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Disclosure in auditor’s report explanatory

Independent Auditors’ Report

To the Members of Metropolis Healthcare Limited

Report on the Financial Statements

1. We have audited the accompanying financial statements of Metropolis Healthcare Limited, (“the Company”), which comprise the Balance Sheet as at 31 March 2015, the Statement of Profit and Loss, the Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information.

Management’s Responsibility for the Financial Statements

2. 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 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 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 (as amended). This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act; safeguarding the assets of the Company; 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.

Auditors’ Responsibility

3. Our responsibility is to express an opinion on these financial statements based on our audit.

4. 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 thereunder.

5. 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.

6. 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 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 financial controls 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 he appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company’s Directors, as well as evaluating the overall presentation of the financial statements.

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

Basis for Qualified Opinion

8. As explained in Note 37 to the financial statements, the Company’s non–current investments as at 31 March 2015 include an investment amounting to INR 12,984,600 (31 March 2014: INR 12,984,600) in its joint venture company, Star Metropolis Health Services Middle East LLC, and trade receivables as at that include INR 64,088,353 (31 March 2014: INR 64,088,353) due from the aforesaid joint venture company; both being considered good and recoverable by the management. However, in the absence of sufficient appropriate audit evidence, we are unable to comment upon the carrying value if this investments, recoverability of the aforesaid trade receivable and the consequential impact, if any, on the financial statements. Our audit opinion on the financial statements for the previous year ended 31 March 2014 was also qualified in respect of recoverability of the dues from aforesaid joint venture company.

Qualified Opinion

9. In our opinion and to the best of our information and according to the explanations given to us, except for the possible effects of the matter described in the Basis for Qualified Opinion paragraph, the aforesaid 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, its profit and its cash flows for the year ended on that date.

Report on Other Legal and Regulatory Requirements

10. As required by the Companies (Auditors’ Report) Order, 2015 (“the Order”) issued by the Central Government of India in terms of Section 143(11) of the Act, we give in the Annexure a statement on the matters specified in paragraphs 3 and 4 of the Order.

11. 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 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 it appears from our examination of those books;

c. the financial statements dealt with by this report are in agreement with the books of account;

d. except for the effects of the matter described in the Basis for Qualified Opinion paragraph, in our opinion, the aforesaid financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014 (as amended);

e. on the basis of the written representations received from the directors as on 31 March 2015 and 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;

f. with respect to the other matters to be included in the Auditors 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. as detailed in Note 29 to the financial statements, the Company has disclosed the impact of pending litigations on its financial position;

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.

For Walker Chandiok & Co LLP

(Formerly Walker, Chandiok & Co)

Chartered Accountants

Firm’s Registration No.: 001076N/N500013

per Sudhi N. Pillai

Partner

Membership No.:  105782

Place : Mumbai

Date :

Annexure to the Independent Auditors Report of even date to the members of Metropolis  Healthcare Limited, on the financial statements for the year ended 31 March 2015

Based on the audit procedures performed for the purpose of reporting a true and fair view on the financial statements of the Company and taking into consideration the information and explanations given to us and the books of account and other records examined by us in the normal course of audit, 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 program of physical verification of its fixed assets under which fixed assets are verified in a phased manner over a period of two years, which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verification.

(ii)(a) The management has conducted physical verification of inventory at reasonable intervals during the year.

(b) 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.

(c) The Company is maintaining proper records of inventory and no material discrepancies between physical inventory and book records were noticed on physical verification.

(iii) The Company has granted unsecured loans to companies covered in the register maintained under Section 189 of the Act; and with respect to the same:

(a) in respect of interest free loans given, the principal amounts are repayable on demand and since the repayment of such loans has not been demanded, in our opinion, receipt of the principal amount is regular. In respect of other loans granted, the principal amount is not due for repayment currently however, the receipt of interest is regular; and

(b) there is no overdue amount in respect of loans granted to such companies.

(iv) Owing to the nature of its business, the Company does not sell any goods. Accordingly, clause 3(iv) of the Order with respect to sale of goods is not applicable.  In our opinion, there is an adequate internal control system commensurate with the size of the Company and the nature of its business for the purchase of inventory and fixed assets and for the sale of services. During the course of our audit, no major weakness has been noticed in the internal control system in respect of these areas.

(v) The Company has not accepted any deposits within the meaning of Sections 73 to 76 of the Act and the Companies (Acceptance of Deposits) Rules, 2014 (as amended). Accordingly, the provisions of clause 3(v) of the Order are not applicable.

(vi) 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 sub–section (1) of Section 148 of the Act in respect of Company’s services and are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained. However, we have not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

(vii)(a) Undisputed statutory dues including provident fund, employees’ state insurance, income tax, sales–tax, wealth tax, service tax, duty of customs, duty of excise, value added tax, cess and other material statutory dues, as applicable, have generally been regularly deposited with the appropriate authorities, though there has been a slight delay in a few cases.  Further, no undisputed amounts payable in respect thereof were outstanding at the year–end for a period of more than six months from the date they became payable.

(b) The dues outstanding in respect of income–tax, sales–tax, wealth tax, service tax, duty of customs, duty of excise, value added tax and cess on account of any dispute, are as follows:

Name of the statute

Nature of dues

Amount

Amount paid under protest

Period to which the amount relates

Forum where dispute is pending

The Central Excise Act, 1944 and Finance Act, 1944

Service tax

416,902
996,841
1,943,457

Nil
Nil
Nil

2004–05
2005–06
2006–07

Director General of Central Excise Intelligence Mumbai

Income Tax Act, 1961

Income tax

1,504,113
1,442,944

Nil
Nil

Assessment
Year 2010–11
Assessment
Year 2011–12

Deputy Commissioner of Income Tax

(c) There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company in accordance with the relevant provisions of the Companies Act, 1956 (1 of 1956) and rules made thereunder. Accordingly, the provisions of clause 3(vii)(c) of the Order are not applicable.

(viii) In our opinion, the Company has no accumulated losses at the end of the financial year and it has not incurred cash losses in the current and the immediately preceding financial year.

(ix) The Company has not defaulted in repayment of dues to any bank during the year. The Company did not have any dues to financial institutions or outstanding debentures during the year.

(x) The Company has not given any guarantees for loans taken by others from banks or financial institutions. Accordingly, the provisions of clause 3(x) of the Order are not applicable.

(xi) In our opinion, the Company has applied the term loan for the purpose for which the loan was obtained.

(xii) No fraud on or by the Company has been noticed or reported during the period covered by our audit.

For Walker Chandiok & Co LLP

(Formerly Walker, Chandiok & Co)

Chartered Accountants

Firm’s Registration No.: 001076N/N500013

per Sudhir N. Pillai

Partner

Membership No.: 105782

Place: Mumbai

Date:

Auditor's qualification(s), reservation(s) or adverse remark(s) in auditors' report

As explained in Note 37 to the financial statements, the Company’s non–current investments as at 31 March 2015 include an investment amounting to INR 12,984,600 (31 March 2014: INR 12,984,600) in its joint venture company, Star Metropolis Health Services Middle East LLC, and trade receivables as at that include INR 64,088,353 (31 March 2014: INR 64,088,353) due from the aforesaid joint venture company; both being considered good and recoverable by the management. However, in the absence of sufficient appropriate audit evidence, we are unable to comment upon the carrying value if this investments, recoverability of the aforesaid trade receivable and the consequential impact, if any, on the financial statements. Our audit opinion on the financial statements for the previous year ended 31 March 2014 was also qualified in respect of recoverability of the dues from aforesaid joint venture company.

Disclosure in auditors report relating to fixed assets

(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 program of physical verification of its fixed assets under which fixed assets are verified in a phased manner over a period of two years, which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verification.

Disclosure relating to quantitative details of fixed assets

(a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

Disclosure relating to physical verification and material discrepancies of fixed assets

(b) The Company has a regular program of physical verification of its fixed assets under which fixed assets are verified in a phased manner over a period of two years, which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verification.

Disclosure in auditors report relating to inventories

(ii)(a) The management has conducted physical verification of inventory at reasonable intervals during the year. (b) 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. (c) The Company is maintaining proper records of inventory and no material discrepancies between physical inventory and book records were noticed on physical verification.

Disclosure of physical verification of inventories at fixed intervals

(a) The management has conducted physical verification of inventory at reasonable intervals during the year.

Disclosure of procedure followed for physical verification of inventories

(b) 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.

Disclosure in auditors report relating to term loans used for purpose other than for purpose they were raised

(xi) In our opinion, the Company has applied the term loan for the purpose for which the loan was obtained.

Disclosure in auditors report relating to any material fraud reported during period

(xii) No fraud on or by the Company has been noticed or reported during the period covered by our audit.

Disclosure about maintenance of inventory records and material discrepancies

(c) The Company is maintaining proper records of inventory and no material discrepancies between physical inventory and book records were noticed on physical verification.

Disclosure in auditors report relating to loans

(iii) The Company has granted unsecured loans to companies covered in the register maintained under Section 189 of the Act; and with respect to the same: (a) in respect of interest free loans given, the principal amounts are repayable on demand and since the repayment of such loans has not been demanded, in our opinion, receipt of the principal amount is regular. In respect of other loans granted, the principal amount is not due for repayment currently however, the receipt of interest is regular; and (b) there is no overdue amount in respect of loans granted to such companies.

Disclosure in auditors report relating to internal control system

In our opinion, there is an adequate internal control system commensurate with the size of the Company and the nature of its business for the purchase of inventory and fixed assets and for the sale of services. During the course of our audit, no major weakness has been noticed in the internal control system in respect of these areas.

Disclosure in auditors report relating to maintenance of cost records

(vi) 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 sub–section (1) of Section 148 of the Act in respect of Company’s services and are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained. However, we have not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

Disclosure in auditors report relating to accumulated losses

(viii) In our opinion, the Company has no accumulated losses at the end of the financial year and it has not incurred cash losses in the current and the immediately preceding financial year.

Disclosure in auditors report relating to default in repayment of financial dues

(ix) The Company has not defaulted in repayment of dues to any bank during the year. The Company did not have any dues to financial institutions or outstanding debentures during the year.

Disclosure in auditors report relating to guarantee given

(x) The Company has not given any guarantees for loans taken by others from banks or financial institutions. Accordingly, the provisions of clause 3(x) of the Order are not applicable.

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