Mar 31, 2023
Reliance Communications Limited
Report on the Audit of the Standalone Financial Statements
Corporate Insolvency Proceedings as per Insolvency and Bankruptcy Code, 2016 (IBC)
The Hon''ble National Company Law Tribunal, Mumbai Bench ("NCLT") admitted an insolvency and bankruptcy petition filed by an operational creditor against Reliance Communications Limited ("the Company") and appointed Resolution Professional (RP) who has been vested with management of affairs and powers of the Board of Directors with direction to initiate appropriate action contemplated with extant provisions of the Insolvency and Bankruptcy Code, 2016 and other related rules.
Qualified Opinion
We have audited the standalone financial statements of Reliance Communications Limited ("the Company"), which comprise the balance sheet as at March 31, 2023, and the statement of Profit and Loss, and the statement of changes in equity and the statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies and other explanatory information ("the standalone financial statements").
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 section of our report, the aforesaid standalone financial statements give a true and fair view in conformity with the Indian Accounting Standards prescribed under section 133 of the Companies Act 2013 ("the Act") read with the Companies (Indian Accounting Standards) Rules, 2015, as amended, ("Ind AS") and other accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2023, its changes in equity, and its loss (including other comprehensive loss) and its cash flows for the year ended on that date.
Basis for Qualified Opinion
a) We draw attention to Note no. 2.14, 2.31 and 2.39(d) of the standalone financial statements regarding, "Assets Held for Sale (AHS)" regarding Wireless Spectrum, Towers, Fibre and Media Convergence Nodes (MCNs) along with liabilities continues to be classified as held for sale at the value ascertained at the end of March 31, 2018, for the reasons referred to in the aforesaid note and impact of the non payment of spectrum instalments due to Department of Telecommunication (DOT). Non determination of fair value of Asset Held for Sale as on the reporting date is not in compliance with Ind AS 105 "Non-Current Assets Held for Sale and Discontinued Operations". Accordingly, we are unable to comment on the consequential impact, if any, on the carrying amount of Assets Held for Sale and on the reported losses for the year ended March 31, 2023.
b) We draw attention to Note no. 2.31 and 2.48 of the standalone financial statements regarding admission of the Company and its two subsidiaries into Corporate Insolvency Resolution Process ("CIRP"), and pending determination of obligations and liabilities with regard to various claims submitted by the Operational/financial/other creditors and employees including interest payable on loans during CIRP We are unable to comment the accounting impact thereof pending reconciliation and determination of final obligation.
The Company accordingly, has not provided interest on borrowings amounting to '' 4,456 crore for the year ended March 31, 2023 and '' 19,581 crore up to previous financial year calculated based on the basic rate of interest as per the terms of the loan. The Company further has not provided net foreign exchange loss amounting to '' 1,286 crore for the year ended March 31, 2023 and net foreign exchange loss of '' 2,142 crore up to previous financial year. Had such interest and foreign exchange variation as mentioned above been provided, the reported loss for the year ended March 31, 2023 would have been higher by '' 5,742 crore and Net worth of the Company would have been lower by '' 27,465 crore and '' 21,723 crore as on March 31, 2023 and March 31, 2022 respectively. Non provision of interest and non-recognition of foreign exchange variation is not in compliance with Ind AS 23 "Borrowing Costs" and Ind AS 21 "The Effects of Changes in Foreign Exchange Rates".
c) We draw attention to Note no. 2.31 of the standalone financial statements, regarding pending comprehensive review of carrying amount of all assets (including investments, receivables and balances lying under Goods & Service Tax) & liabilities and non-provision for impairment of carrying value of the assets and write back of liabilities if any, pending completion of CIRP. In the absence of comprehensive review as mentioned above for the carrying value of all the assets and liabilities, we are unable to comment that whether any adjustment is required in the carrying amount of such assets and liabilities and consequential impact, if any, on the reported losses for the year ended March 31, 2023. Non determination of fair value of financial assets & liabilities and impairment in carrying amount for other assets and liabilities are not in compliance with Ind AS 109 "Financial Instruments", Ind AS 36 "Impairment of Assets" and Ind AS 37 "Provisions, Contingent Liabilities & Contingent Assets".
d) We draw attention to Note no. 2.53 of the standalone financial statements regarding non adoption of Ind AS 116 "Leases" effective from April 01,2019 and the consequent impact thereof. The aforesaid accounting treatment is not in accordance with the relevant Ind AS 116.
e) We draw attention to Note no 2.31 of the standalone financial statements, regarding continuous losses incurred by the Company, current liabilities exceeding its current assets, default in repayment of borrowings and default in payment of regulatory and statutory dues and pending application of renewal of telecom licenses. This situation indicates that a material uncertainty exists that may cast significant doubt on the Company''s ability to continue as a going concern. The accounts however have been prepared by the management on a going concern basis for the reason stated in the aforesaid note. We however are unable to obtain sufficient and appropriate audit evidence regarding management''s use of the going concern basis of accounting in the preparation of the standalone financial statements, in view of ongoing CIRP and matters pending before regulatory authorities, the outcome of which cannot be presently ascertained..
The Networth of the Company excludes the effect of qualification
under (a), (c), (d) and (e) above which are non-quantifiable as
referred therein.
We conducted our audit in accordance with the Standards on Auditing (SAs) specified under section 143(10) of the Act. Our responsibilities under those Standards are further described in the Auditor''s Responsibilities for the Audit of the standalone financial statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India together with the ethical requirements that are relevant to our audit of the standalone financial statements under the provisions of the Act and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for qualified opinion.
Emphasis of Matter Paragraph
We draw attention to Note no. 2.39(b) of the standalone financial statements, regarding provision of license fee and spectrum usage charges based on management estimates pending special audit from Department of Telecommunications, pursuant to the judgment of Hon''ble Supreme Court of India, vide its order dated October 24, 201 9 and status of payment thereof which may undergo revision based on any development in the said matter.
Our opinion is not modified in respect of above matter.
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the standalone financial statements of the current period. These matters were addressed in the context of our audit of the standalone financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. In addition to the matters stated in our Basis for Qualified opinion paragraph we have determined the matters described below to be the key audit matters to be communicated in our report.
For each matter below, our description of how our audit addressed the matter is provided in that context.
We have fulfilled the responsibilities described in the Auditor''s responsibilities for the audit of the standalone financial statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the standalone financial statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying standalone financial statements.
Key Audit Matter |
How our audit addressed the Key Audit Matter |
1. Revenue Recognition The accuracy and completeness of revenue amounts recorded is an inherent industry risk. The revenue is categorised broadly into service and wholesale revenue. Service revenue mainly consists of income from fixed line, broadband, rentals and installations. Wholesale revenue comprises revenue from interconnection, external administration, capacity sales and from resellers. We considered revenue recognition as a key audit matter as the amount involved is material to the financial statements and due to the complexity of the systems and processes used to record revenue. The accounting policy and relevant disclosures relating to revenue are set out in notes 1.12 and 2.24 respectively, to the standalone financial statements. |
Our audit procedures included, amongst others, the following: ⢠Testing the end-to-end reconciliation from business support systems to billing and to the general ledger; ⢠Performing tests on the accuracy of customer bill generation process on a sample basis and testing of a sample of the credits and discounts applied to such customer bills; ⢠Performed substantive analytical procedures over the significant revenue streams; ⢠Involving verification of controls surrounding revenue invoicing; ⢠Assessed transactions taking place before and after year-end to ensure that revenue was recognised in the appropriate period; ⢠Performing specific procedures to test the accuracy and completeness of adjustments, and performing procedures to ensure that the revenue recognition criteria adopted by the Company is in line with the company''s accounting policies. |
Key Audit Matter |
How our audit addressed the Key Audit Matter |
2. Valuation and disclosure of accrual estimates for legal c deposits against the same legal matters including provisi judgment of Hon''ble Supreme Court of India, vide its ord The Company is involved as a party in legal proceedings, including regulatory and other governmental proceedings. The Company has also deposited substantial amounts with regulatory authorities against the demands in dispute, which has been classified as deposit. This area is significant to our audit, since the accounting and disclosure for (contingent) legal liabilities is complex and judgmental (due to the difficulty in predicting the outcome of the matter and estimating the potential impact if the outcome is unfavourable), and the amounts Involved are, or can be, material to the financial statements as a whole. Further reference is made to Note no. 2.36 Contingent liabilities and note no. 2.39(b) on provision of Licence fees and Spectrum Usage Charges. |
laims, litigations, regulatory matters and contingencies and n of license fee and spectrum usage charges, pursuant to the er dated October 24, 2019 Our audit procedures included, amongst others, testing the effectiveness of the Company''s internal controls around the identification and evaluation of claims/provisions, proceedings and investigations at different levels in the Company, and the recording and continuous re-assessment of the related (contingent) liabilities and provisions and disclosures. We inquired with both internal legal staff including Resolution Professional (RP) as well as with the Company''s financial staff in respect of ongoing investigations or claims, proceedings and investigations, inspected relevant correspondence, inspected the minutes of the meetings of the Audit Committee and requested a confirmation from the group''s in-house responsible officials and RP. Also the Company has obtained legal opinions in past against these disputes. For claims settled during the year, we vouched the payments, as appropriate, and read the related orders to verify whether the settlements were properly accounted for. We also assessed the adequacy of the Company''s disclosure around legal claims, litigations, regulatory matters and contingencies as included in Note no. 2.36, Contingent liabilities. We consider management''s conclusion on the predicted outcome and estimation of potential impact reasonable and we assessed that the disclosures in Note no. 2.36, Contingent liabilities are reasonable. |
Information Other than the Standalone Financial Statements and Auditor''s Report Thereon
The Company''s Board of Directors is responsible for the preparation of the other information. The other information comprises the information included in the Board''s Report including Annexures to Board''s Report but does not include the standalone financial statements and our auditor''s report thereon. Our opinion on the standalone financial statements do not cover the other information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the standalone financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the standalone financial statements or our knowledge obtained during the course of our audit or otherwise appears to be materially misstated. When we read the report containing other information, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance.
Responsibility of Management and Those Charged with Governance for the Standalone Financial Statements
The standalone financial statements, which is the responsibility of the Company''s Management is relied upon by the Resolution Professional based on the assistance provided by the Directors and taken on record by the Resolution Professional as fully described in Note no. 2.57 of standalone financial statements. The Company''s Management is responsible for the matters stated in section 134(5) of the Act with respect to the preparation of these standalone financial statements that give a true and fair
view of the financial position, financial performance (changes in equity) 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.
This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of 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 standalone financial statement that give a true and fair view and are free from material misstatement, whether due to fraud or error.
In preparing the standalone financial statements, Directors / Resolution Professional (RP) is responsible for assessing the Company''s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless Director /RP either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
The Director /RP are also responsible for overseeing the Company''s financial reporting process.
Auditor''s Responsibilities for the Audit of the Standalone Financial Statements
Our objectives are to obtain reasonable assurance about whether the standalone financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditor''s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these standalone financial statements.
As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:
⢠Identify and assess the risks of material misstatement of the standalone financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
⢠Obtain an understanding of internal financial controls relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Act, we are also responsible for expressing our opinion on whether the company has adequate internal financial controls system in place and the operating effectiveness of such controls.
⢠Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
⢠Conclude on the appropriateness of management''s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company''s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor''s report to the related disclosures in the standalone financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor''s report. However, future events or conditions may cause the Company to cease to continue as a going concern.
⢠Evaluate the overall presentation, structure and content of the standalone financial statements, including the disclosures, and whether the standalone financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the standalone financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor''s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
(a) Pursuant to applications filed by Ericsson India Pvt. Ltd. before the National Company Law Tribunal, Mumbai Bench ("NCLT") in terms of Section 9 of the Insolvency and Bankruptcy Code, 2016 read with the rules and regulations framed thereunder ("Code"), the NCLT had admitted the applications and ordered the commencement of corporate insolvency resolution process ("CIRP") of Reliance Communications Limited ("the Company") and two of its subsidiaries namely Reliance Infratel Limited (RITL, ceased w.e.f December 22, 2022) and Reliance Telecom Limited (RTL) (collectively, the "Corporate Debtors") vide its orders dated May 15, 2018. The committee of creditors ("CoC") of the Corporate Debtors, at the meetings of the CoC held on May 30, 2019, in terms of Section 22 (2) of the Code, resolved with the requisite voting share, to replace the Interim Resolution Professionals with the Resolution Professional ("RP") for the Corporate Debtors, which has been confirmed by the NCLT in its orders dated June 21, 2019 (published on the website of the NCLT on June 28, 2019).
(b) During an earlier year, Reliance Communication Infrastructure Limited (RCIL) a wholly owned subsidiary of the Company, had been admitted by NCLT for resolution process under the Code and Mr. Anish Nanavaty was appointed as the Resolution Professional by the NCLT.
(c) Further, during the earlier year Reliance Tech Services Limited (RTSL) a wholly owned subsidiary of the Company, has been admitted by NCLT on August 4, 2020 for resolution process under the Code and Mr. Anjan Bhattacharya has been appointed as the Resolution Professional by the NCLT. During the year, NCLT vide order dated March 03, 2023 ordered the liquidation of the RTSL and appointed Mr. Ashok Mittal as Liquidator.
(d) The standalone financial statements of the Company shall be signed by the Chairperson or Managing Director or Whole Time Director or in absence of all of them, it should be signed by any Director of the Company who is duly authorized by the Board of Directors to sign the standalone
financial statements. As mentioned in Note No 2.57 of the standalone financial statements, in view of the ongoing Corporate Insolvency Resolution Process, the powers of the board of directors stand suspended and are exercised by the Resolution Professional.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor''s Report) Order, 2020 ("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" a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.
2. As required by Section 143(3) of the Act, we report that:
(a) Except for the matters stated in Basis for Qualified Opinion paragraph above, 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) Except for the possible effects of the matters described in the Basis of Qualified opinion paragraph above, 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, the Statement of Cash Flows and Statement of Changes in Equity 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 Indian Accounting Standards (Ind AS) specified under Section 133 of the Act, read with Rule 7 of the Companies (Indian Accounting Standards) Rules, 2015 as amended, except requirement of Ind AS 105 "Non-Current Assets Held for Sale and Discontinued Operations", Ind AS 23 "Borrowing Cost" , Ind AS 21 "Effects of Changes in foreign exchanges", Ind AS 36 "Impairment of Assets", Ind AS 37 "Provisions, Contingent Liabilities and Contingent Assets", Ind AS 109 "Financial Instruments" and Ind AS 116 "Leases" with regard to matters described in the Basis of Qualified Opinion paragraph above.
(e) The matters described under the basis for qualified opinion paragraph above and Qualified Opinion paragraph of "Annexure B" to this report in our opinion, may have an adverse effect on functioning of the Company and on the amounts disclosed in standalone financial statements of the Company;
(f) On the basis of the written representations received from two directors of the Company as on March 31, 2023 taken on record by the Board of Directors and based on legal opinion obtained by the Company with regard to non-payment of debenture holder''s due, these two directors are not disqualified as on March 31, 2023 from being appointed as a director in terms of Section 164 (2) of the Act. Further as mentioned in Note no. 2.52 of the standalone financial statements, other directors of the Company have resigned from the
position of director, however their resignation has not been accepted for the reason stated in the said note and Company has not received declarations from these directors in this regard, accordingly we are unable to comment whether these directors are disqualified as on March 31, 2023 from being appointed as a director in terms of Section 164(2) of the Act.
(g) The qualification relating to the maintenance of accounts and other matters connected therewith are as stated in the Basis for Qualified Opinion paragraph above.
(h) With respect to the adequacy of the internal financial controls with reference to standalone financial statements of the Company and the operating effectiveness of such controls, refer to our separate Report in "Annexure B".
(i) With respect to the other matters to be included in the Auditor''s Report in accordance with the requirements of section 197(16) of the Act, as amended:
In our opinion and to the best of our information and according to the explanation given to us, the managerial remuneration has been paid / provided in accordance with the requisite approval by shareholders as mandated by the provisions of section 197 read with schedule V of the Act.
The Ministry of Corporate Affairs has not prescribed other details under section 197(16) which are required to be commented upon by us.
(j) 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 has disclosed the impact of pending litigations on its financial position in its standalone financial statements.
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.
iv. (a) The management has represented to us
that, to the best of its knowledge and belief no funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person or entity, including foreign entities ("Intermediaries"), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, whether, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries;
(b) The management has represented to us that, to the best of its knowledge and belief no funds have been received by the Company from any person or entity, including foreign entities ("Funding Parties"), with the understanding, whether recorded in writing or otherwise, that the Company shall, whether, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries; and
(c) Based on our audit procedure that has been considered reasonable and appropriate in the circumstances, nothing has come to our notice that has caused us to believe that the representations under sub-clause (a) and (b) contain any material misstatement.
v. The Company has not declared or paid any dividend during the year.
vi. Pursuant to Rule 3 (1) of the Companies (Accounts) Rules, 2014 for maintaining books of account using accounting software which has a feature of recording audit trail (edit log) facility is applicable with effect from April 01, 2023 to the Company which are companies incorporated in India and accordingly, reporting under Rule 11(g) of Companies (Audit and Auditors) Rules, 2014 is not applicable for the financial year ended March 31, 2023.
For Pathak H. D. & Associates LLP
Chartered Accountants
Firm''s Registration No: 107783W/W100593
Partner
Membership No: 161851
UDIN: 23161851 BGSWYC6569
Date : May 27, 2023
Place: Mumbai
Mar 31, 2018
1. Report on the Standalone Ind AS Financial Statements
We have audited the accompanying standalone Ind AS financial statements of Reliance Communications Limited (âthe Companyâ), which comprise the Balance Sheet as at 31 March 2018, the Statement of Profit and Loss (including other comprehensive income), the Statement of Cash Flows and the Statement of changes in Equity for the year then ended and a summary of significant accounting policies and other explanatory information (hereinafter referred to as âstandalone Ind AS financial statementsâ).
2. Managementâs Responsibility for the Standalone Ind AS Financial Statements
The Companyâs Board of Directors is responsible for the matters stated in sub-section 5 of Section 134 of the Companies Act, 2013 (âthe Actâ) with respect to the preparation of these standalone Ind AS financial statements that give a true and fair view of the financial position, financial performance including other comprehensive income, cash flows and changes in equity of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) specified under Section 133 of the Act read with relevant rules issued there under.
This responsibility also includes the 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 standalone Ind AS financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
3. Auditorâs Responsibility
Our responsibility is to express an opinion on these standalone Ind AS 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 thereunder.
We conducted our audit of the standalone Ind AS financial statements 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 standalone Ind AS financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the standalone Ind AS financial statements. The procedures selected depend on the auditorâs judgement, including the assessment of the risks of material misstatement of the standalone Ind AS financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Companyâs preparation of the standalone Ind AS financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Companyâs Directors, as well as evaluating the overall presentation of the standalone Ind AS 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 Ind AS financial statements.
4. Basis for Qualified Opinion
We draw attention to note 2.50 of the standalone Ind AS financial statements regarding non provision of interest on borrowings amounting to Rs.3,055 crore for the year ended 31 March 2018 for the reason provided by the management therein. Had such interest been provided then the reported loss for the year ended 31st March, 2018 would have been Rs.12,925 crore and networth of the Company would have been Rs.6,261 crore.
5. Qualified Opinion
In our opinion and to the best of our information and according to the explanations given to us, except for the matters described in Basis for Qualified Opinion paragraph above, the aforesaid standalone Ind AS 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 including the Ind AS, of the state of affairs (financial position) of the Company as at 31 March 2018 and itâs loss (financial performance including other comprehensive income), its cash flows and the changes in equity for the year ended on that date.
6. Emphasis of Matters
a. We draw your attention to Note 2.34.1 (vi) of the standalone Ind AS financial statements regarding the Scheme of Arrangement (âthe Schemeâ) sanctioned on 03 July 2009 by the Honâble High Court of Judicature at Mumbai. The Company is permitted to adjust additional depreciation and amortisation, expenses and/or losses, which have been or are required to be debited to the Statement of profit and loss by a corresponding withdrawal or credit from/to General Reserve, as determined by the Board of Directors. During the year ended the company has withdrawn Rs.280 crore (previous year Rs.1 205 crore) to offset additional depreciation/ amortisation on account of fair valuation of certain assets which may be considered to override the relevant provisions of Schedule II of the Act and Ind AS 8 âAccounting Policies, Changes in Accounting Estimates and Errorsâ. Our opinion is not qualified in respect of this matter
b. We further draw attention to Note 2.41 of the standalone Ind AS financial statements regarding the Scheme of Arrangements (âthe Schemeâ) sanctioned by the Honâble High Court of Judicature at Mumbai and Gujarat. These schemes permit the Company to adjust expenses and/or losses identified by the Board of Directors, which are required to be debited to the Statement of profit and loss by a corresponding withdrawal from General Reserve and Reserve for Business Restructuring, which is considered to be an override to the relevant provisions of Ind AS 8. The Company has identified net foreign exchange gain of Rs.25 crore (previous year net foreign exchange Rs.8 crore), amortisation of Foreign Currency Monetary Items Translation Account (FCMITDA) Rs.252 crore (previous year Rs.238 crore), depreciation on exchange losses capitalised of Rs.221 crore (previous year Rs.433 crore) and impairment charge arising on account of asset held for sale and dimunition in the value of investments Rs.5,948 crore (previous year Rs. Nil crore), as in the opinion of the Board, such exchange variations are considered to be of an exceptional nature and accordingly, these expenses have been met by corresponding withdrawal from General Reserve and Reserve for Business Restructuring. Our opinion is not qualified in respect of this matter Had the effect of paragraphs (a) and (b) above, not been met from General Reserve and Reserve for Business Restructuring, the Company would have reflected a loss after tax for the year of Rs.16,546 crore (previous year Rs.3,680 crore).
c. We draw attention to Note 2.50 of the Standalone Ind AS financial statement, regarding the Definitive Binding Agreement for monetization of assets of the company and its subsidiaries and National Company Law Appellate Tribunal (NCLAT) order dated 30 May 2018 staying NCLT order dated 15 May 2018 admitting the Company under Insolvency and Bankruptcy Code (IBC), 2016. The Company is confident that suitable resolution plan would be formulated by lenders in view of order admitting the Company under IBC proceedings is vacated/stayed, accordingly financial statements of the Company have been prepared on going concern basis.
Our opinion is not modified in respect of above matters.
7. Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditorâs Report) Order, 2016 (âthe Orderâ), issued by the Central Government of India in terms of sub-section (11) of Section 143 of the Act, we enclose in âAnnexure Aâ a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.
2. As required by sub-section 3 of Section 143 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) except for the possible effects of the matters described in the Basis of Qualified opinion paragraph above, 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, the Statement of Cash Flows and Statement of Changes in Equity dealt with by this Report are in agreement with the books of account;
(d) in our opinion, the aforesaid standalone Ind AS financial statements comply with the Indian Accounting Standards prescribed under Section 133 of the Act read with relevant rules issued thereunder, except requirement of Ind AS 23 on Borrowing Cost with regard to matters described in the Basis of Qualified Opinion paragraph above and read with Emphasis of Matter paragraph above, regarding exercise of option available as per the Court Order which overrides the requirement of Ind AS 8;
(e) The going concern matter described in paragraph 6 (c) under Emphasis of Matter paragraph above, in our opinion, may have an adverse effect on the functioning of the Company;
(f) on the basis of the written representations received from the directors as on 31 March 2018 taken on record by the Board of Directors, none of the directors is disqualified as on 31 March 2018 from being appointed as a director in terms of subsection 2 of Section 164 of the Act;
(g) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate report in âAnnexure Bâ; and
(h) with respect to the other matters to be included in the Auditorâs 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 has disclosed the impact of pending litigations on its financial position in its standalone Ind AS financial statements -Refer Note 2.37 to the standalone Ind AS financial statements;
ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses; and
iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.
With reference to the Annexure A referred to in the Independent Auditorsâ Report to the Members of Reliance Communications Limited (âthe Companyâ) on the standalone Ind AS financial statements for the year ended 31 March 2018, we report the following:
(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.
(b) We are informed that the Company physically verifies its assets over a three year period. In our opinion, this periodicity of physical verification is reasonable having regard to the size of the Company and the nature of its assets. In accordance with this policy, the Company has physically verified certain fixed assets during the year and no material discrepancies were identified on such physical verification.
(c) According to the information and explanations given to us, the title deeds of immovable properties, as disclosed in Note 2.01 to the standalone Ind AS financial statements, are held in the name of the Company, except for the following where the Company is in the process of transferring the title deeds in itâs name as these were acquired through various schemes of arrangement entered in the earlier years:
Particulars |
Freehold land |
Building |
|
No of cases |
18 |
4 |
|
Gross block as at 31 (Rs. in crores) |
March 2018 |
3 |
4 |
Net block as at 31 (Rs. in crores) |
March 2018 |
3 |
3 |
(ii) The inventory has been physically verified by the management during the year. In our opinion, the frequency of such verification is reasonable. The discrepancies noticed on verification between the physical stocks and the book records were not material and have been dealt with in books of account.
(iii) The Company has not granted any loans, secured or unsecured, to companies, firms, Limited liability Partnerships or other parties covered in the register maintained under Section 189 of the Act. Accordingly, paragraph (iii) of the Order is not applicable to the Company.
(iv) The Company has not granted any loans or provided any guarantees or security to the parties covered under Section 185 of the Act. The Company has complied with the applicable provisions of Section 186 of the Act.
(v) In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from the public in accordance with relevant provisions of Sections 73 to 76 or any other relevant provisions of the Act and the rules framed there under. Accordingly, paragraph (v) of the Order is not applicable to the Company.
(vi) We have broadly reviewed the books of account maintained by the Company pursuant to the rules prescribed by the Central Government for maintenance of cost records under sub-section 1 of Section 148 of the Act, in respect of telecommunication activities 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 records.
(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, income tax, service tax, goods and services tax, duty of customs, sales tax, value added tax (VAT), entry tax, employeesâ state insurance, cess and other material statutory dues have been generally regularly deposited during the year by the Company with the appropriate authorities though there has been delay in certain cases. As explained to us, the Company did not have any dues on account of duty of excise.
According to the information and explanations given to us, undisputed amounts payable in respect of provident fund, income tax, service tax, goods and services tax, duty of customs, sales tax, value added tax, entry tax, employeesâ state insurance, cess and other material statutory dues which were in arrears as at 31 March 2018 for a period of more than six months from the date they became payable are as under:
Name of Statute |
Nature of Dues |
Amount (Rs. In Crore) |
Period to which the amount relates |
Due Date |
Date of Payment |
Goods and Service Tax Act, 2017 |
Goods and Service Tax Payable |
78.59 |
Jul-17 |
20-Aug-17 |
Unpaid |
Goods and Service Tax Act, 2017 |
Goods and Service Tax Payable |
62.41 |
Aug-17 |
20-Sep-17 |
Unpaid |
Maharastra Value Added Tax Act, 2002 |
Value Added Tax Payable |
0.36 |
FY 2017-18 |
Various Dates |
Unpaid |
Delhi Value Added Tax Act, 2004 |
Value Added Tax Payable |
0.04 |
FY 2017-18 |
Various Dates |
Unpaid |
Karnataka Value Added Tax Act, 2003 |
Value Added Tax Payable |
0.05 |
FY 2017-18 |
Various Dates |
Unpaid |
Orissa Value Added Tax Act, 2004 |
Value Added Tax Payable |
0.00 |
FY 2017-18 |
Various Dates |
Unpaid |
West Bengal Added Tax Act, |
Value Added Tax |
0.01 |
FY 2017-18 |
Various Dates |
Unpaid |
2003 |
Payable |
||||
Maharastra Value Added Tax Act, |
Works Contract Tax |
0.01 |
FY 2017-18 |
Various Dates |
Unpaid |
2002 |
Payable |
||||
Rajasthan Value Added Tax Act, |
Works Contract Tax |
0.03 |
FY 2017-18 |
Various Dates |
Unpaid |
2003 |
Payable |
||||
Income Tax Act, 1961 |
Tax Deducted at source |
18.88 |
Jul-17 |
7-Aug-17 |
Unpaid |
Income Tax Act, 1961 |
Tax Deducted at source |
0.03 |
Aug-17 |
7-Sep-17 |
Unpaid |
(b) According to the information and explanations given to us, there are no dues of cess which have not been deposited on account of any dispute. The dues of income tax, duty of customs, service tax, sales tax, value added tax and entry tax as disclosed below have not been deposited by the Company on account of disputes:
Name of Statue |
Nature of Dues |
Amount* (Rs. In Crore) |
Period |
Forum |
Central Sales Tax, Bihar |
Central Sales Tax |
0.04 |
2005-06 |
Appellate Tribunal |
0.43 |
2011-12 |
Asst. Commissioner of Commercial Taxes |
||
Central Sales Tax, Chattisgarh |
Central Sales Tax |
0.00 |
2011-12 |
Dy. Commissioner (Appeals) |
Central Sales Tax, Madhya Pradesh |
Central Sales Tax |
0.03 |
2011-12 to 2013-14 |
Dy. Commissioner (Appeals) |
Central Sales Tax, Maharashtra |
Central Sales Tax |
0.27 |
2011-12 |
Dy. Commissioner of Sales Tax |
0.35 |
2013-14 |
Dy. Commissioner of Sales Tax |
||
Central Sales Tax, Orissa |
Central Sales Tax |
0.00 |
2009-10 |
Addl. Commisoner (Appeals) |
0.02 |
Oct â06 to March â09 |
Sales Tax Appellate Tribunal |
||
Central Sales Tax, Uttar Pradesh |
Central Sales Tax |
0.07 |
2006-07 |
High Court |
0.08 |
2010-11 |
Additional Commissioner (Appeals) |
||
0.50 |
2013-14 |
Dy. Commisioner of Commercial Taxes |
||
1.25 |
2014-15 |
Dy. Commisioner of Commercial Taxes |
||
Central Sales Tax, Uttarakhand |
Central Sales Tax |
0.12 |
2009-10 to 2010-11 |
Dy. Commissioner of Commercial Taxes |
0.14 |
2012-13 |
Jt. Commisioner of Commercial Taxes (Appeals) |
||
Central Sales Tax, West Bengal |
Central Sales Tax |
0.34 |
2007-08 |
Tax Revision Board |
0.36 |
2014-15 |
Jt.Commisioner Commercial Taxes |
||
Central Sales Tax, Punjab |
Central Sales Tax |
0.05 |
2010-11 |
Dy. Excise and Taxation Commissioner (Appeals) |
Entry Tax, Bihar |
Entry Tax |
0.38 |
2007-08 to 2008-09 |
Commercial Tax Tribunal |
0.25 |
2011-12 |
Asst. Commissioner of Commercial Taxes |
||
Entry Tax, Chattisgarh |
Entry Tax |
0.63 |
2006-07 to 2007-08 |
Dy. Commissioner (Appeals) |
0.25 |
2010-11 to 2011-12 |
Dy. Commissioner (Appeals) |
||
Entry Tax, Himachal Pradesh |
Entry Tax |
1.01 |
2011-11 to 2013-14 |
High Court |
Entry Tax, Madhya Pradesh |
Entry Tax |
0.48 |
2002-03 to 2003-04 |
Asst. Commissioner of Commercial Taxes |
1.58 |
2005-06 to 2008-09 & 2010-11 |
MP Taxation Board |
||
0.21 |
2011-12 |
Dy. Commissioner (Appeals) |
||
Entry Tax, Orissa |
Entry Tax |
0.08 |
2009-10 |
Addl. Commisoner (Appeals) |
0.05 |
Oct 06-March 09 |
Sales Tax Appellate Tribunal |
||
Entry Tax, Uttar Pradesh |
Entry Tax |
0.13 |
2003-04 |
Commercial Tax Tribunal |
0.02 |
2013-14 |
Dy. Commisioner of Commercial Taxes |
||
0.02 |
2014-15 |
Dy. Commisioner of Commercial Taxes |
||
Entry Tax, West Bengal |
Entry Tax |
0.17 |
2014-15 |
Jt.Commisioner Commercial Taxes |
Entry Tax, Rajasthan |
Entry Tax |
1.70 |
2013-14 to 2014-15 |
Appellate Authority |
14.73 |
2005-06, 2007-08 to 2012-13 |
Supreme Court |
||
Entry Tax, Jammu & Kashmir |
Entry Tax |
9.69 |
2008-09 to 2011-12 |
High Court |
Entry Tax, Punjab |
Entry Tax |
0.01 |
Oct 2012 to Dec 2012 |
High Court |
VAT, Bihar |
VAT |
0.24 |
2005-06 |
Commercial Tax Tribunal |
8.33 |
2011-12 |
High Court |
||
VAT, Haryana |
VAT |
1.15 |
2011-12 |
Commercial Tax Tribunal |
VAT, Kerala |
VAT |
0.01 |
2006-07 |
Deputy Commisoner (Appeals) |
2.79 |
2010-11 |
High Court |
||
0.02 |
2011-12 |
Deputy Commisoner (Appeals) |
||
0.32 |
2012-13 |
High Court |
||
2.80 |
2013-14 |
High Court |
||
2.15 |
2014-15 |
High Court |
||
VAT, Punjab |
VAT |
0.05 |
2010-11 |
Deputy Commisoner (Appeals) |
VAT, Uttarakhand |
VAT |
0.78 |
2009-10 to 2010-11 |
Dy. Commissoner of Commercial Taxes |
0.03 |
2007-08 |
Jt. Commisioner (Appeals) |
||
0.41 |
2012-13 |
Jt. Commissioner of Commercial Taxes (Appeals) |
||
VAT, West Bengal |
VAT |
4.17 |
200506,2007-08 to 2008-09 |
Tax Revision Board |
0.03 |
2012-13 |
Jt. Commisioner of Commercial Taxes (Appeals) |
||
0.02 |
2014-15 |
Jt. Commisioner Commercial Taxes |
||
VAT/Sales Tax, Uttar Pradesh |
VAT/Sales Tax |
0.24 |
2003-04 |
UP Trade Tax Tribunal |
0.93 |
2004-05 |
High Court |
0.52 |
2005-06, Jan 08 to March 08 |
Dy. Commissioner of Commercial Taxes |
||
0.20 |
2010-11 |
Addl. Commisoner (Appeals) |
||
2.38 |
2013-14 |
Dy. Commissioner of Commercial Taxes |
||
1.83 |
2014-15 |
Dy. Commisioner of Commercial Taxes |
||
VAT, Chattisgarh |
VAT |
0.02 |
2011-12 |
Dy. Commisooner (Appeals) |
Finance Act, 1994 |
CENVAT Credit |
2.60 |
01.04.2004 to 31.03.2015 |
Commisoner, CGST & Central Excise |
3.33 |
01.4.2010 to 31.03.2014 |
Commisoner, CGST & Central Excise |
||
1.32 |
2014-15 |
CESTAT |
||
Income Tax Act, 1961 |
Income Tax |
2.76 |
2009-10 |
Commissioner of Income Tax (Appeals) |
Income Tax Act, 1961 |
Income Tax |
2.52 |
2010-11 |
Commissioner of Income Tax (Appeals) |
Income Tax Act, 1961 |
Income Tax |
1.34 |
2011-12 |
Joint Commissioner of Income Tax |
*Net of amounts paid under protest.
(viii) (a) The Company has defaulted in repayment of following dues to the financial institution, banks and debentures, which were paid on or before the Balance Sheet date:
Name of Lender |
Amount (Rs. in crore) Borrowings |
Amount (Rs. in crore) Interest |
Period (Maximum days) Borrowings |
Period (Maximum days) Interest |
Loan from Banks Axis Bank |
100 |
5 |
87 |
80 |
Bank of Baroda |
- |
24 |
- |
87 |
Bank of India |
- |
16 |
- |
87 |
Bank of Maharashtra |
27 |
- |
85 |
- |
Canara Bank |
59 |
8 |
25 |
25 |
Central Bank of India |
- |
6 |
- |
87 |
Corporation Bank |
- |
5 |
- |
87 |
Credit Agricole Corporate & Investment Bank |
- |
1 |
- |
14 |
DBS Bank |
112 |
4 |
60 |
7 |
Deutsche Bank |
180 |
4 |
82 |
7 |
HDFC Bank |
56 |
18 |
- |
|
China Development Bank |
768 |
7 |
305 |
197 |
Industrial and Commercial Bank of China |
130 |
7 |
305 |
197 |
Export Import Bank of China |
264 |
7 |
305 |
197 |
IDBI Bank |
- |
18 |
- |
87 |
Indian Overeseas Bank |
- |
3 |
- |
87 |
IndusInd Bank |
1,500 |
26 |
59 |
61 |
Oriental Bank of Commerce |
- |
4 |
- |
87 |
Punjab National Bank |
70 |
- |
169 |
- |
Standard Chartered Bank |
293 |
3 |
111 |
56 |
State Bank of India |
- |
40 |
- |
87 |
Syndicate Bank |
- |
9 |
- |
87 |
UCO Bank |
- |
17 |
- |
87 |
Union Bank of India |
- |
5 |
- |
3 |
United Bank of India |
13 |
4 |
147 |
87 |
Yes Bank |
71 |
6 |
92 |
112 |
Debenture |
||||
Life Insurance Corporation of India |
375 |
72 |
62 |
40 |
Other Loans |
||||
India Infrastructure Finance Corporation Limited |
- |
2 |
- |
88 |
Reliance Cleangen Limited |
9 |
21 |
||
Total |
4,018 |
312 |
(b) The Company has defaulted in repayment of following dues to the financials institution, banks and debenture holders during the year, which were not paid as at Balance Sheet date:
Name of Lender |
Amount (Rs. in crore) Borrowings |
Amount (Rs. in crore) Interest |
Period (Maximum days) Borrowings |
Period (Maximum days) Interest |
Loan from Banks Ahli United Bank B.S.C. |
98 |
111 |
||
Bank of Baroda |
802 |
11 |
389 |
366 |
Bank of India |
280 |
9 |
366 |
366 |
Bank of Maharashtra |
473 |
- |
318 |
- |
Canara Bank |
237 |
- |
275 |
- |
Central Bank of India |
112 |
3 |
366 |
366 |
Corporation Bank |
266 |
8 |
388 |
366 |
Credit Agricole Corporate & Investment Bank |
192 |
- |
377 |
- |
DBS Bank |
300 |
- |
185 |
- |
Dena Bank |
250 |
- |
53 |
- |
Deutsche Bank |
391 |
1 |
111 |
284 |
China Development Bank |
2,185 |
128 |
398 |
398 |
Industrial and Commercial Bank of China |
551 |
33 |
398 |
398 |
Export Import Bank of China |
814 |
47 |
398 |
398 |
IDBI Bank |
331 |
9 |
370 |
366 |
Indian Overeseas Bank |
52 |
1 |
366 |
366 |
Oriental Bank of Commerce |
91 |
2 |
366 |
366 |
Punjab National Bank |
593 |
- |
367 |
- |
Standard Chartered Bank |
1,072 |
- |
355 |
- |
State Bank of India |
1,258 |
21 |
366 |
366 |
Syndicate Bank |
423 |
5 |
389 |
366 |
UCO Bank |
296 |
9 |
366 |
366 |
Union Bank of India |
599 |
3 |
366 |
366 |
United Bank of India |
341 |
2 |
366 |
366 |
Debenture Life Insurance Corporation of India |
375 |
- |
53 |
- |
Other Loans Industrial Finance Corporation of India |
125 |
4 |
382 |
382 |
Limited India Infrastructure Finance |
4 |
4 |
183 |
397 |
Corporation Limited Reliance Capital Limited |
- |
3 |
- |
366 |
Reliance Unicorn Enterprise Private Limited |
- |
53 |
- |
366 |
Reliance Cleangen Limited |
- |
14 |
- |
366 |
Kunjbihari Developers Private Limited |
- |
1 |
- |
366 |
Total |
12,511 |
371 |
c) During the year, there was a delay of 11days in case of installment payment of Rs.22 crore to Department of Telecommunications. Further, as at March 31, 2018, Rs.281 crore was outstanding, delayed by 10 days which was subsequently paid.
(ix) During the year, the Company has not raised any money by way of initial public offer or further public offer (including debt instruments). The term loans, prima facie, have been utilized for the purpose for which these were raised.
(x) According to the information and explanations given to us, no material fraud by the Company or on the Company by its officers or employees has been noticed or reported during the course of our audit.
(xi) According to the information and explanations given to us and based on our examination of the records, the Company has paid/provided total managerial remuneration amounting to Rs.2 crore to the managerial person of the company for which the company is in the process of getting requisite approval of shareholders in ensuing annual general meeting.
(xii) In our opinion and according to the information and explanations given to us, the Company is not a nidhi company. Accordingly, paragraph (xii) of the Order is not applicable to the Company.
(xiii) According to the information and explanations given to us and based on our examination of the records of the Company, transactions with the related parties are in compliance with Sections 177 and 188 of the Act, where applicable. The details of such related party transactions have been disclosed in the standalone Ind AS financial statements as required by the applicable accounting standards.
(xiv) According to the information and explanations given to us and based on our examination of the records, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year, however the company has issued equity shares to Sistema Shyam Teleservices Limited in terms of Scheme of Demerger sanctioned by the Honâble High Court of Judicature of Bombay and Jaipur.
(xv) According to the information and explanations given to us and based on our examination of the records, the Company has not entered into non-cash transactions with directors or persons connected with him. Accordingly, paragraph (xv) of the Order is not applicable to the Company.
(xvi) The Company is not required to be registered under Section 45-IA of the Reserve Bank of India Act, 1934. Accordingly, the provisions of Clause (xvi) of the Order are not applicable to the Company.
Report on the Internal Financial Controls under Clause (i) of Subsection 3 of Section 143 of the Companies Act, 2013 (âthe Actâ).
We have audited the internal financial controls over financial reporting of Reliance Communications Limited (âthe Companyâ) as of 31 March 2018 in conjunction with our audit of the standalone Ind AS financial statements of the Company for the year ended on that date.
Managementâs Responsibility for Internal Financial Controls
The Companyâs management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India (ICAI). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to companyâs policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Act.
Auditorâs Responsibility
Our responsibility is to express an opinion on the Companyâs internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the âGuidance Noteâ) and the Standards on Auditing issued by ICAI and deemed to be prescribed under Section 143
(10) of the Act, to the extent applicable to an audit of internal financial controls, both applicable to an audit of Internal Financial Controls and both issued by the ICAI. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditorâs judgement, including the assessment of the risks of material misstatement of the standalone Ind AS financial statements, whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Companyâs internal financial controls system over financial reporting.
A companyâs internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A companyâs internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and that receipts and expenditures of the company are being made only in accordance with authorisations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the companyâs assets that could have a material effect on the financial statements.
Inherent Limitations of Internal Financial Controls Over Financial Reporting
Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Opinion
In our opinion, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at 31 March 2018, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the ICAI.
For Pathak H.D. & Associates
Chartered Accountants
Firmâs Registration No: 107783W
Parimal Kumar Jha
Partner
Membership No: 124262
Mumbai
30 May 2018
Mar 31, 2017
Independent Auditor''s Report on Financial Statement To
The Members of Reliance Communications Limited
Report on the Standalone Ind AS Financial Statements
We have audited the accompanying Standalone Ind AS financial statements of Reliance Communications Limited (''the Company''), which comprise the Balance Sheet as at 31 March 2017, the Statement of Profit and Loss (including other comprehensive income), the Statement of Cash Flows and the Statement of changes in Equity for the year then ended and a summary of significant accounting policies and other explanatory information (hereinafter referred to as ''standalone Ind AS financial statements'').
Management''s Responsibility for the Standalone Ind AS Financial Statements
The Company''s Board of Directors is responsible for the matters stated in sub-section 5 of Section 134 of the Companies Act, 2013 (''the Act'') with respect to the preparation of these standalone Ind AS financial statements that give a true and fair view of the financial position, financial performance including other comprehensive income, cash flows and changes in equity of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) specified under Section 133 of the Act read with relevant rules issued thereunder. This responsibility also includes the 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 judgements 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 standalone Ind AS 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 Ind AS 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 of the standalone Ind AS financial statements 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 standalone Ind AS financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the standalone Ind AS financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the standalone Ind AS 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 standalone Ind AS financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances.
An audit also includes evaluating the 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 standalone Ind AS 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 Ind AS financial statements.
Opinion
In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone Ind AS 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 including the Ind AS, of the financial position of the Company as at 31 March 2017 and its loss (financial performance) including other comprehensive income, its cash flows and the changes in equity for the year ended on that date.
Emphasis of Matters
a. We draw attention to Note 2.36.1 (vi) of the standalone Ind AS financial statements regarding the Scheme of Arrangement (''the Scheme'') sanctioned on 03 July 2009 by the Hon''ble High Court of Judicature at Mumbai, the Company is permitted to adjust additional depreciation/ amortization, expenses and/or losses, which have been or are required to be debited to the Statement of Profit and Loss by a corresponding withdrawal or credit from/ to General Reserve, as determined by the Board of Directors. During the year, the Company has withdrawn Rs 1,205 crore (previous year Rs1,190 crore) to offset additional depreciation/amortization on account of fair valuation of certain assets which may be considered to override the relevant provisions of Schedule II of the Act and Ind AS 8 ''Accounting Policies, Changes in Accounting Estimates and Errors''. Our opinion is not qualified in respect of this matter.
b. We further draw attention to Note 2.44 of the standalone Ind AS financial statements regarding the Scheme of Arrangement (''the Scheme'') sanctioned by the Hon''ble High Court of Judicature at Mumbai. The Scheme permits the Company to adjust expenses and/or losses identified by the Board of Directors, which are required to be debited to the Statement of Profit and Loss, by a corresponding withdrawal from General Reserve, which is considered to be an override to the relevant provisions of Ind AS 8. The Company has identified net foreign exchange variations of Rs 8 crore (previous year Rs 3 crore), amortization of Foreign Currency Monetary Items Translation Difference Account (FCMITDA) of Rs 238 crore (previous year Rs 274 crore) and depreciation on exchange losses capitalised of Rs 433 crore (previous year Rs 467 crore), as in the opinion of the Board, such exchange losses and depreciation are considered to be of an exceptional nature and accordingly, these expenses have been met by corresponding withdrawal from General Reserve. Our opinion is not qualified in respect of this matter.
Had the effect of paragraphs (a) and (b) above, not been met from General Reserve, the Company would have reflected a loss after tax for the year of Rs 3,680 crore (previous year Rs 2,313 crore).
c. As stated in Note 2.18.4 of the standalone Ind AS financial statements, pending formal confirmation, the borrowings are continued to be classified as non-current liabilities. Our opinion is not qualified in respect of this matter.
Other Matters
a. The comparative financial information of the Company for the year ended 31 March, 2016 and the transition date opening Balance Sheet as at 1 April, 201 5 included in these standalone Ind AS financial statements, are based on the statutory financial statements prepared in accordance with the Companies (Accounting Standards) Rules, 2006 and other accounting principles generally accepted in India audited by BSR & Co. LLP, Chartered Accountants (one of the joint auditors) and Chaturvedi & Shah, Chartered Accountants (predecessor joint auditor), whose report for the year ended 31 March 2016 and 31 March 2015 dated 30 May 2016 and 29 May 2015 respectively expressed an unmodified opinion on those standalone financial statements, as adjusted for the differences in the accounting principles adopted by the Company on transition to the Ind AS, which have been audited by us.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor''s Report) Order, 2016 (''the Order''), issued by the Central Government of India in terms of sub-section (11) of Section 143 of the Act, we enclose in ''Annexure A'', a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.
2. As required by sub-section 3 of Section 143 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) i n 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, the Statement of Cash Flows and Statement of Changes in Equity dealt with by this Report are in agreement with the books of account;
(d) in our opinion, the aforesaid standalone Ind AS financial statements comply with the Indian Accounting Standards prescribed under Section 1 33 of the Act read with relevant rule issued there under; read with Emphasis of Matter paragraph above, regarding exercise of option available as per the Court Order which overrides the requirement of Ind AS 8;
(e) on the basis of the written representations received from the directors as on 31 March 2017 taken on record by the Board of Directors, none of the directors is disqualified as on 31 March 2017 from being appointed as a director in terms of sub-section 2 of Section 164 of the Act;
(f) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate report in "Annexure B"; and
(g) 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 as amended by notification no. G.S.R. 307 (E) issued by MCA dated 30 March 2017, in our opinion and to the best of our information and according to the explanations given to us:
i. The Company has disclosed the impact of pending litigations on its financial position in its standalone Ind AS financial statements - Refer Note 2.39 to the standalone Ind AS financial statements;
ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses;
iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company; and
iv. The Company has provided requisite disclosures in the standalone Ind AS financial statements as regards its holding and dealings in Specified Bank Notes as defined in the Notification S.O. 3407(E) dated the 8 November, 2016 of the Ministry of Finance, during the period from 8 November, 2016 to 30 December, 2016. Based on audit procedures performed and the representations provided to us by the management, we report that the disclosures are in accordance with the books of account maintained by the Company and as produced to us by the Management. Refer Note 2.52 to the standalone Ind AS financial statements.
With reference to Annexure A referred to in the Independent Auditors'' Report to the Members of Reliance Communications Limited (''the Company'') on the standalone Ind AS financial statements for the year ended 31 March 2017, we report the following:
(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.
(b) We are informed that the Company physically verifies its assets over a three year period, except for base trans-receiver stations. We are informed that these assets are under continuous operational surveillance at National Network Operating Centre and are therefore not separately physically verified. In our opinion, this periodicity of physical verification is reasonable having regard to the size of the Company and the nature of its assets. In accordance with this policy, the Company has physically verified certain fixed assets during the year and no material discrepancies were identified on such physical verification.
(c) According to the information and explanations given to us, the title deeds of immovable properties, as disclosed in Note 2.01 to the standalone Ind AS financial statements, are held in the name of the Company, except for the following where the Company is in the process of transferring the title deeds in its name as these were acquired through various schemes of arrangement entered in the earlier years:
Particulars |
Freehold |
Leasehold |
Building |
land |
land |
||
No of cases |
394 |
16 |
413 |
Gross block as at 31 |
196 |
13 |
295 |
March 2017 (Rs in crore) |
|||
Net block as at 31 March |
196 |
11 |
201 |
2017 (Rs in crore) |
(ii) The inventory has been physically verified by the management during the year. In our opinion, the frequency of such verification is reasonable. The discrepancies noticed on verification between the physical stocks and the book records were not material and have been dealt with in books of account.
(iii) The Company has not granted any loans, secured or unsecured, to companies, firms, Limited liability Partnerships or other parties covered in the register maintained under Section 189 of the Act. Accordingly, paragraph (iii) of the Order is not applicable to the Company.
(iv) The Company has not granted any loans or provided any guarantees or security to the parties covered under Section 185 of the Act. The Company has complied with the applicable provisions of Section 186 of the Act.
(v) In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from the public in accordance with relevant provisions of Sections 73 to 76 or any other relevant provisions of the Act and the rules framed there under. Accordingly, paragraph (v) of the Order is not applicable to the Company.
(vi) We have broadly reviewed the books of account maintained by the Company pursuant to the rules prescribed by the Central Government for maintenance of cost records under sub-section 1 of Section 1 48 of the Act, in respect of telecommunication activities 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 records.
(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, Income Tax, Service Tax, Duty of Customs, Sales Tax, Value Added Tax (VAT), Entry Tax, Employees'' State Insurance, cess and other material statutory dues have been generally regularly deposited during the year by the Company with the appropriate authorities though there has been slight delay in few cases. As explained to us, the Company did not have any dues on account of duty of excise.
According to the information and explanations given to us, no undisputed amounts payable in respect of Provident Fund, Income Tax, Service Tax, Duty of Customs, Sales Tax, Value Added Tax, Entry Tax, Employees'' State Insurance, cess and other material statutory dues were in arrears as at 31 March 2017 for a period of more than six months from the date they became payable.
(b) According to the information and explanations given to us, there are no dues of cess which have not been deposited on account of any dispute. The dues of Income Tax, Duty of Customs, Service Tax, Sales Tax, Value Added Tax and Entry Tax as disclosed below have not been deposited by the Company on account of disputes.
Name of the Statute |
Nature of dues |
Amount* (Rs in crore) |
Period |
Forum where the dispute is pending |
Central Sales Tax, Uttar Pradesh |
Central Sales Tax |
0.07 0.08 0.50 |
2006-07 2010-11 2013-14 |
High Court Additional Commissioner (Appeals) Dy. Commissioner of Commercial Taxes |
Central Sales Tax, Maharashtra |
Central Sales Tax |
0.27 |
2011-12 |
Dy. Commissioner of Sales Taxes |
Central Sales Tax, Bihar |
Central Sales Tax |
0.04 0.43 |
2005-06 2011-12 |
Appellate Tribunal Asst. Commissioner of Commercial Taxes |
0.09 |
2013-14 |
Dy. Commissioner of Commercial Taxes |
||
Central Sales Tax, Madhya Pradesh |
Central Sales Tax |
0.03 |
2011-12 to 2013-14 |
Dy. Commissioner (Appeals) |
Central Sales Tax, Uttarakhand |
Central Sales Tax |
0.12 0.14 |
2009-10 to 2010-11 2012-13 |
Dy. Commissioner of Commercial Taxes Jt. Commissioner of Commercial Taxes (Appeals) |
Central Sales Tax, Orissa |
Central Sales Tax |
0.02 0.01 |
Oct-06 to March-09 2009-10 |
Sales Tax Appellate Tribunal Addl. Commissioner (Appeals) |
Central Sales Tax, Chhattisgarh |
Central Sales Tax |
0.01 |
2011-12 |
Dy. Commissioner (Appeals) |
Central Sales Tax, West Bengal |
Central Sales Tax |
0.34 |
2007-08 |
Tax revision Board |
Entry Tax, Madhya Pradesh |
Entry Tax |
0.48 |
2002-03 to 2003-04 |
Asst. Commissioner of Commercial Taxes |
1.58 |
2005-06 to 2008-09 and 2010-11 |
MP Taxation Board |
||
0.21 |
2011-12 |
Dy. Commissioner (Appeals) |
||
Entry Tax, Rajasthan |
Entry Tax |
14.73 |
2005-06, 2007-08 to 2012-13 |
Supreme Court |
1.70 |
2013-14 to 2014-15 |
Appellate Authority |
||
Entry Tax, Orissa |
Entry Tax |
0.05 |
Oct 06 - Mar 09 |
Sales Tax Appellate Tribunal |
0.08 |
2009-10 |
Addl. Commissioner (Appeals) |
||
Entry Tax, Uttar Pradesh |
Entry Tax |
0.13 0.02 |
2003-04 2013-14 |
Commercial Tax Tribunal# Dy. Commissioner of Commercial Taxes |
Entry Tax, Chhattisgarh |
Entry Tax |
0.63 |
2006-07 to 2007-08 |
Dy. Commissioner (Appeals) |
0.25 |
2010-11 to 2011-12 |
Dy. Commissioner (Appeals) |
Name of the Statute |
Nature of dues |
Amount1 (Rs in crore) |
Period |
Forum where the dispute is pending |
Entry Tax, Himachal Pradesh |
Entry Tax |
1.01 |
2010-11 to 2013-14 |
High Court# |
Entry Tax, Bihar |
Entry Tax |
0.38 0.25 |
2007-08 to 2008-09 2011-12 |
Commercial Tax Tribunal Asst. Commissioner of Commercial Taxes |
VAT, Bihar |
VAT |
0.24 8.33 |
2005-06 2011-12 |
Commercial Tax Tribunal High Court |
VAT/Sales Tax, Uttar Pradesh |
VAT/Sales Tax |
0.24 0.93 0.52 0.20 2.38 |
2003-04 2004-05 2005-06, Jan Rs08 to March Rs08 2010-11 2013-14 |
UP Trade Tax Tribunal# High Court# Dy. Commissioner of Commercial Taxes Addl. Commissioner (Appeals) Dy. Commissioner of Commercial Taxes |
VAT, |
VAT |
0.03 |
2007-08 |
Jt. Commissioner (Appeals) |
Uttarakhand |
0.78 0.41 |
2009-10 to 2010-11 2012-13 |
Dy. Commissioner of Commercial Taxes Jt. Commissioner of Commercial Taxes (Appeals) |
|
VAT, West Bengal |
VAT |
4.17 0.03 |
2005-06, 2007-08 to 2008-09 2012-13 |
Tax Revision Board Jt. Commissioner of Commercial Taxes (Appeals) |
VAT, Kerala |
VAT |
0.01 2.79 0.02 0.32 |
2006-07 2010-11 2011-12 2012-13 |
Deputy Commissioner (Appeals)# High Court# Deputy Commissioner (Appeals) High Court# |
VAT, Punjab |
VAT |
0.05 |
2010-11 |
Deputy Commissioner (Appeals) |
VAT Haryana |
VAT |
1.15 |
2011-12 |
Commercial Tax Tribunal |
VAT Chhattisgarh |
VAT |
0.02 |
2011-12 |
Dy. Commissioner (Appeals) |
Finance Act, 1994 |
CENVAT Credit |
1.32 |
2014-15 |
CESTAT |
The Customs Act, 1962 |
Customs duty |
0.23 |
2006-07 |
CESTAT# |
Income Tax Act, 1961 |
Income Tax |
216.20 |
2009-10 |
Income Tax Appellate Tribunal |
Income Tax Act, 1961 |
Income Tax |
83.23 |
2010-11 |
Income Tax Appellate Tribunal |
Income Tax Act, 1961 |
Income Tax |
89.97 |
2002-06 |
Bombay High Court |
(viii) In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of loans or borrowings to financial institutions, banks and Government and in payment of dues to the debenture holders except for the following instances of delay/ default in repayment of principal amount and interest:
Lenders'' Name |
As on March 31, 2017 (Rs in crore) |
Period of delay |
Axis Bank |
63 |
Less than 90 days |
Bank of Baroda |
91 |
Less than 90 days |
Bank of India |
72 |
Less than 90 days |
Canara Bank |
59 |
Less than 90 days |
Central Bank of India |
28 |
Less than 90 days |
Corporation Bank |
30 |
Less than 90 days |
Credit Agricole Corporate and Investment Bank |
193 |
Less than 90 days |
China Development Bank |
593 |
Less than 90 days |
DBS Bank Limited |
116 |
Less than 90 days |
Deutsche Bank |
54 |
Less than 90 days |
IDBI Bank |
87 |
Less than 90 days |
India Infrastructure Finance Company Limited |
5 |
Less than 90 days |
Indian Overseas Bank |
13 |
Less than 90 days |
IndusInd Bank Limited |
1,526 |
Less than 90 days |
Industrial Finance Corporation Of India Limited |
27 |
Less than 90 days |
Industrial and Commercial Bank of China |
220 |
Less than 90 days |
Oriental Bank of Commerce |
20 |
Less than 90 days |
Punjab National Bank |
86 |
Less than 90 days |
Standard Chartered Bank India |
249 |
Less than 90 days |
State Bank of India |
160 |
Less than 90 days |
Syndicate Bank |
61 |
Less than 90 days |
The Export Import Bank of China |
313 |
Less than 90 days |
UCO Bank |
76 |
Less than 90 days |
United Bank of India |
34 |
Less than 90 days |
Union Bank of India |
11 |
Less than 90 days |
Life Insurance Corporation of India |
410 |
Less than 90 days |
Total |
4,597 |
Further, during the year, the Company has delayed in repayment of Loans amounting Rs 2,619 crore which were made good before the Balance Sheet date.
(ix) During the year, the Company has not raised any money by way of initial public offer or further public offer (including debt instruments). The term loans have been utilized for the purpose for which these were raised.
(x) According to the information and explanations given to us, no material fraud by the Company or on the Company by its officers or employees has been noticed or reported during the course of our audit.
(xi) According to the information and explanations given to us and based on our examination of the records, the Company has paid /provided for managerial remuneration in accordance with the requisite approvals mandated by the provisions of Section 197 read with Schedule V to the Act.
(xii) In our opinion and according to the information and explanations given to us, the Company is not a nidhi company. Accordingly, paragraph (xii) of the Order is not applicable to the Company.
(xiii) According to the information and explanations given to us and based on our examination of the records of the Company, transactions with the related parties are in compliance with Sections 177 and 188 of the Act, where applicable. The details of such related party transactions have been disclosed in the standalone Ind AS financial statements as required by the applicable accounting standards.
(xiv) According to the information and explanations given to us and based on our examination of the records, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year.
(xv) According to the information and explanations given to us and based on our examination of the records, the Company has not entered into non-cash transactions with directors or persons connected with him. Accordingly, paragraph (xv) of the Order is not applicable to the Company.
(xvi) The Company is not required to be registered under Section 45-IA of the Reserve Bank of India Act, 1 934. Accordingly, the provisions of Clause (xvi) of the Order are not applicable to the Company.
Report on the Internal Financial Controls under Clause (i) of subsection 3 of Section 143 of the Companies Act, 2013 ("the Act").
We have audited the internal financial controls over financial reporting of Reliance Communications Limited ("the Company") as of 31 March 2017 in conjunction with our audit of the standalone Ind AS financial statements of the Company for the year ended on that date.
Management''s Responsibility for Internal Financial Controls
The Company''s management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India (ICAI). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to company''s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Act.
Auditor''s Responsibility
Our responsibility is to express an opinion on the Company''s internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls over Financial Reporting (the "Guidance Note") and the Standards on Auditing issued by the ICAI and deemed to be prescribed under Section 143 (10) of the Act, to the extent applicable to an audit of internal financial controls, both applicable to an audit of Internal Financial Controls and both issued by the ICAI. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the standalone Ind AS financial statements, whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company''s internal financial controls system over financial reporting.
Meaning of Internal Financial Controls over Financial Reporting
A company''s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company''s internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company''s assets that could have a material effect on the financial statements.
Inherent Limitations of Internal Financial Controls over Financial Reporting
Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Opinion
In our opinion, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at 31 March, 2017, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the ICAI.
For Pathak H.D. & Associates For B S R & Co. LLP
Chartered Accountants Chartered Accountants
Firm''s Reg. No: 107783W Firm''s Reg. No: 101248W/
W-100022
Parimal Kumar Jha Vijay Bhatt
Partner Partner
Membership No: 1 24262 Membership No: 036647
Mumbai Mumbai
May 27, 2017 May 27, 2017
Mar 31, 2016
We have audited the accompanying standalone financial statements of
Reliance Communications Limited (''the Company''), which comprise the
Balance Sheet as at 31 March 2016, the Statement of Profit and Loss, 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 Standalone Financial Statements
The Company''s Board of Directors is responsible for the matters stated
in sub-section 5 of Section 134 of the Companies Act, 2013 (''the Act'')
with respect to the preparation 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 (''the Rules'').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 standalone 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 thereunder.
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.
An audit also includes evaluating the 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 standalone 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 2016, and its loss and its cash flows for the year ended on
that date.
Emphasis of Matters
a. We draw attention to Note 2.28 (vi) of the standalone financial
statements regarding the Scheme of Arrangement (''the Scheme'')
sanctioned on 03 July 2009 by the Hon''ble High Court of Judicature at
Mumbai, the Company is permitted to adjust additional
depreciation/amortisation, expenses and/or losses, which have been or
are required to be debited to the Statement of Profit and Loss by a
corresponding withdrawal or credit from/to General Reserve, as
determined by the Board of Directors. During the year, the Company has
withdrawn Rs. 1,190 crore (previous year Rs. 1,177 crore) to offset
additional depreciation/ amortisation on account of fair valuation of
certain assets which may be considered to override the relevant
provisions of Schedule II of the Act and Accounting Standard 5 (AS 5)
''Net Profit or Loss for the Period, Prior Period Items and Changes in
Accounting Policies''. Our opinion is not qualified in respect of this
matter.
b. We further draw your attention to Note 2.37 (b) of the standalone
financial statements regarding the Scheme of Arrangement (''the Scheme'')
sanctioned by the Hon''ble High Court of Judicature at Mumbai. The
Scheme permits the Company to adjust expenses and/or losses identified
by the Board of Directors, which are required to be debited to the
Statement of proft and loss by a corresponding withdrawal from General
Reserve, which is considered to be an override to the relevant
provisions of AS 5. The Company has identified net foreign exchange
variations of Rs. 3 crore (previous year Rs. 31 crore), amortization of
Foreign Currency Monetary Items Translation Difference Account
(FCMITDA) of Rs. 274 crore (previous year Rs. 199 crore) and
depreciation on exchange losses capitalised of Rs. 467 crore (previous
year Rs. 387 crore), as in the opinion of the Board, such exchange
losses and depreciation are considered to be of an exceptional nature
and accordingly, these expenses have been met by corresponding
withdrawal from General Reserve. Our opinion is not qualified in respect
of this matter.
Had the effect of paragraphs (a) and (b) above, not been met from
General Reserve, the Company would have reflected a loss after tax for
the year of Rs. 3,558 crore (previous year Rs. 1,948 crore).
Report on Other Legal and Regulatory Requirements
As required by the Companies (Auditor''s Report) Order, 2016 (''the
Order''), issued by the Central Government of India in terms of
sub-section (11) of Section 143 of the Act, we enclose in ''Annexure A''a
statement on the matters specified in paragraphs 3 and 4 of the Order,
to the extent applicable.
2. As required by sub-section 3 of Section 143 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; read with
Emphasis of Matter paragraph above, regarding exercise of option
available as per the Court Order which overrides the requirement of AS
5;
(e) on the basis of written representations received from the directors
as on 31 March 2016 taken on record by the Board of Directors, none of
the directors is disqualified as on 31 March 2016 from being appointed
as a director in terms of sub-section 2 of Section 164 of the Act;
(f) With respect to the adequacy of the internal financial controls over
financial reporting of the Company and the operating effectiveness of
such controls, refer to our separate report in "Annexure B" and
(g) 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 has disclosed the impact of pending litigations on its
financial position in its standalone financial statements  Refer Note
2.31 to the standalone financial statements;
ii. The Company did not have any long-term contracts including
derivative contracts for which there were any material foreseeable
losses; and
iii. There has been no delay in transferring amounts, required to be
transferred, to the Investor Education and Protection Fund by the
Company.
With reference to the Annexure A referred to in the Independent
Auditors''Report to the Members of Reliance Communications Limited (''the
Company'') on the standalone financial statements for the year ended 31
March 2016, we report the following:
(i) (a) The Company has maintained proper records showing full
particulars, including quantitative details and situation of fixed
assets.
(b) We are informed that the Company physically verifies its assets over
a three year period, except for base trans-receiver stations. We are
informed that these assets are under continuous operational
surveillance at National Network Operating Centre and are therefore not
separately physically verified. In our opinion, this periodicity of
physical verification is reasonable having regard to the size of the
Company and the nature of its assets. In accordance with this policy,
the Company has physically verified certain fixed assets during the year
and no material discrepancies were identified on such physical
verification.
(c) According to the information and explanations given to us, the
title deeds of immovable properties, as disclosed in Note 2.10 to the
standalone financial statements, are held in the name of the Company,
except for the following where the Company is in the process of
transferring the title deeds in it''s name as these were acquired
through various schemes of arrangement entered in the earlier years:
Particulars Freehold Leasehold Building
land land
No of cases 418 8 435
Gross block as at 189 3 347
31 March 2016 (Rs. in crore)
Net block as at 189 2 240
31 March 2016 (Rs. in crore)
(ii) The inventory has been physically verified by the management during
the year. In our opinion, the frequency of such verification is
reasonable. The discrepancies noticed on verification between the
physical stocks and the book records were not material and have been
dealt with in books of account.
(iii) The Company has not granted any loans, secured or unsecured, to
companies, firms, Limited liability Partnerships or other parties
covered in the register maintained under Section 189 of the Act.
Accordingly, paragraph (iii) of the Order is not applicable to the
Company.
(iv) The Company has not granted any loans or provided any guarantees
or security to the parties covered under Section 185 of the Act. The
Company has complied with the applicable provisions of Section 186 of
the Act.
(v) In our opinion and according to the information and explanations
given to us, the Company has not accepted any deposits from the public
in accordance with relevant provisions of Sections 73 to 76 or any
other relevant provisions of the Act and the rules framed there under.
Accordingly, paragraph (v) of the Order is not applicable to the
Company.
(vi) We have broadly reviewed the books of account maintained by the
Company pursuant to the rules prescribed by the Central Government for
maintenance of cost records under sub-section 1 of Section 148 of the
Act, in respect of telecommunication activities 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
records.
(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, Wealth Tax, Income Tax,
Service Tax, Customs Duty, Sales Tax, Value Added Tax (VAT), Entry Tax,
Employees''State Insurance, cess and other material statutory dues have
been generally regularly deposited during the year by the Company with
the appropriate authorities though there has been slight delay in few
cases. As explained to us, the Company did not have any dues on account
of Excise Duty.
According to the information and explanations given to us, no
undisputed amounts payable in respect of Provident Fund, Wealth Tax,
Income Tax, Service Tax, Customs Duty, Sales Tax, VAT, Entry Tax,
Employees'' State Insurance, cess and other material statutory dues were
in arrears as at 31 March 2016 for a period of more than six months
from the date they became payable.
(b) According to the information and explanations given to us, there
are no dues of Wealth Tax or cess which have not been deposited on
account of any dispute. The dues of Excise Duty, Income Tax, Customs
Duty, Service Tax, Sales Tax, VAT and Entry Tax as disclosed below have
not been deposited by the Company on account of disputes.
Name of the
Statute Nature of dues Amount Period Forum where the
dispute is pending
(Rs. in
Cr)
Central Sales
Tax, Uttar
Pradesh Central Sales
Tax 0.07 2006-07 High Court
Additional
Commissioner
(Appeals)
0.08 2010-11
Central Sales
Tax, Bihar Central Sales
Tax 0.04 2005-06 Appellate Tribunal
0.09 2013-14 Dy. Commissioner of
Commercial Taxes
Central Sales
Tax, Haryana Central Sales
Tax 0.06 2012-13 Jt. Commissioner
Central Sales
Tax, Madhya
Pradesh Central Sales
Tax 0.03 2011-12
to Dy. Commissioner
(Appeals)
2013-14
Central Sales
Tax,
Uttarakhand Central Sales
Tax 0.12 2009-10
to Dy. Commissioner
of Commercial Taxes
2010-11
Central Sales
Tax, Orissa Central Sales
Tax 0.02 Oct-06
to Sales Tax
Appellate Tribunal
March-09
0.01 2009-10 Addl. Commissioner
(Appeals)
Central Sales
Tax, West
Bengal Central Sales
Tax 0.34 2007-08 Tax revision Board
Entry Tax,
Madhya Pradesh Entry Tax 0.48 2002-03
to Asst. Commissioner
of Commercial Taxes
2003-04
1.58 2005-06
to MP Taxation Board
2008-09
and
2010-11
0.21 2011-12 Dy. Commissioner
(Appeals)
Entry Tax,
Rajasthan Entry Tax 14.73 2005-06, Supreme Court
2007-08
to
2012-13
3.40 2013-14
to Appellate Authority
2014-15
Entry Tax,
Orissa Entry Tax 0.05 Oct 06 -
Mar Sales Tax Appellate
Tribunal
09
0.08 2009-10 Addl. Commissioner
(Appeals)
Entry Tax,
Uttar Pradesh Entry Tax 0.13 2003-04 Commercial Tax
Tribunal
Entry Tax,
Chattisgarh Entry Tax 0.50 2006-07
to Commercial Tax
Tribunal
2007-08
0.17 2010-11 Dy. Commissioner
(Appeals)
Name of the
Statute Nature of
dues Amount Period Forum where the
dispute is pending
(Rs. in
Cr)
Entry Tax,
Himachal
Pradesh Entry Tax 0.95 2010-11
to High Court
2013-14
Entry Tax,
Bihar Entry Tax 0.38 2007-08
to Commercial Tax
Tribunal
2008-09
Central Excise
Act, 1944 Excise duty 4.16 2002-04 CESTAT, Mumbai
Sales Tax,
Maharashtra Sales Tax 4.79 2004-05 Jt. Commissioner
(Appeals)
VAT, Bihar VAT 0.24 2005-06 Commercial Tax
Tribunal
VAT/Sales Tax,
Uttar Pradesh VAT/Sales Tax 0.24 2003-04 UP Trade Tax
Tribunal
0.93 2004-05 High Court
0.52 2005-06, Dy. Commissioner of
Commercial Taxes
Jan ''08
to
March ''08
0.20 2010-11 Addl. Commissioner
(Appeals)
VAT, VAT 0.03 2007-08 Jt. Commissioner
(Appeals)
Uttarakhand 0.78 2009-10
to Dy. Commissioner of
Commercial Taxes
2010-11
VAT, West
Bengal VAT 4.17 2005-06, Tax Revision Board
2007-08
to
2008-09
VAT, Kerala VAT 0.01 2006-07 Deputy Commissioner
(Appeals)
VAT, Punjab VAT 0.05 2010-11 Deputy Commissioner
(Appeals)
VAT Haryana VAT 1.15 2011-12 Commercial Tax
Tribunal
Finance Act,
1994 CENVAT Credit 1.32 2014-15 CESTAT
The Customs
Act, 1962 Customs duty 0.23 2006-07 CESTAT
Income Tax
Act, 1961 Income Tax 0.57 2012-13 Commissioner Income
Tax (Appeals)
Income Tax
Act, 1961 Income Tax 89.97 2002-06 Bombay High Court
(viii) In our opinion and according to the information and explanations
given to us, the Company has not defaulted in repayment of loans or
borrowings to financial institutions, banks and Government and in
payment of dues to debenture holders as at balance sheet date.
(ix) During the year, the Company has not raised any money by way of
initial public offer or further public offer (including debt
instruments). The term loans have been utilized for the purpose for
which these were raised.
(x) According to the information and explanations given to us, no
material fraud by the Company or on the Company by its officers or
employees has been noticed or reported during the course of our audit.
(xi) According to the information and explanations given to us and
based on our examination of the records, the Company has paid /provided
for managerial remuneration in accordance with the requisite approvals
mandated by the provisions of Section 197 read with Schedule V to the
Act.
(xii) In our opinion and according to the information and explanations
given to us, the Company is not a nidhi company. Accordingly, paragraph
(xii) of the Order is not applicable to the Company.
(xiii) According to the information and explanations given to us and
based on our examination of the records of the Company, transactions
with the related parties are in compliance with Sections 177 and 188 of
the Act, where applicable. The details of such related party
transactions have been disclosed in the financial statements as required
under Accounting Standard (AS) 18, Related Party Disclosures specified
under Section 133 of the Act, read with Rule 7 of the Companies
(Accounts) Rules, 2014.
(xiv) According to the information and explanations given to us and
based on our examination of the records, the Company has not made any
preferential allotment or private placement of shares or fully or
partly convertible debentures during the year.
(xv) According to the information and explanations given to us and
based on our examination of the records, the Company has not entered
into non-cash transactions with directors or persons connected with
him. Accordingly, paragraph (xv) of the Order is not applicable to the
Company.
(xvi) The Company is not required to be registered under Section 45-IA
of the Reserve Bank of India Act, 1934. Accordingly, the provisions of
Clause (xvi) of the Order are not applicable to the Company.
For Chaturvedi & Shah For B S R & Co. LLP
Chartered Accountants Chartered Accountants
Firm''s Reg. No: 101720W Firm''s Reg. No: 101248W/
W-100022
Lalit R. Mhalsekar Vijay Bhatt
Partner Partner
Membership No: 103418 Membership No: 036647
Mumbai Mumbai
May 30, 2016 May 30, 2016
Mar 31, 2015
We have audited the accompanying Standalone Financial Statements of
Reliance Communications 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
significant accounting policies and other explanatory information.
Management's responsibility for the Standalone 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 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
specifed 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 thereunder. 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 disclosures in the financial statements. The procedures
selected depend on the auditor's judgement, 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 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 control system over financial
reporting and the operative effectiveness of such controls. An audit
also includes evaluating the appropriateness of 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.
We believe that the audit evidence we have obtained is suffcient 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 loss and cash flows for the year ended on that
date.
Emphasis of Matter
a) We draw attention to Note 2.29 (vi) of the Standalone Financial
Statements regarding the Scheme of Arrangement ('the Scheme')
sanctioned on 03 July 2009 by the Hon'ble High Court of Judicature at
Mumbai, the Company is permitted to adjust additional depreciation/
amortisation, expenses and/or losses, which have been or are required
to be debited to the Statement of Profit and Loss by a corresponding
withdrawal or credit from/ to General Reserve, as determined by the
Board of Directors. During the year, the Company has withdrawn Rs. 1,177
crore to offset additional depreciation / amortisation on account of
fair valuation of certain assets which may be considered to override
the relevant provisions of Schedule II of the Act and Accounting
Standard 5 (AS 5) 'Net Profit or Loss for the Period, Prior Period Items
and Changes in Accounting Policies'. Our opinion is not Qualified in
respect of this matter.
b) We further draw your attention to Note 2.38 (b) of the Standalone
Financial Statements regarding the Scheme of Arrangement ('the Scheme')
sanctioned by the Hon'ble High Court of Judicature at Mumbai. The
Scheme permits the Company to adjust expenses and/ or losses identified
by the Board of Directors, which are required to be debited to the
Statement of Profit and Loss by a corresponding withdrawal from General
Reserve, which is considered to be an override to the relevant
provisions of AS 5 'Net Profit or Loss for the Period, Prior Period
Items and Changes in Accounting Policies'. The Company has identified
net foreign exchange variations of Rs. 31 crore (previous year Rs. 54
crore), amortization of Foreign Currency Monetary Items Translation
Difference Account (FCMITDA) of Rs. 199 crore (previous year Rs. 254 crore)
and depreciation on exchange losses capitalised of Rs. 387 crore
(previous year Rs. 333 crore), as in the opinion of the Board, such
exchange losses and depreciation are considered to be of an exceptional
nature and accordingly, these expenses have been met by corresponding
withdrawal from General Reserve. Our opinion is not Qualified in respect
of this matter.
Had the effect of paragraphs (a) and (b) above, not been met from
General Reserve, the Company would have reflected a loss after tax for
the year of Rs. 1,948 crore (previous year- profit after tax Rs. 89 crore)
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 paragraphs 3 and 4 of the Order.
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
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, 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; and read
with Emphasis of Matter paragraph above, the Company has exercised the
option available as per the Court Order which overrides the relevant
provisions of AS 5;
(e) on the basis of written representations received from the directors
as on 31 March 2015 taken on record by the Board of Directors, none of
the director 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 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 has disclosed the impact of pending litigations on its
financial position in its financial statements  Refer Note 2.32 to the
Standalone Financial Statements;
ii. The Company did not have any long-term contracts including
derivative contracts for which there were any foreseeable losses; and
iii. There has been no delay in transferring amounts, required to be
transferred, to the Investor Education and Protection Fund by the
Company.
With reference to the Annexure referred to in the Independent Auditors'
Report to the Members of Reliance Communications Limited ('the
Company') on the standalone financial statements for the year ended 31
March 2015, we report the following:
(i) (a) The Company has maintained proper records showing full
particulars, including quantitative details and location of fixed
assets.
(b) We are informed that the Company physically verifies its assets over
a three year period, except for base trans-receiver stations. We are
informed that these assets are under continuous operational
surveillance at National Network Operating Centre and are therefore not
separately physically verified. In our opinion, this periodicity of
physical verification is reasonable having regard to the size of the
Company and the nature of its assets. In accordance with this policy,
the Company has physically verified certain fixed assets during the year.
No material discrepancies were noticed on physical verification of fixed
asset as compared to book records.
(ii) (a) The inventory has been physically verified by the management
during the year. In our opinion, the frequency of such verification is
reasonable.
(b) The procedures for the physical verification of inventories 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 inventories. The
discrepancies noticed on verification between the physical stocks and
the book records were not material.
(iii) The Company has not granted any loans, secured or unsecured, to
companies, firms or other parties covered in the register maintained
under Section 189 of the Act. Accordingly, paragraphs (iii) (a) and
(b) of the Order are not applicable to the Company.
(iv) In our opinion, and according to the information and explanations
given to us, and having regard to the explanation that purchases of
certain items of inventories and fixed assets are for the Company's
specialised requirements for which suitable alternative sources are not
available to obtain comparable quotations, there is an adequate
internal control system commensurate with the size of the Company and
nature of its business with regard to the purchase of inventories and
fixed assets and with regard to the sale of services. In our opinion,
activities of the Company do not involve sale of goods. In our opinion,
and according to the information and explanations given to us, there is
no continuing failure to correct major weaknesses in the internal
control system.
(v) In our opinion, and according to the information and explanations
given to us, the Company has not accepted deposits as per the
directives issued by the Reserve Bank of India under the provisions of
Sections 73 to 76 or any other relevant provisions of the Act and the
rules framed there under. Accordingly, paragraph (v) of the Order is
not applicable to the Company.
(vi) We have broadly reviewed the books of account maintained by the
Company pursuant to the rules prescribed by the Central Government for
maintenance of cost records under sub-section (1) of Section 148 of the
Act, in respect of telecommunication activities 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
records.
(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, Wealth Tax, Income Tax,
Service Tax, Customs Duty, Sales Tax, Value Added Tax (VAT), Entry Tax,
Employees' State Insurance, cess and other material statutory dues have
been generally regularly deposited during the year by the Company with
the appropriate authorities. As explained to us, the Company did not
have any dues on account of Excise Duty. According to the information
and explanations given to us, no undisputed amounts payable in respect
of Provident Fund, Wealth Tax, Income Tax, Service Tax, Customs Duty,
Sales Tax, VAT, Entry Tax, Employees' State Insurance, cess and other
material statutory dues were in arrears as at 31 March 2015 for a
period of more than six months from the date they became payable.
(b) According to the information and explanations given to us, there
are no dues of Wealth Tax or cess which have not been deposited on
account of any dispute. The dues of Excise Duty, Income Tax, Customs
Duty, Service Tax, Sales Tax, VAT and Entry Tax as disclosed below have
not been deposited by the Company on account of disputes.
Name of the Statute Nature of dues Amount
(Rs.in Cr)
Central Sales Tax, West Central Sales Tax 0.34
Bengal
0.09
Central Sales Tax, Central Sales Tax 0.07
Uttar Pradesh 0.08
Central Sales Tax, Central Sales Tax 0.12
Uttarakhand
Central Sales Tax, Madhya Central Sales Tax 0.01
Pradesh
Central Sales Tax, Orissa Central Sales Tax 0.02
0.01
Sales Tax, Maharashtra Sales Tax 4.79
Central Sales Tax, Central Sales Tax 0.44
Maharashtra
Central Sales Tax, Bihar Central Sales Tax 0.04
0.09
Entry Tax, Bihar Entry Tax 0.38
Entry Tax, Entry Tax 0.48
Madhya Pradesh
1.76
0.21
Entry Tax, Orissa Entry Tax 0.05
0.08
Entry Tax, Rajasthan Entry Tax 18.06
Entry Tax, Uttar Pradesh Entry Tax 0.13
Entry Tax, Chattisgarh Entry Tax 0.50
Entry Tax, Himachal Entry Tax 0.82
Pradesh
Central Excise Act, 1944 Excise duty 4.16
VAT, Bihar VAT 0.24
VAT/Sales Tax, Uttar VAT/Sales Tax 0.24
Pradesh
0.93
0.72
0.71
VAT, Uttarakhand VAT 0.03
0.78
VAT, West Bengal VAT 1.49
2.69
2.42
VAT, Haryana VAT 1.15
VAT, Kerala VAT 0.01
VAT, Punjab VAT 0.05
Finance Act, 1944 Service tax 14.31
The Custom Act, 1962 Custom duty 0.23
Income Tax Act, 1961 Income Tax 116.76
Income Tax Act, 1961 Income Tax 89.97
Name of the Statue Period Forum where the dispute
is pending
Central Sales Tax, West 2007-08 Tax revision board
Bengal
2011-12 Jt. Commissioner (Appeals)
Central Sales Tax 2006-07 UP Trade Tax Tribunal
Uttar Pradesh 2010-11 Addl. Commissioner
(Appeals)
Central Sales Tax, 2009-10 Dy. Commissioner of
Commercial Taxes
Uttarakhand to 2010-11
Central Sales Tax, Madhya 2011-12 Dy. Commissioner (Appeals)
Pradesh
Central Sales Tax, Orissa Oct06 -Mar09 Sales Tax Appellate
Tribunal
2009-10 Addl. Commissioner
(Appeals)
Sales Tax, Maharashtra 2004-05 Jt. Commissioner (Appeals)
Central Sales Tax 2005-06 Dy. Commissioner of
Sales Tax
Maharashtra
Central Sales Tax, Bihar 2005-06 Commercial Taxes Tribunal
2013-14 Jt. Commissioner of
Commercial Taxes
(Appeals)
Entry Tax, Bihar 2007-08 to Commercial Taxes Tribunal
2008-09
Entry Tax 2002-03 to Asst. Commissioner of
Commercial Taxes
Madhya Pradesh 2003-04
2005-06 to MP Taxation Board
2008-09 and
2010-11
2011-12 Dy. Commissioner
(Appeals)
Entry Tax, Orissa Oct06 - Mar09 Sales Tax Appellate
Tribunal
2009-10 Addl. Commissioner
(Appeals)
Entry Tax, Rajasthan 2005-06, Supreme Court
2007-08 to
2012-13
Entry Tax, Uttar Pradesh 2003-04 Commercial Tax Tribunal
Entry Tax, Chattisgarh 2006-07 to Commercial Tax Tribunal
2007-08
Entry Tax, Himac 2010-11 to High Court
Pradesh 2013-14
Central Excise Act, 1944 2002-04 CESTAT, Mumbai
VAT, Bihar 2005-06 Commercial Tax Tribunal
VAT/Sales Tax, Uttar 2003-04 UP Trade Tax Tribunal
Pradesh
2004-05 High Court
2005-06,
Jan '08 Addl. Commissioner
(Appeals)
to March'08 and
2010-11
2006-07 to Dy. Commissioner of
Commercial Taxes
2009-10
VAT, Uttarakhand 2007-08 Jt. Commissioner
(Appeals)
2009-10 to Dy. Commissioner of
Commercial Taxes
2010-11
VAT, West Bengal 2005-06 Tax Revision Board
2007-08 to Tax revision board
2008-09
2006-07, Jt. Commissioner (Appeals)
2009-10 to
2011-12
VAT, Haryana 2011-12 Jt. Excise and Taxation
Commissioner
(Appeals)
VAT, Kerala 2006-07 Deputy Commissioner
(Appeals)
VAT, Punjab 2010-11 Deputy Commissioner
(Appeals)
Finance Act, 1944 Oct'06 to
Sept'11 CESTAT
and
May'08 to
May'09
The Custom Act, 1962 2006-07 CESTAT
Income Tax Act, 1961 2008-09,
2009-10 Commissioner Income
Tax (Appeals)
and 2011-12
Income Tax Act, 1961 2002-06 Bombay High Court
(c) According to the information and explanations given to us and on
the basis of our examination of the records of the Company, the amount
required to be transferred to Investor Education and Protection Fund in
accordance with the relevant provisions of the Companies Act, 1956 and
rules made thereunder has been transferred to such fund within time.
(viii) The Company does not have any accumulated losses at the end of
the financial year. The Company has not incurred any cash losses in the
current year and in the immediately preceding financial year.
(ix) In our opinion and according to the information and explanations
given to us, the Company has not defaulted in repayment of dues to its
bankers or debenture holders or to any financial institutions.
(x) In our opinion and according to the information and explanations
given to us, the terms and conditions on which the Company has given
guarantee for loan taken, by subsidiaries and other companies with whom
the Company has business dealings, from banks are not prima facie
prejudicial to the interests of the Company.
(xi) In our opinion and according to the information and explanations
given to us and the records of the Company examined by us, the term
loans taken by the Company have been applied for the purpose for which
they were raised except for certain term loans availed as at the end of
the year, which have been placed as fixed deposits with bank and have
been utilised for the stated purpose, subsequent to Balance Sheet date.
(xii) According to the information and explanations given to us, no
significant fraud on or by the Company, that causes a material
misstatement to the financial statements, has been noticed or reported
during the year.
For Chaturvedi & Shah For B S R & Co. LLP
Chartered Accountants Chartered Accountants
Firm's Reg. No: 101720W Firm's Reg. No: 101248W/
W-100022
Chandan Lala Rajesh Mehra
Partner Partner
Membership No: 35671 Membership No: 103145
Mumbai
May 29, 2015
Mar 31, 2014
We have audited the accompanying financial statements of Reliance
Communications Limited (''the Company''), which comprise the Balance
Sheet as at 31 March 2014, 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 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") read with the General Circular
15/2013 dated 13 September 2013 of the Ministry of Corporate Affairs in
respect of Section 133 of the Companies Act, 2013. 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.
Auditor''s 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 auditor''s judgement, 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 Company''s 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 entity''s
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 31 March 2014;
(b) in the case of the Statement of profit and Loss, of the profit of the
Company for the year ended on that date; and
(c) in the case of the Cash Flow Statement, of the cash flows of the
Company for the year ended on that date.
Emphasis of Matter
We draw your attention to Note 2.37 of the financial statements
regarding the Scheme of Arrangement (''the Scheme'') sanctioned by the
Hon''ble High Court of Judicature at Mumbai. The Scheme permits the
Company to adjust expenses and/or losses identified by the Board of
Directors, which are required to be debited to the Statement of profit
and loss by a corresponding withdrawal from General Reserve, which is
considered to be an override to the relevant provisions of Accounting
Standard 5 (AS 5) ''Net profit or Loss for the Period, Prior Period Items
and Changes in Accounting Policies''. The Company has identified net
foreign exchange variations of Rs. 54 crore (previous year Rs. 91 crore),
amortization of Foreign Currency Monetary Items Translation Difference
Account (FCMITDA) of Rs. 254 crore (previous year Rs. 546 crore) and
depreciation on exchange losses capitalised of Rs. 333 crore (previous
year Rs. 218 crore), as in the opinion of the Board, such exchange loss
and depreciation are considered to be of an exceptional nature and
accordingly, these expenses have been met by corresponding withdrawal
from General Reserve. Had such write off of exchange loss and
depreciation not been met from General Reserve, the Company would have
refected a profit after tax for the year of Rs. 89 crore (previous year Â
loss after tax of Rs. 231 crore) and the consequential effect of this on
the profit after tax for the year would have been of Rs. 641 crore
(previous year Rs. 855 crore). Pending clarifcation from the Institute of
Chartered Accountants of India (ICAI), the Company has credited such
withdrawals to the Statement of profit and loss. Our opinion is not
Qualified in this matter.
Report on other legal and regulatory requirements
As required by the Companies (Auditor''s 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:
(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, 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 Balance Sheet, the Statement of profit and Loss
and the Cash Flow Statement comply with the Accounting Standards
referred to in sub- section (3C) of Section 211 of the Act read with
the General Circular 15/2013 dated 13 September 2013 of the Ministry of
Corporate Affairs in respect of Section 133 of the Companies Act, 2013;
as referred in Emphasis of Matter paragraph above, the Company has
exercised the option available as per the Court Order which overrides
the relevant provisions of the Accounting Standard 5 (AS 5); and
(e) on the basis of written representations received from the directors
of the Company as at 31 March 2014, and taken on record by the Board of
Directors, none of the directors is disQualified as on 31 March 2014
from being appointed as a director in terms of clause (g) of
sub-section (1) of Section 274 of the Act.
Annexure to the Independent Auditors'' Report - 31 March 2014
With reference to the Annexure referred to in the Independent Auditors''
Report to the Members of Reliance Communications Limited (''the
Company'') on the financial statements for the year ended 31 March 2014,
we report the following:
1. (a) The Company has maintained proper records showing full
particulars, including quantitative details and location of fixed
assets.
(b) We are informed that the Company physically verifes its assets over
a three year period, except for base trans-receiver stations. We are
informed that these assets are under continuous operational
surveillance at National Network Operating Centre and are therefore not
separately physically verifed. In our opinion, this periodicity of
physical verifcation is reasonable having regard to the size of the
Company and the nature of its assets. In accordance with this policy,
the Company has physically verifed certain fixed assets during the year.
(c) The Company has not disposed off any fixed assets during the year.
2. (a) The inventory has been physically verifed by management during
the current year. In our opinion, the frequency of such verifcation is
reasonable.
(b) The procedures for the physical verifcation of inventories followed
by 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.
Discrepancies identified on physical verifcation of inventories as
compared to book records were not material.
3. The Company has neither granted nor taken any loans, secured or
unsecured, to or from companies, firms or other parties covered in the
register maintained under section 301 of the Companies Act, 1956.
Accordingly, paragraph 4(iii) of the Order is not applicable.
4. In our opinion, and according to the information and explanations
given to us, and having regard to the explanation that purchases of
certain items of inventories and fixed assets are for the Company''s
specialised requirements for which suitable alternative sources are not
available to obtain comparable quotations, there is an adequate
internal control system commensurate with the size of the Company and
nature of its business with regard to the purchase of inventories and
fixed assets and with regard to the sale of services. In our opinion,
activities of the Company do not involve sale of goods. In our opinion,
and according to the information and explanations given to us, there is
no continuing failure to correct major weaknesses in the internal
control system.
5. In our opinion, and according to the information and explanations
given to us, there are no contracts and arrangements the particulars of
which need to be entered into the register maintained under section 301
of the Companies Act, 1956.
6. The Company has not accepted any deposits from the public.
7. In our opinion, the Company has an internal audit system
commensurate with the size and nature of its business.
8. We have broadly reviewed the books of account maintained by the
Company pursuant to the rules prescribed by the Central Government for
maintenance of cost records under section 209(1) (d) of the Companies
Act, 1956 in respect of telecommunication activities 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 records.
9. (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, Wealth Tax, Income Tax,
Service Tax, Customs Duty, Sales Tax, Value Added Tax (VAT), Entry Tax,
Employees'' State Insurance and other material statutory dues have been
generally regularly deposited during the year by the Company with the
appropriate authorities. As explained to us, the Company did not have
any dues on account of excise duty and Investor Education and
Protection Fund. According to the information and explanations given to
us, no undisputed amounts payable in respect of Provident Fund, Wealth
Tax, Income Tax, Service Tax, Customs Duty, Sales Tax, VAT, Entry Tax,
Employees'' State Insurance and other material statutory dues were in
arrears as at 31 March 2014 for a period of more than six months from
the date they became payable.
(b) According to the information and explanations given to us, there
are no dues of Wealth Tax which have not been deposited on account of
any dispute. The dues of Excise Duty, Income Tax, Customs Duty, Service
Tax, Sales Tax, VAT and Entry Tax as disclosed below have not been
deposited by the Company on account of disputes.
Name of the Statute Nature of dues Amount Period
Rs. Cr.
Income Tax Act, 1961 Income tax 49.43 2008-09
Income Tax Act, 1961 Withholding tax 89.97 2002-06
Central Sales Tax,
West Bengal Central Sales
Tax 0.34 2007-08
Central Sales Tax,
Uttar Pradesh Central Sales Tax 0.02 2005-06
0.50 2006-07
Name of the Statue Forum where dispute is pending
Income Tax Act, 1961 Commissioner income tax (Appeal)
Income Tax Act, 1961 Bombay High court
Central Sales Tax, West
Bengal West Bengal Tax revision board
Central Sales Tax, Uttar
Pradesh Assessing Officer (Remanded by Additional
Commissioner (Appeals))
Assessing Officer (Remanded by Additional
Commissioner (Appeals))
Name of the Statute Nature of dues Amount Period
Rs. Cr.
0.07 2006-07
0.20 2007-08
1.04 2008-09
1.23 2009-10
Central Sales
Tax, Orissa Central Sales Tax 0.02 Oct 06 -
Mar 09
0.01 2009-10
Central Sales
Tax, Bihar Central Sales Tax 0.04 2005-06
Sales Tax,
Maharashtra Sales Tax 4.79 2004-05
Sales Tax,
Uttar Pradesh Sales Tax 0.24 2003-04
Sales Tax 0.93 2004-05
Entry Tax, Assam Entry Tax 0.10 2007-08
Entry Tax, Bihar Entry Tax 0.29 2007-08
0.09 2008-09
Entry Tax,
Chattisgarh Entry Tax 0.05 2006-07
0.57 2007-08
Entry Tax,
Madhya Pradesh Entry Tax 0.29 2002-03
0.19 2003-04
0.12 2005-06
0.12 2006-07
0.52 2007-08
0.07 2008-09
Entry Tax,
Orissa Entry Tax 0.05 Oct 06 -
Mar 09
Entry Tax 0.08 2009-10
Entry Tax,
Rajasthan Entry Tax 0.03 2005-06
6.64 2007-08
6.52 2008-09
0.96 2009-10
2.52 2010-11
Entry Tax,
Uttar Pradesh Entry Tax 0.13 2003-04
Entry Tax,
Himachal Pradesh Entry Tax 0.79 2010-14
Finance Act, 1994 Service Tax 27.13 2006-12
The Central Excise
Act, 1944 Excise duty 2.08 2002-04
The Customs Act,
1962 Customs Duty 0.23 2006-07
VAT, Bihar VAT 0.24 2005-06
VAT, Kerala VAT 0.01 2006-07
VAT, Punjab VAT 0.05 2010-11
VAT, Uttar
Pradesh VAT 0.17 2008-09
0.18 2005-06
0.23 2006-07
Name of the Statue Forum where dispute is pending
UP Trade Tax Tribunal
Assessing Officer (Remanded by Additional
Commissioner (Appeals))
Assessing Officer (Remanded by Additional
Commissioner (Appeals))
Assessing Officer (Remanded by Additional
Commissioner (Appeals))
Central Sales Tax, Orissa Sales Tax Appellate Tribunal
Joint Commissioner (Appeals)
Central Sales Tax, Bihar Sales Tax Appellate Tribunal
Sales Tax, Maharashtra Joint Commissioner (Appeals)
Sales Tax, Uttar Pradesh Sales Tax Appellate Tribunal
Allahabad High court
Entry Tax, Assam Deputy Commissioner (Appeals)
Entry Tax, Bihar Sales Tax Appellate Tribunal
Sales Tax Appellate Tribunal
Entry Tax, Chattisgarh Dy. Commissioner (Appeals)
Dy. Commissioner (Appeals)
Entry Tax, Madhya Pradesh MP Taxation Board
MP Taxation Board
MP Taxation Board
MP Taxation Board
MP Taxation Board
Appellate Tribunal
Entry Tax, Orissa Appellate Tribunal
Joint Commissioner (Appeals)
Entry Tax, Rajasthan High Court of Rajasthan
High Court of Rajasthan
High Court of Rajasthan
High Court of Rajasthan
High Court of Rajasthan
Entry Tax, Uttar Pradesh UP Trade Tax Tribunal
Entry Tax, Himachal
Pradesh High Court of Himachal Pradesh
Finance Act, 1994 CESTAT Customs Excise Service Tax
Appellate Tribunal
The Central Excise Act,
1944 CESTAT Customs Excise Service Tax
Appellate Tribunal
The Customs Act, 1962 CESTAT Customs Excise Service Tax
Appellate Tribunal
VAT, Bihar Appellate Tribunal
VAT, Kerala Deputy Commissioner (Appeals)
VAT, Punjab Deputy Commissioner (Appeals)
VAT, Uttar Pradesh Addl. Commissioner (Appeals)
Addl. Commissioner (Appeals)
Addl. Commissioner (Appeals)
Name of the Statute Nature of dues Amount Period
Rs. Cr.
0.12 2007-08
0.34 Jan ''08 to
March ''08
0.25 2009-10
VAT, Uttarakhand VAT 0.01 2005-06
0.03 2007-08
VAT, West Bengal VAT 1.49 2005-06
1.80 2006-07
2.34 2007-08
0.34 2008-09
0.71 2009-10
1.62 2010-11
Name of the Statue Forum where dispute is pending
Addl. Commissioner (Appeals)
Addl. Commissioner (Appeals)
Addl. Commissioner (Appeals)
VAT, Uttarakhand Uttarakhand Sales Tax Tribunal
Joint Commissioner (Appeals)
VAT, West Bengal West Bengal Tax revision board
West Bengal Tax revision board
West Bengal Tax revision board
West Bengal Tax revision board
Addl. Commissioner (Appeals)
Addl. Commissioner (Appeals)
10. The Company does not have any accumulated losses at the end of the
financial year and has not incurred cash losses in the current financial
year and in the immediately preceding financial year.
11. In our opinion and according to the information and explanations
given to us, the Company, has not defaulted in repayment of dues to its
bankers or debenture holders or to any financial institutions.
12. According to the information and explanations given to us, the
Company has not granted loans and advances on the basis of security by
way of pledge of shares, debentures and other securities.
13. In our opinion and according to the information and explanations
given to us, the Company is not a chit fund/ nidhi/ mutual benefit fund/
society.
14. According to the information and explanations given to us, the
Company is not dealing or trading in shares, securities, debentures and
other investments.
15. In our opinion and according to the information and explanations
given to us, the terms and conditions on which the Company has given
guarantees for loans taken by wholly owned subsidiaries and other
companies with whom the Company has business dealings, from banks or
financial institutions are not prejudicial to the interest of the
Company.
16. In our opinion and according to the information and explanations
given to us and the records of the Company examined by us, the term
loans taken by the Company have been applied for the purpose for which
they were raised.
17. According to the information and explanations given to us and on
an overall examination of the balance sheet of the Company, we are of
the opinion that the funds raised on the short term basis have not been
used for long-term investment.
18. The Company has not made any preferential allotment of shares to
companies/firms/parties covered in the register maintained under Section
301 of the Companies Act, 1956.
19. According to the information and explanations given to us, the
Company has created security in respect of debentures issued except for
certain debentures as mentioned in Note 2.03.1 for which the Company is
in the process of creating the security.
20. The Company has not raised any money by public issues during the
year.
21. According to the information and explanations given to us, no
significant fraud on or by the Company, that causes a material
misstatement to the financial statements, has been noticed or reported
during the year.
Fo r Chaturvedi & Shah Fo r B S R & Co. LLP
Chartered Accountants Chartered Accountants
Firm''s Reg. No: 101720W Firm''s Reg. No: 101248W
C D Lala Bhavesh Dhupelia
Partner Partner
Membership No: 35671 Membership No: 042070
Mumbai
May 2, 2014
Mar 31, 2013
Report on the financial statements
We have audited the accompanying financial statements of Reliance
Communications Limited (''the Company''), which comprise the Balance
Sheet as at 31 March 2013, 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 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, 1 956 ("the 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 auditor''s judgement, 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 Company''s 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 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 31 March 2013;
(b) in the case of the Statement of Profit and Loss, of the profit of
the Company for the year ended on that date; and
(c) in the case of the Cash Flow Statement, of the cash flows of the
Company fbr the year ended on that date.
Emphasis of Matter
We draw your attention to Note 2,37 of the financial statements
regarding the Scheme of Arrangement (''the Scheme'') sanctioned by the
Hon''ble High Court of Judicature at Mumbai. The Scheme permits the
Company to adjust expenses and/ or losses identified by the Board of
Directors, which are required to be debited to the Statement of profit
and loss by a corresponding withdrawal from General Reserve, which is
considered to be an override to the relevant provisions of Accounting
Standard 5 (AS 5) ''Net Profit or Loss for the Period, Prior Period
Items and Changes in Accounting Policies''. The Company has identified
exchange variations of Rs. 91 crore (previous yearRs. 1,048 crore),
provision for doubtful debt of Rs. Nil (previous yearRs. 220 crore),
amortization of Foreign Currency Monetary Items Translation Difference
Account (FCMITDA) of Rs. 546 crore (previous year Rs. 1 6 crore),
provision for subsidy receivable ofRs. Nil (previous yearRs. 48 crore)
and depreciation on exchange losses capitalised of Rs. 218 crore
(previous year Rs. Nil), as in the opinion of the Board, such exchange
loss, provision and depreciation are considered to be of an exceptional
nature and accordingly, these expenses have been met by corresponding
withdrawal from General Reserve. Had such write off of expenses and
losses not been met from General Reserve, the Company would have
reflected a loss after tax for the year of Rs. 231 crore (previous year
Rs. 1,176 crore) and the consequential effect of this on the profit
after tax for the year would have been of Rs. 855 crore (previous
yearRs. 1,332 crore). Pending clarification from the Institute of
Chartered Accountants of India (ICAI), the Company has credited such
withdrawals to the Statement o.: profit and loss. Our opinion is not
qualified in respect of this matter.
Report on other legal and regulatory requirements
1. As required by the Companies (Auditor''s 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.
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, 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 Balance Sheet, the Statement of Profit and Loss
and the Cash Flow Statement comply with the Accounting Standards
referred to in sub- section (3C) of Section 211 of the Act; as referred
in Emphasis of Matter paragraph above, the Company has exercised the
option available as per the Court Order which overrides the relevant
provisions of the Accounting Standard 5 (AS 5) and
(e) on the basis of written representations received from the directors
of the Company as at 31 March 201 3, and taken on record by the Board
of Directors, none of the directors is disqualified as on 31 March 201
3 from being appointed as a director in terms of clause (g) of
sub-section (1) of Section 274 of the Act.
With reference to the Annexure referred to in the Independent Auditors''
Report to the Members of Reliance Communications Limited (''the
Company'') on the f nancial statements for the year ended 31 March 2013,
we report the following:
1. (a) The Company is in the process of updating its fixed asset
register including, to give effect to the assets transferred on
demerger of the optical fibre undertaking and the passive
infrastructure to a subsidiary company.
(b) We are informed that the Company physically verifies its assets
over a three year period, except for base trans-receiver stations. We
are informed that these assets are under continuous operational
surveillance at National Network Operating Centre and are therefore not
separately physically verified. In our opinion, this periodicity of
physical verification is reasonable having regard to the size of the
Company and the nature of its assets. In accordance with this policy,
the Company has physically verified certain fixed assets during the
year and we are informed that no material discrepancies were noticed on
such verification.
(c) The Company has not disposed off any fixed assets during the year.
2. (a) The inventory has been physically verified by management during
the current year. In our opinion, the frequency of such verification is
reasonable.
(b) The procedures for the physical verification of inventories
followed by 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.
Discrepancies identified on physical verification of inventories as
compared to book records were not material.
3. The Company has neither granted nor taken any loans, secured or
unsecured, to orfrom companies, firms or other parties covered in the
register maintained under section 301 of the Companies Act, 1956.
Accordingly, paragraph 4(iii) of the Order is not applicable.
4. In our opinion, and according to the information and explanations
given to us, and having regard to the explanation that purchases of
certain items of inventories and fixed assets are for the Company''s
specialised requirements for which suitable alternative sources are not
available to obtain comparable quotations, there is an adequate
internal control system commensurate with the size of the Company and
nature of its business with regard to the purchase of inventories and
fixed assets and with regard to the sale of services. In oar-Â
opinion, activities of the Company do not involve sale of goods. In our
opinion, and according to the information and explanations given to us,
there is no continuing failure to correct major weaknesses in the
internal control system.
5. In our opinion, and according to the information and explanations
given to us, there are no contracts and arrangements the particulars of
which need to be entered into the register maintained under section 301
of the Companies Act, 1 956.
6. The Company has not accepted any deposits from the public.
7. In our opinion, the Company has an internal audit system
commensurate with the size and nature of its business.
8. We have broadly reviewed the books of account maintained by the
Company pursuant to the rules prescribed by the Central Government for
maintenance of cost records under section 209(1) (d) of the Companies
Act, 1956 in respect of telecommunication activities 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 records.
9. (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, Wealth Tax, Income Tax,
Service Tax, Customs Duty, Sales Tax, Entry Tax, Employees'' State
Insurance and other material statutory dues have been generally
regularly deposited during the year by the Company with the appropriate
authorities. As explained to us, the Company did not have any dues on
account of excise duty and Investor Education and Protection Fund.
According to the information and explanations given to us,, no
undisputed amounts payable in respect of Provident Fund, Wealth Tax,
Income Tax, Service Tax, Customs Duty, Sales Tax, Entry Tax, Employees''
State Insurance and other material statutory dues were in arrears as at
31 March 201 3 for a period of more than six months from the date they
became payable.
(b) According to the information and explanations given to us, there
are no dues of Provident Fund, Wealth Tax, Income Tax, Service Tax,
Customs Duty, Employees'' State Insurance which have not been deposited
on account of any dispute. The dues of Excise Duty, VAT, Sales Tax and
Entry Tax as disclosed below have not been deposited by the Company on
account of disputes.
Name of the Statute Nature of dues Amount
(Rs in Crore)
Central Sales Tax, West Bengal Central Sales Tax 0.34
Central Sales Tax 1.73
Central Sales Tax, Uttar Pradesh Central Sates Tax 0.24
0.93
0.02
0.07
0.50
0.20
1.04
Central Sales Tax, Orissa Central Sales Tax 0.02
0.01
Central Sales Tax, Maharashtra Central Sales Tax 4.79
Central Sales Tax, Delhi Central Sates Tax 0.05
Central Sales Tax, Bihar Central Sales Tax 0.03
Central Sales Tax, Assam Central Sales Tax 0.05
Entry Tax, Assam Entry Tax 0.10
Entry Tax, Bihar Entry Tax 0.76
0.20
Entry Tax, Chattisgarh Entry Tax 0.05
0.57
Name of the Statute Period Forum where dispute is pending
Central Sales Tax,
West Bengal 2007-08 West Bengal Tax revision board
2008-09 Joint Commissioner (Appeals)
Central Sales Tax,
Uttar Pradesh 2003-04 UP Trade Tax Tribunal
2004-05 High Court of Uttar Pradesh
2005-06 Additional Commissioner
(Appeals)
2006-07 UP Trade Tax Tribunal
2006-07 Additional Commissioner
(Appeals)
2007-08 Additional Commissioner
(Appeals)
2008-09 Additional Commissioner
(Appeals)
Central Sales Tax Orissa Oct 06-Mar 09 Joint Commissioner (Appeals)
2009-10 Joint Commissioner (Appeals)
Central Sales Tax,
Maharashtra 2004-05 Joint Commissioner (Appeals)
Central Sales Tax, Delhi 2010-11 VAT Officer (Remanded by the
Commissioner)
Central Sales Tax, Bihar 2005-06 Sales Tax Appellate Tribunal
Central Sales Tax, Assam 2010-11 Deputy Commissioner (Appeals)
Entry Tax Assam 2007-08 Deputy Commissioner (Appeals)
Entry Tax Bihar 2007-08 Joint Commissioner (Appeals)
2008-09 Joint Commissioner (Appeals)
Entry Tax Chattisgarh 2006-07 Dy. Commissioner (Appeals)
2007-08 Dy. Commissioner (Appeals)
10. The Company does not have any accumulated losses at the end of the
financial year and has not incurred cash losses in the current
financial year and in the immediately preceding financial year.
11. In our opinion and according to the information and explanations
given to us, the Company has not defaulted in repayment of dues to its
bankers or debenture holders or to any financial institutions.
12. According to the information and explanations given to us, the
Company has not granted loans and advances on the basis of security by
way of pledge of shares, debentures and other securities.
13. In our opinion and according to the information and explanations
given to us, the Company is not a chit fund/ nidhi/ mutual benefit
ftjnd/ society.
14. According to the information and explanations given to us, the
Company is not dealing or trading in shares, securities, debentures and
other investments.
15. In our opinion and according to the information and explanations
given to us, the terms and conditions on which the Company has given
guarantees for loans taken by wholly owned subsidiaries and other
companies with whom the Company has business dealings, from banks or
financial institutions are not prejudicial to the interest of the
Company.
16. In our opinion and according to the information and explanations
given to us and the records of the Company examined by us, the term
loans taken by the Company have been applied for the purpose for which
they were raised except portion of term loans availed as at the end of
the year is kept in bank, to be applied for the purpose for which it
was obtained.
17. According to the information and explanations given to us and on
an overall examination of the balance sheet of the Company, we are of
the opinion that the funds raised on the short term basis have not been
used for long-term investment.
18. The Company has not made any preferential allotment of shares to
companies/firms/parties covered in the register maintained under
Section 301 of the Companies Act 1 956.
19. According to the information and explanations given to us, the
Company has created security in respect of debentures issued except for
certain debentures as mentioned in Note 2.03.1 for which the Company is
in the process of creating the security,
20. The Company has not raised any money by public issues during the
year.
21. According to the information and explanations given to us, no
significant fraud on or by the Company, that causes a material
misstatement to the financial statements, has been noticed or reported
during the year.
For Chaturvedi & Shah For B S R & Co.
Chartered Accountants Chartered Accountants
Firm''s Reg. No: 101720W Firm''s Reg. No: 101248W
C.D. Lala Bhavesh Dhupelia
Partner Partner
Membership No: 35671 Membership No: 042070
Mumbai
10 May 2013
Mar 31, 2012
1 We have audited the attached Balance Sheet of Reliance Communications
Limited ('the Company') as at March 31, 2012 and also the Statement of
profit and loss and the Cash flow statement for the year ended on that
date, annexed thereto. These financial statements are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
2 We conducted our audit in accordance with the auditing standards
generally accepted in India. Those Standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for
our opinion.
3 As required by the Companies (Auditor's Report) Order, 2003 ('the
Order') issued by the Central Government of India in terms of
sub-section (4A) of Section 227 of the Companies Act, 1956 ('the Act'),
we enclose in the Annexure, a statement on the matters specified in
paragraphs 4 and 5 of the said Order.
4 Without qualifying our report, we draw your attention to Note 2.38 of
the financial statements regarding the Scheme of Arrangement ('the
Scheme') sanctioned by the Hon'ble High Court of Judicature at Mumbai.
The Scheme permits the Company to adjust expenses and/ or losses
identified by the Board of Directors, which are required to be debited
to the Statement of profit and loss by a corresponding withdrawal from
General Reserve, which is considered to be an override to the relevant
provisions of Accounting Standard 5 (AS 5) Net Profit or Loss for the
Period, Prior Period Items and Changes in Accounting Policies'. The
Company has identified exchange variations of Rs. 1,064 crore (including
Rs. 775 crore in the nature of borrowing costs), provision for doubtful
debt of Rs. 220 crore and provision for subsidy receivable of Rs. 48 crore,
as in the opinion of the Board, such exchange loss and provisions are
considered to be of an exceptional nature and accordingly, these
expenses have been met by corresponding withdrawal from General
Reserve. Pending clarification from the Institute of Chartered
Accountants of India (ICAI), the Company has credited such withdrawal
to the Statement of profit and loss. Had such write off of expenses and
losses not been met from General Reserve, the Company would have
reflected a loss after tax for the year of Rs. 1,176 crore and the
consequential effect of this on the profit after tax for the year would
have been of Rs. 1,332 crore.
5 Further to our comments in the Annexure referred to in the paragraph
3 above, 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 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 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 dealt with by this report comply with the
Accounting Standards referred to in sub-section (3C) of Section 211 of
the Companies Act, 1956; as referred in paragraph (4) above, the
Company has exercised the option available as per the Court Order which
overrides the relevant provisions of Accounting Standard 5 (AS 5);
(e) on the basis of written representations received from the directors
of the Company as at March 31, 2012 and taken on record by the Board of
Directors, we report that none of the directors is disqualified as at
March 31, 2012 from being appointed as a director of the Company under
clause (g) of sub-section (1) of Section 274 of the Companies Act,
1956; and
(f) 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.
i. in the case of the Balance Sheet, of the state of affairs of the
Company as at March 31, 2012;
ii. in the case of the Statement of profit and loss, of the profit of
the Company for the year ended on that date; and
iii. in the case of the Cash flow statement, of the cash flows of the
Company for the year ended on that date.
With reference to the Annexure referred to in the Auditors' Report to
the Members of Reliance Communications Limited ('the Company') on the
financial statements for the year ended March 31, 2012, we report the
following:
1. (a) The Company is in the process of updating its fixed asset
register including, to give effect to the assets transferred on
demerger of the optical fibre undertaking and the passive
infrastructure to a subsidiary company,
(b) We are informed that the Company physically verifies its assets
over a three year period, except for base trans-receiver stations. We
are informed that these assets are under continuous operational
surveillance at National Network Operating Centre and are therefore not
separately physically verified. In our opinion, this periodicity of
physical verification is reasonable having regard to the size of the
Company and the nature of its assets. In accordance with this policy,
the Company has physically verified certain fixed assets during the
year,
(c) Fixed assets disposed off during the year were not substantial and,
therefore, do not affect the going concern assumption.
2. (a) The inventory has been physically verified by management during
the current year. In our opinion, the frequency of such verification is
reasonable.
(b) The procedures for the physical verification of inventories
followed by 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.
Discrepancies identified on physical verification of inventories as
compared to book records were not material.
3. The Company has neither granted nor taken any loans, secured or
unsecured, to or from companies, firms or other parties covered in the
register maintained under section 301 of the Companies Act, 1956.
Accordingly, paragraph 4(iii) of the Order is not applicable.
4. In our opinion, and according to the information and explanations
given to us, and having regard to the explanation that purchases of
certain items of inventories and fixed assets are for the Company's
specialised requirements for which suitable alternative sources are not
available to obtain comparable quotations, there is an adequate
internal control system commensurate with the size of the Company and
nature of its business with regard to the purchase of inventories and
fixed assets and with regard to the sale of services. In our opinion,
activities of the Company do not involve sale of goods. In our opinion,
and according to the information and explanations given to us, there is
no continuing failure to correct major weaknesses in the internal
control system.
5. In our opinion, and according to the information and explanations
given to us, there are no contracts and arrangements the particulars of
which need to be entered into the register maintained under section 301
of the Companies Act, 1956.
6. The Company has not accepted any deposits from the public.
7. In our opinion, the Company has an internal audit system
commensurate with the size and nature of its business.
8. We have broadly reviewed the books of account maintained by the
Company pursuant to the rules prescribed by the Central Government for
maintenance of cost records under section 209(1)(d) of the Companies
Act, 1 956 in respect of telecommunication activities 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 records.
9. (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, Wealth Tax, Income Tax,
Service Tax, Customs Duty, Sales Tax, Entry Tax, Employees' State
Insurance and other material statutory dues have been generally
regularly deposited during the year by the Company with the appropriate
authorities. As explained to us, the Company did not have any dues on
account of excise duty and Investor Education and Protection Fund.
According to the information and explanations given to us, no
undisputed amounts payable in respect of Provident Fund, Wealth Tax,
Income Tax, Service Tax, Customs Duty, Sales Tax, Entry Tax, Employees'
State Insurance and other material statutory dues were in arrears as at
March 31, 2012 for a period of more than six months from the date they
became payable.
(b) According to the information and explanations given to us, there
are no dues of Provident Fund, Wealth Tax, Income Tax, Service Tax,
Customs Duty, Employees' State Insurance which have not been deposited
on account of any dispute. The dues of Excise Duty, Sales Tax and Entry
Tax as disclosed below have not been deposited by the Company on
account of disputes.
Name of the
Statute Nature of
dues Amount Period to which Forum where dispute
is pending
(Rs.
crore) the amount
relates
Central
Sales Tax,
West
Bengal Central
Sales Tax 0.34 2007-08 West Bengal Tax
revision board
Central
Sales Tax 1.73 2008-09 Joint Commissioner
(Appeals)
Central
Sales Tax,
Uttar
Pradesh Central
Sales Tax 0.24 2003-04 UP Trade Tax Tribunal
0.93 2004-05 High Court of Uttar
Pradesh
0.07 2006-07 UP Trade Tax Tribunal
Central
Sales Tax,
Orissa Central
Sales Tax 0.02 Oct 06 - Mar 09 Joint Commissioner
(Appeals)
Central
Sales Tax,
Maharashtra Central
Sales Tax 4.79 2004-05 Joint Commissioner
(Appeals)
Central
Sales Tax,
Bihar Central
Sales Tax 0.03 2005-06 Deputy Commissioner
(Appeals)
Entry Tax,
Assam Entry Tax 0.10 2007-08 Deputy Commissioner
(Appeals)
Entry Tax,
Bihar Entry Tax 0.76 2007-08 Joint Commissioner
(Appeals)
0.20 2008-09 Joint Commissioner
(Appeals)
Entry Tax,
Madhya
Pradesh Entry Tax 0.05 2006-07 Deputy Commissioner
(Appeals)
0.29 2002-03 MP Taxation Board
0.19 2003-04 MP Taxation Board
0.12 2005-06 MP Taxation Board
0.12 2006-07 MP Taxation Board
0.52 2007-08 Deputy Commissioner
(Appeals)
0.07 2008-09 MP Taxation Board
Entry Tax,
Orissa Entry Tax 0.05 Oct 06 - Mar 09 Joint Commissioner
(Appeals)
Entry Tax,
Rajasthan Entry Tax 0.03 2005-06 Deputy Commissioner
(Appeals)
6.64 2007-08 High Court of
Rajasthan
6.52 2008-09 High Court of
Rajasthan
0.96 2009-10 Supreme Court
Entry Tax,
Uttar
Pradesh Entry Tax 0.13 2003-04 UP Trade Tax Tribunal
Excise duty,
Maharashtra Excise duty 2.08 2002-04 UP Trade Tax Tribunal
VAT, Bihar VAT 0.68 2005-06 Deputy Commissioner
(Appeals)
VAT,
Uttarakhand VAT 0.01 2005-06 Uttarakhand Sales
Tax Tribunal
0.03 2007-08 Joint Commissioner
(Appeals)
VAT, West
Bengal VAT 1.49 2005-06 West Bengal Tax
revision board
1.80 2006-07 West Bengal Tax
revision board
2.34 2007-08 West Bengal Tax
revision board
2.75 2008-09 Joint Commissioner
(Appeals)
10. The Company does not have any accumulated losses at the end of the
financial year and has not incurred cash losses in the current
financial year and in the immediately preceding financial year,
11. In our opinion and according to the information and explanations
given to us, the Company has not defaulted in repayment of dues to its
bankers or debenture holders or to any financial institutions.
12. According to the information and explanations given to us, the
Company has not granted loans and advances on the basis of security by
way of pledge of shares, debentures and other securities.
13. In our opinion and according to the information and explanations
given to us, the Company is not a chit fund/ nidhi/ mutual benefit
fund/ society
14. According to the information and explanations given to us, the
Company is not dealing or trading in shares, securities, debentures and
other investments.
15. In our opinion and according to the information and explanations
given to us, the terms and conditions on which the Company has given
guarantees for loans taken by wholly owned subsidiaries and other
companies with whom the Company has business dealings, from banks or
financial institutions are not prejudicial to the interest of the
Company.
16. In our opinion and according to the information and explanations
given to us and the records of the Company examined by us, the term
loans taken by the Company have been applied for the purpose for which
they were raised.
17. According to the information and explanations given to us and on
an overall examination of the balance sheet of the Company, we are of
the opinion that the funds raised on the short term basis have not been
used for long-term investment.
18. The Company has not made any preferential allotment of shares to
companies/ firms/ parties covered in the register maintained under
Section 301 of the Companies Act, 1956.
19. According to the information and explanations given to us, the
Company has created securities in respect of Debentures issued except
for certain Debentures issued during the year as mentioned in Note
2.03.1 for which the Company is in the process of creating the security
20. The Company has not raised any money by public issues during the
year,
21. According to the information and explanations given to us, no
significant fraud on or by the Company, that causes a material
misstatement to the financial statements, has been noticed or reported
during the year.
For Chaturvedi & Shah For B S R & Co.
Chartered Accountants Chartered Accountants
Firm Reg. No.: 101720W Firm Reg. No.: 101248W
C. D. Lala Bhavesh Dhupelia
Partner Partner
Membership No: 035671 Membership No: 042070
Mumbai
May 26, 2012
Mar 31, 2011
1 We have audited the attached Balance Sheet of Reliance Communications
Limited ('the Company') as at 31 March 2011 and also the profit and Loss
Account and the Cash flow statement for the year ended on that date,
annexed thereto. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion
on these financial statements based on our audit.
2 We conducted our audit in accordance with the auditing standards
generally accepted in India. Those Standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for
our opinion.
3 As required by the Companies (Auditor's Report) Order, 2003 ('the
Order') issued by the Central Government of India in terms of
sub-section (4A) of Section 227 of the Companies Act, 1956 ('the Act'),
we enclose in the Annexure, a statement on the matters specified in
paragraphs 4 and 5 of the said Order.
4 Further to our comments in the Annexure referred to in the paragraph
3 above, 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 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 appears from our examination of
those books;
(c) the Balance Sheet, profit and Loss Account and Cash Flow Statement
dealt with by this report are in agreement with the books of account;
(d) in our opinion, the Balance Sheet, profit and Loss Account and Cash
Flow Statement dealt with by this report 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
of the Company as at 31 March 2011 and taken on record by the Board of
Directors, we report that none of the directors is disQualified as at 31
March 2011 from being appointed as a director of the Company under
clause (g) of sub-section (1) of Section 274 of the Companies Act,
1956; and
(f) in our opinion, and to the best of our information and according to
the explanations given to us, the said accounts give the information
required by the Companies Act, 1956, in the manner so required and give
a true and fair view in conformity with the accounting principles
generally accepted in India:
(i) in the case of the Balance Sheet, of the state of affairs of the
Company as at 31 March 2011;
(ii) in the case of the profit and Loss Account, of the loss of the
Company for the year ended on that date; and
(iii) in the case of the Cash Flow Statement, of the cash flows of the
Company for the year ended on that date.
Annexure to Auditors' Report - 31st March, 2011
With reference to the Annexure referred to in the Auditors' Report to
the Members of Reliance Communications Limited ('the Company') on the
financial statements for the year ended 31 March 2011, we report the
following:
1. (a) The Company is in the process of updating its fixed asset
register including, to give effect to the assets transferred on
demerger of the optical fibre undertaking and the passive infrastructure
to a subsidiary company.
(b) We are informed that the Company physically verifies its assets over
a three year period, except for base trans-receiver stations. We are
informed that these assets are under continuous operational
surveillance at National Network Operating Centre and are therefore not
separately physically verified. In our opinion, this periodicity of
physical verification is reasonable having regard to the size of the
Company and the nature of its assets. In accordance with this policy,
the Company has physically verified certain fixed assets during the year.
(c) Fixed assets disposed off during the year were not substantial and,
therefore, do not affect the going concern assumption.
2. (a) The inventory has been physically verified by management during
the current year. In our opinion, the frequency of such verification is
reasonable.
(b) The procedures for the physical verification of inventories followed
by 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.
Discrepancies identifed on physical verification of inventories as
compared to book records were not material.
3. The Company has neither granted nor taken any loans, secured or
unsecured, to or from companies, firms or other parties covered in the
register maintained under section 301 of the Companies Act, 1956.
Accordingly, paragraph 4(iii) of the Order is not applicable.
4. In our opinion, and according to the information and explanations
given to us, and having regard to the explanation that purchases of
certain items of inventories and fixed assets are for the Company's
specialised requirements for which suitable alternative sources are not
available to obtain comparable quotations, there is an adequate
internal control system commensurate with the size of the Company and
nature of its business with regard to the purchase of inventories and
fixed assets and with regard to the sale of services. In our opinion,
activities of the Company do not involve sale of goods. In our opinion,
and according to the information and explanations given to us, there is
no continuing failure to correct major weaknesses in the internal
control system.
5. In our opinion, and according to the information and explanations
given to us, there are no contracts and arrangements the particulars of
which need to be entered into the register maintained under section 301
of the Companies Act, 1956.
6. The Company has not accepted any deposits from the public.
7. In our opinion, the Company has an internal audit system
commensurate with the size and nature of its business.
8. We have broadly reviewed the books of account maintained by the
Company pursuant to the rules prescribed by the Central Government for
maintenance of cost records under section 209(1) (d) of the Companies
Act, 1956 in respect of telecommunication activities 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 records.
9. (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, Wealth Tax, Income Tax,
Service Tax, Customs Duty, Sales Tax, Entry Tax, Employees' State
Insurance and other material statutory dues have been regularly
deposited during the year by the Company with the appropriate
authorities. As explained to us, the Company did not have any dues on
account of Excise Duty and Investor Education and Protection Fund.
There were no dues on account of cess under Section 441A of the
Companies Act, 1956 since the date from which the aforesaid section
comes into force has not yet been notified by the Central Government.
According to the information and explanations given to us, no
undisputed amounts payable in respect of Provident Fund, Wealth Tax,
Income Tax, Service Tax, Customs Duty, Sales Tax, Entry Tax, Employees'
State Insurance and other material statutory dues were in arrears as at
31 March 2011 for a period of more than six months from the date they
became payable.
(b) According to the information and explanations given to us, there
are no dues of Income Tax, Wealth Tax, Service Tax, Customs Duty,
Employees' State Insurance which have not been deposited on account of
any dispute. The dues of Excise Duty, Sales Tax and Entry Tax as
disclosed below have not been deposited by the Company on account of
disputes.
Name of the Statute Nature of Amount Period to
which the Forum where
dispute is pending
the Dues (Rs
crores) amount
relates
The Central Excise
and Salt Act, 1944 Excise duty 2.08 2002-04 Tribunal
Entry Tax Act,
Uttar Pradesh Entry Tax 0.13 2003-04 Trade Tax
Tribunal, Lucknow
Trade Tax Act,
Uttar Pradesh Sales Tax 0.93 2004-05 Trade tax
Tribunal,(Appeals)
10.53 2005-06 Joint Commissioner
(Appeals)
0.24 2003-04 Trade Tax Tribunal
Lucknow
Entry Tax Act,
Madhya Pradesh Entry Tax 0.29 2002-03 Deputy
Commissioner of
Appeals
(Commercial Taxes)
0.20 2003-04 Deputy
Commissioner of
Appeals
(Commercial Taxes)
0.16 2005-06 Deputy
Commissioner of
Appeals
(Commercial Taxes)
0.15 2006-07 Deputy
Commissioner of
Appeals
(Commercial Taxes)
0.65 2007-08 Deputy
Commissioner of
Appeals
(Commercial Taxes)
Punjab VAT Act VAT 0.01 2007-08 Deputy
Commissioner
(Appeals)
Entry Tax Act,
Chhattisgarh Entry Tax 0.03 2003-04 Deputy
Commissioner
(Appeals)
(Commercial Taxes)
Uttarakhand VAT Act VAT 0.01 2005-06 Deputy
Commissioner of
Commercial
Taxes
West Bengal VAT Act VAT 1.49 2005-06 First appellate
authority
1.80 2006-07 First appellate
authority
2.40 2007-08 Deputy
Commissioner of
Sales Tax
Entry Tax Act,
Rajasthan Entry tax 0.03 2005-06 Deputy
Commissioner of
Appeals
(Commercial Taxes)
10.78 2007-08 Deputy
Commissioner of
Appeals
(Commercial Taxes)
10.59 2008-09 Deputy
Commissioner of
Appeals
(Commercial Taxes)
Delhi VAT Act VAT 36.48 2007-08 Commissioner
(Appeals)
Maharashtra
Sales Tax Sales Tax 4.79 2004-05 Deputy
Commissioner of
Sales tax
West Bengal,CST CST 0.21 2007-08 Deputy
Commissioner of
Sales Tax
Punjab VAT Act VAT 0.05 First appellate
authority
10. The Company does not have any accumulated losses at the end of the
financial year and has not incurred cash losses in the current financial
year and in the immediately preceding financial year.
11. In our opinion and according to the information and explanations
given to us, the Company has not defaulted in repayment of dues to its
bankers or debenture holders or to any financial institutions.
12. According to the information and explanations given to us, the
Company has not granted loans and advances on the basis of security by
way of pledge of shares, debentures and other securities.
13. In our opinion and according to the information and explanations
given to us, the Company is not a chit fund/ nidhi/ mutual benefit fund/
society.
14. According to the information and explanations given to us, the
Company is not dealing or trading in shares, securities, debentures and
other investments.
15. In our opinion and according to the information and explanations
given to us, the terms and conditions on which the Company has given
guarantees for loans taken by wholly owned subsidiaries and other
companies with whom the Company has business dealings, from banks or
financial institutions are not prejudicial to the interest of the
Company.
16. In our opinion and according to the information and explanations
given to us and examination of the records of the Company by us, the
term loans taken by the Company have been applied for the purpose for
which they were raised except portion of term loans availed as at the
end of the year is kept in bank, to be applied for the purpose for
which it was obtained.
17. According to the information and explanations given to us and on
an overall examination of the balance sheet of the Company, we are of
the opinion that the funds raised on short term basis have not been
used for long term investment.
18. The Company has not made any preferential allotment of shares to
companies/firms/parties covered in the register maintained under Section
301 of the Companies Act, 1956.
19. According to the information and explanations given to us, the
Company has created security in respect of debentures issued.
20. The Company has not raised any money by public issues during the
year.
21. According to the information and explanations given to us, no
significant fraud on or by the Company, that causes a material
misstatement to the financial statements, has been noticed or reported
during the year.
For Chaturvedi & Shah For B S R & Co.
Chartered Accountants Chartered Accountants
Firm Reg. No: 101720W Firm Reg. No: 101248W
C. D. Lala Bhavesh Dhupelia
Partner Partner
Membership No: 35671 Membership No: 042070
Mumbai
30 May 2011
Mar 31, 2010
1 We have audited the attached Balance Sheet of Reliance Communications
Limited (Ãthe Company) as at 31 March 2010 and also the Profit and
Loss Account and the Cash flow statement for the year ended on that
date, annexed thereto. These financial statements are the
responsibility of the Companys management. Our responsibility is to
express an opinion on these financial statements based on our audit.
2 We conducted our audit in accordance with the auditing standards
generally accepted in India. Those Standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for
our opinion.
3 As required by the Companies (Auditors Report) Order, 2003 (Ãthe
Order) issued by the Central Government of India in terms of
sub-section (4A) of Section 227 of the Companies Act, 1956 (Ãthe Act),
we enclose in the Annexure, a statement on the matters specified in
paragraphs 4 and 5 of the said Order.
4. Further to our comments in the Annexure referred to in the paragraph
3 above, 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 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 appears from our examination of
those books;
(c) the Balance Sheet, Profit and Loss Account and Cash Flow Statement
dealt with by this report are in agreement with the books of account;
(d) in our opinion, the Balance Sheet, Profit and Loss Account and Cash
Flow Statement dealt with by this report 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
of the Company as at 31st March 2010 and taken on record by the Board
of Directors, we report that none of the directors is disqualified as
at 31 March 2010 from being appointed as a director of the Company
under clause (g) of sub-section (1) of Section 274 of the Companies
Act, 1956; and
(f) in our opinion, and to the best of our information and according to
the explanations given to us, the said accounts give the information
required by the Companies Act, 1956, in the manner so required and give
a true and fair view in conformity with the accounting principles
generally accepted in India:
(i) in the case of the Balance Sheet, of the state of affairs of the
Company as at 31 March 2010;
(ii) in the case of the Profit and Loss Account, of the profit of the
Company for the year ended on that date; and
(iii) in the case of the Cash Flow Statement, of the cash flows of the
Company for the year ended on that date.
Annexure to Auditors Report - 31st March, 2010 With reference to the
Annexure referred to in the Auditors Report to the Members of Reliance
Communications Limited (Ãthe Company) on the financial statements for
the year ended 31 March 2010, we report the following:
1. (a) The Company is in the process of updating its fixed asset
register including, to give effect to the assets transferred on
demerger of the Optic fibre undertaking and the passive infrastructure
to a subsidiary company.
(b) We are informed that the Company physically verifies its assets
over a three year period, except for base trans-receiver stations. We
are informed that these assets are under continuous operational
surveillance at National Network Operating Centre and are therefore not
separately physically verified. In our opinion, this periodicity of
physical verification is reasonable having regard to the size of the
Company and the nature of its assets. In accordance with this policy,
the Company has physically verified certain fixed assets during the
year.
(c) Fixed assets disposed off during the year were not substantial and,
therefore, do not affect the going concern assumption.
2. (a) The inventory has been physically verified by management during
the current year. In our opinion, the frequency of such verification is
reasonable.
(b) The procedures for the physical verification of inventories
followed by 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.
Discrepancies identified on physical verification of inventories as
compared to book records were not material.
3. The Company has neither granted nor taken any loans, secured or
unsecured, to or from companies, firms or other parties covered in the
register maintained under section 301 of the Companies Act, 1956.
Accordingly, paragraph 4(iii) of the Order is not applicable.
4. In our opinion, and according to the information and explanations
given to us, and having regard to the explanation that purchases of
certain items of inventories and fixed assets are for the Companys
specialised requirements for which suitable alternative sources are not
available to obtain comparable quotations, there is an adequate
internal control system commensurate with the size of the Company and
nature of its business with regard to the purchase of inventories and
fixed assets and with regard to the sale of services. In our opinion,
activities of the Company do not involve sale of goods. In our opinion,
and according to the information and explanations given to us, there is
no continuing failure to correct major weaknesses in the internal
control system.
5. In our opinion, and according to the information and explanations
given to us, there are no contracts and arrangements the particulars of
which need to be entered into the register maintained under section 301
of the Companies Act, 1956.
6. The Company has not accepted any deposits from the public.
7. In our opinion, the Company has an internal audit system
commensurate with the size and nature of its business.
8. We have broadly reviewed the books of account maintained by the
Company pursuant to the rules prescribed by the Central Government for
maintenance of cost records under section 209(1)(d) of the Companies
Act, 1956 in respect of telecommunication activities 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 records.
9. (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, Wealth Tax, Income
Tax, Service Tax, Customs Duty, Sales Tax, Entry Tax, Employees State
Insurance and other material statutory dues have been regularly
deposited during the year by the Company with the appropriate
authorities. As explained to us, the Company did not have any dues on
account of Excise Duty and Investor Education and Protection Fund.
There were no dues on account of cess under Section 441A of the
Companies Act, 1956 since the date from which the aforesaid section
comes into force has not yet been notified by the Central Government.
According to the information and explanations given to us, no
undisputed amounts payable in respect of Provident Fund, Wealth Tax,
Income Tax, Service Tax, Customs Duty, Sales Tax, Entry Tax, Employees
State Insurance and other material statutory dues were in arrears as at
31st March 2010 for a period of more than six months from the date they
became payable.
(b) According to the information and explanations given to us, there
are no dues of Income Tax, Wealth Tax, Service Tax, Customs Duty,
Employees State Insurance which have not been deposited on account of
any dispute. The dues of Excise Duty, Sales Tax and Entry Tax as
disclosed below have not been deposited by the Company on account of
disputes.
Name of the Statute Nature of Amount
the Dues (Rs crores)
The Central Excise and
Salt Act, 1944 Excise duty 2.08
Entry Tax Act,
Uttar Pradesh Entry Tax 0.13
Trade Tax Act,
Uttar Pradesh Sales Tax 0.93
10.53
0.24
Name of the Statue Period to which Forum where dispute
is pending
the amount relates
The Central Excise and
Salt Act, 1944 2002-04 Tribunal
Entry Tax Act, Uttar Pradesh 2003-04 Trade Tax Tribunal, Lucknow
Trade Tax Act, Uttar Pradesh 2004-05 Trade tax Tribunal, (Appeals)
2005-06 Joint Commissioner (Appeals)
2003-04 Trade Tax Tribunal, Lucknow
Name of the Statute Nature of Amount
the Dues (Rs crores)
Entry Tax Act, Madhya Pradesh Entry Tax 0.29
0.16
0.15
Entry Tax Act, Chhattisgarh Entry Tax 0.09
Punjab VAT Act VAT 0.01
Entry Tax Act, Madhya Pradesh Entry Tax 0.20
Entry Tax Act, Chhattisgarh Entry Tax 0.03
Entry Tax Act, Chattisgarh Entry Tax 0.08
0.09
Uttarakhand VAT Act VAT 0.01
West Bengal VAT Act VAT 1.49
1.80
Entry Tax Act, Rajasthan Entry tax 0.03
Delhi VAT Act VAT 36.48
Name of the Period to which Forum where dispute is pending
Statue the amount relates
Entry Tax Act,
Madhya Pradesh 2002-03 Deputy Commissioner of Appeals
(Commercial Taxes)
2005-06 Deputy Commissioner of Appeals
(Commercial Taxes)
2006-07 Deputy Commissioner of Appeals
(Commercial Taxes)
Entry Tax Act,
Chhattisgarh 2002-03 Deputy Commissioner of Appeals
(Commercial Taxes)
Punjab VAT Act 2007-08 Deputy Commissioner (Appeals)
Entry Tax Act,
Madhya Pradesh 2003-04 Deputy Commissioner (Appeals)
(Commercial Taxes)
Entry Tax Act,
Chhattisgarh 2003-04 Deputy Commissioner (Appeals)
(Commercial Taxes)
Entry Tax Act,
Chattisgarh 2004-05 Assistant Commissioner of
Commercial Taxes
2005-06 Assistant Commissioner of
Commercial Taxes
Uttarakhand VAT Act 2005-06 Deputy Commissioner of
Commercial Taxes
West Bengal VAT Act 2005-06 First appellate authority
2006-07 First appellate authority
Entry Tax Act,
Rajasthan 2005-06 Deputy Commissioner of Appeals
(Commercial Taxes)
Delhi VAT Act 2007-08 Commissioner (Appeals)
10. The Company does not have any accumulated losses at the end of the
financial year and has not incurred cash losses in the current
financial year and in the immediately preceding financial year.
11. In our opinion and according to the information and explanations
given to us, the Company has not defaulted in repayment of dues to its
bankers or debenture holders or to any financial institutions.
12. According to the information and explanations given to us, the
Company has not granted loans and advances on the basis of security by
way of pledge of shares, debentures and other securities.
13. In our opinion and according to the information and explanations
given to us, the Company is not a chit fund/ nidhi/ mutual benefit
fund/ society.
14. According to the information and explanations given to us, the
Company is not dealing or trading in shares, securities, debentures and
other investments.
15. In our opinion and according to the information and explanations
given to us, the terms and conditions on which the Company has given
guarantees for loans taken by wholly owned subsidiaries and other
companies with whom the Company has business dealings, from banks or
financial institutions are not prejudicial to the interest of the
Company.
16. In our opinion and according to the information and explanations
given to us, the term loans taken by the Company have been applied for
the purpose for which they were raised.
17. According to the information and explanations given to us and on
an overall examination of the balance sheet of the Company, we are of
the opinion that the funds raised on short-term basis have not been
used for long-term investment.
18. The Company has not made any preferential allotment of shares to
companies/firms/parties covered in the register maintained under
Section 301 of the Companies Act, 1956.
19. According to the information and explanations given to us, the
Company has created security in respect of debentures issued.
20. The Company has not raised any money by public issues during the
year.
21. According to the information and explanations given to us, no
significant fraud on or by the Company, that causes a material
misstatement to the financial statements, has been noticed or reported
during the year.
For Chaturvedi & Shah For B S R & Co.
Chartered Accountants Chartered Accountants
Firm Reg. No. 101720W Firm Reg. No. 101248W
C. D. Lala Natrajan Ramkrishna
Partner Partner
Membership No: 35671 Membership No: 032815
Mumbai
15 May, 2010