
time the barter transaction is negotiated. The value assigned to this
transaction should be a conservative average of the market rate for
similar accommodations or services at the property, per the
USALI.

When services are provided by the property, revenues are recorded
and charged to the barter liability. On the other side, the expense is
offset against the barter asset account when the service is received.
For external reporting purposes, USAL suggests that the asset and
liability accounts be netted and reflected as a current asset or
liability. This will result in revenues and expenses associated with
the barter transaction being reported in different periods.
Ratio analysis, in general, comprises the same types of ratios used
in almost any industry. However, there are a few industry
specialized ratios peculiar to hotels and/or restaurants of which one
should be aware.
Average Room Rate = Rooms Revenue divided by Paid Rooms
Occupied.

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Average Food Check = Total Food Revenue divided by Number of
Covers. Covers refer to guests served in the food operation during
the period.
A key recent addition is RevPar, which stands for Revenue per
Available Room. It is calculated as either: Rooms Revenue
divided by Rooms Available for Sale, or as Rooms Revenue
divided by Rooms Available. The USALI expresses a preference
for the second computation because [t]he purpose of the ratio is to
determine whether the inventory of rooms is being managed
optimally. Therefore, the denominator should also include rooms
out of order and temporary house use rooms.
The USALI also discusses a sample chart of accounts, which uses
a twelve-digit numbering system, consisting of four clusters of
three digits each. The first three digits are the property
number. The second three digits are the revenue departments or
cost centers. The third three digits are the major accounts on the
balance sheet or income statement and the final three digits are
sub-accounts useful for analysis and control. Obviously, this may
vary considerably from taxpayer to taxpayer.
The descriptions contained in this guide only scratch the surface of
standard practices within the hotel industry which are either unique
to the hotel industry, or are uncommon in most other industries. A
partial listing of available publications is provided elsewhere
within this guide should additional information be required.

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Industry Operating Procedures
Some hotels are heavily involved in franchising activities.
Franchisees will pay a fixed per-cent of receipts to a franchiser for
advertising and royalties. Some hotel franchisers will lease the
structure to the franchisee for a monthly rate and/or a percentage of
sales.
The internal controls of these chain hotels are extensive;
conversely, individual independent hotels do not always enjoy the
same degree of controls over operations.
Ownership takes diverse forms, ranging from publicly-held
companies to individuals. Included within this span are churches
and other not-for-profit organizations, municipalities, partnerships
and REITs. Of the various ownership arrangements, REITs seem
to provide some of the more interesting, and perhaps more
involved sets of rules.
Many firms desire to convert to the REIT status because the
taxable income that is distributed to the shareholders is not
taxed. Therefore, REITs avoid double taxation.
Effective January 1, 2001, REITs were allowed to wholly own
taxable subsidiaries. These taxable subsidiaries were, in turn,
allowed to lease hotels from the related REIT and/or its affiliates,
provided certain conditions were met, and provided the subsidiary
did not manage or operate any hotels or health care facilities.

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These comments are some highlights of the REIT status. A full
analysis the law applying to REITs is clearly beyond the scope of
this document.
Also beyond the scope of this document are numerous potential
employment tax issues, unrelated business income issues in the
case of non-profits, and any other areas which generally fall
outside the purview of LMSB. Nevertheless, it should be kept in
mind that the hotel industry entails a great variety of business
arrangements which include not merely hotel owners, but also
hotel operators, designers, builders and so on.
Government Regulatory Requirements
A. Federal Requirements
The Federal Trade Commission (FTC) publishes the rulebook for
promotional allowance marketing, titled Guides for Advertising
Allowances and Other Merchandising Payments and Services,these
guides are usually referred to as The Guides, the FTC Guides
or the Fred Meyer Guides.
Text of the Americans with Disabilities Act, Public Law 336 of the
101st Congress, enacted July 26, 1990. The ADA prohibits
discrimination and ensures equal opportunity for persons with
disabilities in employment, State and local government services,
public accommodations, commercial facilities, and transportation.

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It also mandates the establishment of TDD/telephone relay
services.

B. State Requirements
Each state has their own specific requirements and regulations
regarding the manufacture, sale, resale, and consumption of
alcoholic beverages.
C. Local Requirements
Many localities have controls over the purchase, sale, resale and
consumption of alcoholic beverages.










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About the company

Oberoi Realty was incorporated as Kingston
Properties Private Limited on May 8, 1998 under the Companies
Act, 1956 in Mumbai. The name of the company was changed to
Oberoi Realty Private Limited on October 23, 2009. The company
was converted into a public limited company on December 14,
2009 and consequently, the name was changed to Oberoi Realty
Limited.
The company is a real estate development company operating in
Mumbai, focused on premium developments. The company has
established a strong brand and a successful track record in the real
estate industry by developing innovative projects through its
emphasis on contemporary architecture, strong project execution
and quality construction. While its focus is on residential projects,
it has a diversified portfolio of projects covering key segments of

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the real estate market, which target the upper end of the respective
income or market segment. It develops residential, office space,
retail, hospitality and social infrastructure projects in mixed-use
and single-segment developments.
The company uses a knowledge-based approach from internal and
external sources in making land acquisition, development and
lease/sales decisions. It also utilizes an outsourcing model that
emphasizes quality design and construction. It works with several
reputed international architects and domestic architects and
contractors. The company believes that this outsourcing model
provides us with the scalability required to undertake large
developments.
Oberoi Realty currently follows a sale model for its residential
projects and a lease model for a portion of its office space and
retail projects as it believes this provides the company with stable
cash flows. In hospitality projects, it currently follows an operating
agreement model, whereby the hotel is owned by the company and
operated by a hotel chain.
The company currently has eight ongoing and 19 planned projects,
which it expects to provide a total saleable area of approximately
21,316,528 square feet.



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Subsidiaries of the company
Expressions Realty
Kingston Hospitality and Developers
Kingston Property Services
Oberoi Constructions
Oberoi Mall
Triumph Realty
Perspective Realty
Group companies
Beachwood Properties
Envision Realty
I-Ven Realty
New Dimension Consultants
Oberoi Consultancy Services
Oberoi Estates
R S Estate Developers






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Milestones
o February 20, 2002: Acquisition of land at Goregaon,
Mumbai from Ciba Specialty Chemicals (India).
Acquisition of land at Goregaon, Mumbai from Novartis
India Limited at Goregaon, Mumbai
o April 8, 2003: OMPL became a 100% subsidiary of the
company
o February 10, 2005: Acquisition of development rights at
Andheri (West), Mumbai from Excel Industries and Shroff
Family Charitable Trust for development of property
o March 31, 2005: Master Asset Purchase Agreement entered
into between Tulip Hospitality Services, Tulip Hotels
Private, Ajit Kerkar and SRPL for acquisition of Hotel
Tulip Star at Juhu, Mumbai from Tulip Hospitality Services
o September 26, 2005: Acquisition of land at Mulund,
Mumbai from GlaxoSmithKline Pharmaceuticals
o October 18, 2005: Acquisition of land at Andheri (East),
Mumbai from Madhu Fantasy Land and Avinash Bhosale
o December 21, 2006: OCPL became 100% subsidiary of the
company
o January 14, 2007: Investment in the company by SSIII by a
fresh issue of 279,777 equity shares and 783 preference
shares for Rs 5,967 million and Rs 783 million,
respectively aggregating an investment of Rs 6,750 million

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o January 2, 2008: Hotel operating services agreement
entered into between the company and Starwood Asia
Pacific Hotels & Resort Pte for operating The Westin
Mumbai - Garden City hotel at Goregaon (East), Mumbai
o September 23, 2009: Joint Venture agreement entered into
between the company, Skylark Build and Shree Vrunda
Enterprises for the development of the free-sale component
under slum rehabilitation scheme at Annie Besant Road,
Worli, Mumbai









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The Oberoi Dharma
Fundamental Code of Conduct
We, as members of OBEROI organization are committed to
display through our behavior and actions the following
CONDUCT which applies to all aspects of our Business :
CONDUCT which is of the highest ethical standards
intellectual, financial and moral and reflects the highest
levels of courtesy and consideration to others.
CONDUCT which builds and maintains team work, with
mutual trust as the basis of all working relationship.
CONDUCT which puts the customer first, the Company
second and the self last.
CONDUCT which exemplifies care for the customer
through anticipation of need, attention to detail, excellence,
aesthetics and style and respect for privacy along with
warmth and concern.
CONDUCT which demonstrates two-way communication
accepting constructive debate and dissent whilst acting
fearlessly with conviction.
CONDUCT which demonstrates that people are our key
asset, through respect for every employee, and leading from
the front regarding performance achievements as well as
individual development.

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CONDUCT which at all times safeguards the safety,
security, health and environment of customers, employees
and the assets of the Company.
CONDUCT which eschews the short-term quick-fix for the
long-term establishment of healthy precedent.










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MANAGEMENT DISCUSSION AND
ANALYSIS
Industry Structure, Developments and Outlook the global
economic growth rate reduced to 3.5% in 2012 compared with 4%
in 2011. The situation in India mirrored this global trend. Indias
growth rate fell to 5.5% driven by lower industrial production in
core sectors, slow internal investment, reduced urban consumption
and high inflation. The growth in foreign tourist arrivals to India
also reduced from that of the previous two years. the World travel
and tourism Council forecasts a modest 2% to 4% increase in
international tourist volumes in 2013. Furthermore, with the
increased supply of hotel rooms, prospects for the year 2013 are
subdued for the Indian hospitality sector. The long term outlook
for the Indian hospitality industry continues to be positive.
According to the World travel and tourism Council, demand for
travel and tourism in India will grow annually by 8.2% during the
period 2010 to 2019. Indias travel and tourism sector generates
more jobs than the mining industry and communication services.
Indias middle class of 350-500 million people with a growing
disposable income to spend on travel is positive for the hotel
industry. this confidence is reflected in substantial planned
investments in new hotel projects over the next three years. to keep
pace with this growth in travel and tourism, more attention needs
to be given to infrastructure development as well as safety and

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security of tourists, both domestic and international. Visa on
arrival from key markets of Europe and North America, better
roads and connectivity and a cleaner environment are areas that
deserve attention from all stakeholders. While the Cabinet
approval of Foreign Direct Investment in aviation is a step in the
right direction, more needs to be done for a sector that contributed
6.4% towards Indias Gross Domestic Product in 2012.
Opportunities, Threats, Risks & concerns
Growth in hotel supply in recent times has outstripped
demand in a number of Indian cities. Escalating land prices,
increasing energy costs, depleting water levels and a scarcity of
trained manpower are challenges that will need to be addressed and
overcome. With increasing affluence in India, the composition of
the market is undergoing a change. Domestic travel and tourism is
experiencing rapid growth as is domestic corporate travel. These
segments will require due attention whilst we continue to focus on
traditional markets. Source markets are changing with demand
from the SAARC nations, China, Japan and the Middle east
growing steadily. The tourism Ministry will need to orient itself to
this development.




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Internal control Systems and Risk
Management
The Companys Internal Audit Department (IAD)
continues to conduct regular audits of Hotels, oberoi Airport
services, oberoi Flight services and the Printing Press to ensure
that control systems and procedures are followed, under the overall
supervision of the Audit Committee of the Board of Directors. the
internal audit plan is approved by the Audit Committee at the
beginning of the financial year to enable the IAD to conduct its
audit smoothly. The Companys Risk Management team keeps the
Board informed periodically of the various risks associated with
the business of the Company and the measures taken to mitigate
these risks.
Financial and Operating Performance
During the financial year 2012-2013, the Companys total
Revenue was 11,770.07 million compared to 11,622.11 million in
the previous year. earnings Before Interest, Depreciation, taxation,
exceptional items and Amortization (EBIDTA) was 2,443.53
million as compared to 2,913.70 million in the previous
year.Profit Before tax was 718.30 million compared to 1,549.98
million in the previous year. The Profit After tax was ` 509.64
million as compared to ` 1,224.19 million in the previous year.

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The Company continues to be largely engaged in hospitality and
related services.

Business consolidation and expansion
The flight kitchen at Indira Gandhi International Airport,
new Delhi opened in July 2012. This state of the art kitchen will
produce 15,000 meals per day to cater to domestic and
international airlines. the facility has been well received by the
airline industry. the unit has reported a thirty percent increase in
overall business.the 252 key the oberoi, Dubai is scheduled to open
in June 2013. The oberoi, Dubai will be managed by a wholly
owned subsidiary.trident Hyderabad consisting of 326 keys is also
scheduled to open in June 2013. This hotel will be managed by the
Company.
Planning approval for the Companys 55 acre beach front site at
Goa has been received; environmental clearance is awaited.
Planning in respect of the 250 key the oberoi and luxury branded
residences in Bangalore is presently in progress.
Planning for a 126 key the oberoi, Pune is in progress. the hotel
will be managed by the Company.

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The oberoi, Marrakech is under construction; this hotel will be
managed by a wholly owned overseas subsidiary. In addition to the
hotel, branded villas for sale are planned on an adjacent site.
A 160 key trident is currently under planning in navi Mumbai.
Construction is scheduled to commence shortly. the hotel will be
managed by the Company.
Planning for a 61 key the oberoi, Chandigarh has been completed.
Adjoining a 400 acre forest, the 20 acre hotel site will consist of
luxury villas and tents with private swimming pools surrounded by
extensive landscaped gardens. Construction is expected to begin
shortly. The hotel will be managed by the Company.

Corporate Social Responsibility
The Company is engaged in a number of community
development and social service
efforts. During the year under review the Company has supported
education for underprivileged children as the cornerstone of its
future corporate social Responsibility. The Company contributed
to the Commonwealth Human Rights Initiative, an organization
working for the realization of human rights in Commonwealth
countries, to save our tigers Campaign of the Wildlife

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Conservation trust, and to Purbachal udayan sangha for books and
medicines to needy women and children.
The oberoi, New Delhi supports the Blind school through various
activities like voice donation by employees to create audio
textbooks. the trident, Bandra Kurla supports st. Catherines of
sienna orphanage through voluntary contribution by the
employees. the trident, nariman Point and the oberoi, Mumbai host
fund raising events besides partnering the terry Fox Run and the
Mumbai Marathon, the proceeds of which go to charity. The
oberoi, Bangalore organizes lunch and entertainment for children
and senior citizens of the Cheshire Home trust on Christmas and
Independence Day. The oberoi, Hotel Award Awarded
By21udaivilas provides professional training to underprivileged
people of the locality in tailoring, cooking, cleaning and gardening.
Contributions of linen, uniforms and food are made to NGOS by
most hotels. on environment conservation; all oberoi and trident
hotels have undertaken water harvesting, water re-cycling and
energy saving initiatives.
The oberoi, Vanyavilas is involved in the conservation of wildlife
at the tiger reserve and has instituted the oberoi scholarship Award,
forest guard insurance and waterhole filling to enrich the life of
forest guards and their families and to protect the environment.
The oberoi, Bangalore works with an nGo to clean sections of the
Mahatma Gandhi Road. Wildflower Hall supports a primary health
centre at Kufri by donating medical equipment. A number of the

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Companys hotels are involved in planting trees to enrich the
environment in their proximity.

Development in Human Resources and
Industrial Relations
Industrial relations remained stable throughout the year.the
Companys people management systems and processes are
designed to enhance employee engagement, organizational
capability and superior guests services.The Companys hotels are
known for their impeccable service, attributable to the quality of its
people. the Human Resource philosophy focuses on attracting and
retaining quality talent. the Company believes that its real asset
and strength lies in the quality of its manpower.
As on 31st March, 2013 the number of people employed by the
group was 9,502.





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Audit Report on Oberoi Ltd.
INDEPENDENT AUDITORS REPORT ON
STANDALONE FINANCIAL STATEMENTS To
The Members of Oberoi Realty Limited

Report on the Financial Statements

We have audited the accompanying financial statements of
Oberoi Realty Limited (the Company), which comprise the
Balance Sheet as at March 31, 2013, and the Statement of Profit
and 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

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Act). This 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 from 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. An audit also
includes evaluating the appropriateness of accounting policies used

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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: in the case of the Balance
Sheet, of the state of affairs of the Company as at March 31, 2013;
in the case of the Statement of Profit and Loss, of the profit for the
year ended on that date; and in the case of the Cash Flow
Statement, of the cash flows for the year ended on that date.





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Report on Other Legal and Regulatory Requirements
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 paragraphs 4 and
5 of the Order. As required by section 227(3) of the Act, we report
that:
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; 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; 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; in our opinion,
the Balance Sheet, Statement of Profit and Loss, and Cash Flow
Statement comply with the Accounting Standards referred to in
subsection (3C) of section 211 of the Companies Act, 1956; on the
basis of written representations received from the directors as on
March 31, 2013, and taken on record by the Board of Directors,
none of the directors is disqualified as on March 31, 2013, from
being appointed as a director in terms of clause (g) of sub-section
(1) of section 274 of the Companies Act, 1956.
For P. RAJ & CO. Chartered Accountants

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Explanation REFERRED TO IN THE AUDITORS
REPORT

The Company is maintaining proper records showing full
particulars, including quantitative details and situation of fixed
assets.

The fixed assets have been physically verified by the management
as per a phased programme of verification. In our opinion, the
frequency of verification is reasonable having regard to the size of
the Company and the nature of its assets. The discrepancies
reported on verification were not material and have been properly
dealt with in the books of account.

In our opinion, the disposal of fixed assets during the year does not
affect the going concern assumption.

The management has conducted physical verification of inventory
at reasonable intervals.
In our opinion, 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.

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The Company is maintaining proper records of inventory. The
discrepancies noticed on verification between physical inventories
and the book records were not material in relation to the operation
of the Company and the same have been properly dealt with in the
books of account.

The Company has granted interest free loans to six entities covered
in the register maintained under section 301 of the Companies Act,
1956. The maximum amount outstanding during the year was `
18,711.84 Lakh and the year-end balance of such loan amounted to
` 16,334.39 Lakh.

Other terms and conditions of such loans are prima facie not
prejudicial to the interest of the Company.

In our opinion and according to the information and explanations
given to us, the receipt of principal is regular. According to the
information and explanations given to us, the Company has not
taken any loans, secured or unsecured from any of the parties
covered in the register maintained under section 301 of the
Companies Act, 1956.

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In our opinion and according to the information and explanations
given to us, there are adequate internal control procedures
commensurate with the size of the Company and the nature of its
business, for the purchase of inventory, fixed assets and for the
sale of property. During the course of our audit, no major
weakness has been noticed in the internal controls. Based on the
audit procedures applied by us and according to the information
and explanations provided by the management, we are of the
opinion that the transactions that need to be entered into the
register maintained under section 301 of the Companies Act, 1956
have been so entered. Such transactions have been made at prices
which are reasonable having regard to the prevailing market prices
at the relevant time.

In our opinion and according to the information and explanations
given to us, the Company has not accepted any deposits from the
public within the meaning of Section 58A and 58AA of the
Companies Act, 1956 and the rules framed there under.

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


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We have broadly reviewed the books of account maintained by the
Company pursuant to the rules made by the Central Government
for the maintenance of cost records under section 209 (1)(d) of the
Companies Act, 1956 and are of the opinion that prima facie the
prescribed accounts and records have been made and maintained.
According to the information and explanations given to us
and on the basis of our examination of the books of account, the
Company has been generally regular in depositing undisputed
statutory dues of provident fund, income tax, service tax, wealth
tax, customduty, cess and other material statutory dues during the
year with the appropriate authorities. As on March 31, 2013, there
are no undisputed dues payable for a period of more than six
months from the date they became payable.
According to the information and explanations given to us,
there are no material dues of provident fund, wealth tax, custom
duty, cess and other material statutory dues which have not been
deposited with the appropriate authorities on account of any
dispute. However, according to information and explanations given
to us, the following dues of Income Tax, Service Tax and
Municipal tax have not been deposited by the Company on account
of disputes.



34
STANDALONE BALANCE SHEET

(` in Lakh)
AS AT MARCH 31, NOTE 2013 2012

EQUITY AND
LIABILITIES
Shareholders
funds
Share capital 2 32,823.33 32,823.33
Reserves and
surplus 3 2,17,814.77 1,91,682.93
2,50,638.10 2,24,506.26
Non-current
liabilities
Deferred tax
liabilities 4 1,299.76 654.83
Trade payables 5 652.28 93.39
Other long-term
liabilities 6 2,704.92 2,813.32
Long-term
provisions 7 108.87 81.81
4,765.83 3,643.35
Current liabilities
Trade payables 5 1,876.96 1,777.63
Other current
liabilities 8 79,668.28 72,425.53

35
Short-term
provisions 7 7,777.14 7,731.35
89,322.38 81,934.51
Total 3,44,726.31 3,10,084.12
ASSETS
Non-current assets
Fixed assets
Tangible assets 9 54,394.36 55,405.27
Intangible assets 9 184.70 316.48

Capital work in
progress 38,042.50 28,009.32

Non-current
investments 10 31,577.64 34,879.57

Long-term loans
and advances 11 29,239.12 27,497.28
1,53,438.32 1,46,107.92
Current assets

Current
investments 12 6,375.00 2,800.00
Inventories 13 58,819.93 40,260.39
Trade receivables 14 3,522.60 2,910.69

Cash and bank
balances 15 92,165.45 1,05,150.09
Short-term loans and advances 11 29,291.25 11,427.65

Other current
assets 16 1,113.76 1,427.38

36
1,91,287.99 1,63,976.20
Total 3,44,726.31 3,10,084.12


ANNEXURE REFERRED TO IN THE AUDITORS REPORT(CONTD.)







# - Resultant reduction of MAT Credit claimed in Financial Year
2010 2011
Nature of Nature of the Dues Amount Financial Year to Forum where dispute is
pending
Statute (` in Lakh) which the amount
Relates
Municipal
Taxes
Municipal Taxes 4.81 2005-06 The Assistant Assessor
and Collector, Assessment
Department, M.C.G.M
Service Tax Service Tax and
penalty
171.82 2008-09 CESTAT
Service Tax Service Tax and
penalty
17.71 2009-10 CESTAT
Income Tax Income Tax and
Interest
1.73 2001-02 ITAT
Income Tax Income Tax and
Interest
121.82 2005-06# CIT-(A)
Income Tax Income Tax and
Interest
129.40 2007-08# CIT-(A)
Income Tax Income Tax and
Interest
8.53 2008-09# ITAT
Income Tax Income Tax and
Interest
38.73 2009-10# CIT-(A)
Income Tax Income Tax and
Interest
271.82 2009-10 CIT-(A)

37

In the following matters, the department has preferred appeals at
higher levels:

Nature of Nature of the Dues Amount Financial Year to
Forum where dispute is
pending
Statute (` in Lakh) which the amount
relates
Income Tax
Income Tax and
Interest 64.50 2001-02 High Court
Income Tax
Income Tax and
Interest 54.51 2002-03 High Court
Income Tax
Income Tax and
Interest 414.28 2003-04 High Court
Income Tax
Income Tax and
Interest 224.07 2004-05 High Court
Income Tax
Income Tax and
Interest 277.80 2006-07# High Court












38
# - Resultant reduction of MAT Credit claimed in
Financial Year 2010 2011

The Company has no accumulated losses at the end of the financial
year and it has not incurred any cash losses in the current and
immediately preceding financial year

Based on our audit procedures and on the basis of information and
explanations given by the management the Company has not
defaulted in repayment of dues to banks.

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 and other securities.

In our opinion and according to the information and explanations
given to us, the nature of activities of the Company does not attract
any special statute applicable to chit fund and nidhi / mutual
benefit fund / societies.


39
In our opinion and according to the information and explanations
given to us, the Company has maintained proper records and
contracts with respect to its investments wherein timely entries of
transactions are made. Also, the securities have been held by the
company in its own name.
















40
Explanation REFERRED TO IN THE AUDITORS
REPORT (CONTD.)

According to the information and explanations given to us and the
records examined by us, the Company has not given any guarantees for loan
taken by others from banks and financial institutions.

According to the information and explanations given to us, the Company has
not borrowed any term loans from banks and financial institutions.

According to the information and explanations provided to us and on an
overall examination of the records and cash flow statement of the Company,
there are no short-term loans raised during the year

During the year, the Company has not made any preferential allotment of
shares to any party and companies covered in the Register maintained under
Section 301 of the Companies act, 1956.

According to the information and explanations given to us and the records
examined by us, during the year the Company has not issued any debentures.


41
The Management has disclosed the end use of money raised by public issue in
Note 32. We have verified the same to the extent of utilization by the
Company.

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 provided by the management, we report that no fraud on or by
the Company has been noticed or reported during the course of our audit.

For P. RAJ & CO.
Chartered Accountants
Firm Registration No. 108310W
P. S. Shah
Partner









42
STANDALONE STATEMENT OF PROFIT AND LOSS

(` in Lakh)

FOR THE YEAR
ENDED MARCH 31, NOTE 2013 2012

INCOME
Revenue from operations 17 59,504.57 39,138.75
Other income 18 14,744.93 15,886.56
Total revenue (A) 74,249.50 55,025.31
EXPENSES
Operating costs 19 21,930.69 14,097.08
Employee benefits
expense 20 3,496.82 3,035.66
Other expenses 21 2,052.40 1,304.03
Total expenses (B) 27,479.91 18,436.77
Profit before interest, depreciation,
amortization and (A-B) 46,769.59 36,588.54
taxes (EBIDTA)
Depreciation and
amortization 22 2,366.87 2,234.87
Interest and finance
charges 23 33.65 26.33
Profit before prior period items and
taxes 44,369.07 34,327.34
Prior period income /
(expenses) (6.87) (42.73)
Profit before tax 44,362.20 34,284.61

43
Tax expense
Current tax 10,951.10 7,976.89
Deferred tax 644.93 814.27
Short provision of tax in
earlier years 18.94 -
Profit after tax 32,747.23 25,493.45
Earnings per equity share (face
value of ` 10) 24
- Basic (in `) 9.98 7.77
- Diluted (in `) 9.97 7.77
Significant accounting
policies 1
The accompanying notes form an integral part of
the financial statements














44
CARO REPORT OF OBEROI REALTY


On the basis of such checks as we considered appropriate and in terms
of the information and explanations given to us, we state that:-
i) In respect of Fixed Assets :

(a) The Oberoi Realty has generally maintained proper records
showing full particulars including quantitative details and
situation of its fixed assets.

(b) As stated by the management, fixed assets have been physically
verified at the year end. We are unable to comment whether physical
verification so conducted is reasonable having regard to the size of the
Oberoi Realty and nature of its business. We are also unable to comment
if any material discrepancies were noticed on such physical verification
and whether they have been properly dealt with in the books of accounts.

(c) The Oberoi Realty has not disposed off any substantial part of its
fixed assets so as to affect its going concern status.

ii) In respect of Inventories :

(a) As explained to us, inventories were physically verified during the
year by the management at the end of the year.


45
(b) In our opinion and according to the information and explanations
given to us, the procedures of physical verification of inventories
followed by the management were reasonable and adequate in
relation to the size of the Oberoi Realty and the nature of its
business.

(c) In our opinion and according to the information and explanation
given to us, the Oberoi Realty has maintained proper records of its
inventory. Discrepancies were noticed on physical verification of
inventory as compared to book records and the same has been
properly dealt with in books of accounts. .

iii) The Oberoi Realty has neither granted nor taken any loans, secured
or unsecured from companies, firms or other parties covered in the
register maintained u/s 301 of the Companies Act, 1956.
Accordingly, the provisions of clause (iii) (a) to (iii) (g) of
Companies (Auditors Report) Order, 2003 are not applicable to the
Company.
iv) In our opinion and according to the information and explanations
given to us, there are generally adequate internal control
procedures commensurate with the size of the Oberoi Realty and
the nature of its business with regard to purchase of inventory and
fixed assets and for sale of goods.

v) In respect of the contracts or arrangements referred to in Section
301 of the Companies Act, 1956 :

46

(a) On the basis of the audit procedures performed by us and
according to the information, explanations and representations
given to us, the Oberoi Realty has not made any contracts or
arrangements that need to be entered into the registered
maintained under section 301 of the Companies Act, 1956.

(b) As no contracts or arrangements have been made, the provisions
of clause (v) (b) of the Order are not applicable to the company.

vi) The Oberoi Realty has not accepted any deposit from the public
pursuant to sections 58A, 58AA or any other relevant provisions of the
Companies Act 1956 and rules framed there under. Therefore, the
provisions of clause (vi) of the Order are not applicable to the
Company.

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

viii) We have broadly reviewed the books of accounts maintained by the
Oberoi Realty pursuant to the order made by the Central Government
of India for the maintenance of cost records under clause (d) of sub-
section (1) of section 209 of the Companies Act, 1956 and are of the
opinion that prima facie, the prescribed accounts and records have
been maintained. We have not, however, carried out a detailed

47
examination of the records to ascertain whether they are accurate or
complete.

ix) In respect of statutory dues:

(a) The Oberoi Realty has been regular in depositing 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 statutory dues with the appropriate authorities during the
year. According to the information and explanations given to us,
no undisputed amount payable in respect of the aforesaid dues
were outstanding as at March 31, 2012 for a period of more than
six months from the date of becoming payable.

(b) According to the information and explanations given to us,
there are no dues of Sales Tax, Income Tax, Wealth Tax, Service
Tax, Excise Duty and Cess which have not been deposited on
account of any dispute.

x) The accumulated loss of the Oberoi Realty at the end of the financial
year exceeds fifty percent of its net worth and the Oberoi Realty has
incurred cash losses in the current financial year and also in the
immediately preceding financial year.


48
xi) According to the information and explanations given to us and based
on the documents and records produced to us, the Oberoi Realty has
not defaulted in payment of dues to the Financial Institution or Banks
except the loan taken from Government of India. Further, the Oberoi Realty
has not obtained any borrowings by way of debentures.

xii) The Oberoi Realty has not granted any loans and advances on the basis
of security by way of pledge of shares, debentures and other
securities.

xiii) The Oberoi Realty is not a chit fund / nidhi / mutual benefit fund /
society. Therefore, the provisions of clause 4(xiii) of the Companies
(Auditors Report) Order, 2003 are not applicable to the company.

xiv) In our opinion, the Oberoi Realty is not dealing in or trading in shares,
securities, debentures and other investments as such provisions of
clause 4(xiv) of the Companies (Auditors Report) Order, 2003 are not
applicable to the Company.

xv) According to the information and explanations given to us and the
representations made by the management, the Oberoi Realty has not
given any guarantee for loans taken by others from any bank or
financial institution.

xvi) The Oberoi Realty had an outstanding Term Loan from Government
of India amounting to ` 48,191 lacs (Previous year ` 41,691 lacs)
(principal component) at the beginning of the financial year. The

49
Oberoi Realty further received term loan of ` 4,500 lacs (Previous year
` 6,500 lacs) from Government of India during current financial year
out of which ` 43,075 lacs (Previous year ` 37,878 lacs) has been
utilized for the stated purpose and balance amount of ` 9,616 lacs
(Previous year ` 10,313 lacs) pending for utilization has been kept as
Term Deposit with bank.

xvii) According to the information and explanations given to us and on an
overall examination of the Financial Statements of the Company, we
report that no funds raised on short term basis have been used for
long term investment.

xviii) During the year, the Oberoi Realty has not made preferential
allotment of shares to parties and companies covered in the register
maintained under Section 301 of the Companies Act, 1956.

xix) On the basis of the records and documents examined by us, the Oberoi
Realty has not issued any debentures during the year. Therefore the
provisions of clause 4(xix) of the Companies (Auditors Report) Order,
2003 are not applicable to the Company.

xx) The Oberoi Realty has not raised any money by public issue during the
year.

xxi) According to the information and explanations given to us and to the
best of our knowledge and belief no fraud on or by the Oberoi Realty
has been noticed or reported during the year.


50

Bibliography
1. The introduction to the audit retrieved from
http://www.readyratios.com/reference/audit/audit_report.html 23-2-
2014

2. The history of Hotel Industry retrieved from
http://www.irs.gov/Businesses/Hotel-Industry-Overview---Complete-
Version 23-2-2014


3. The oberoirealtys website Retrieved from
http://www.oberoirealty.com/pdf/2013/Annual_Report-12-13.pdf 23-2-
2014

4. The research paper retrieved from
http://www.eihltd.com/EIHLimited_AR2012-2013.pdf 23-2-2014