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Auditor Report of Tamil Nadu Telecommunications Ltd.

Mar 31, 2015

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

Management's Responsibility for the Financial Statements

2. The Company's Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. 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 financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor's Responsibility

3. Our responsibility is to express an opinion on these 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.

4. 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.

5. An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company's preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on whether the Company has in place an adequate internal financial control system over financial reporting and the operating effectiveness of such controls. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company's Directors, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our adverse audit opinion on the financial statements.

Opinion

6. In our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial statements give the information required by the Companies Act, 2013 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 31st March, 2015;

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

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

Emphasis of Matter

7. Without qualifying our conclusion, we draw , attention to S.No - 3– Note – 25 - Notes to Accounts. As at 31st March 2015, the Company's accumulated losses of Rs. 9400.69 Lakhs has eroded the Net Worth of the Company, indicating the existence of material uncertainity that may cast a doubt about the Company's ability to continue as a going concern. The Company has incurred a loss of Rs.857.49 Lakhs for the year under audit. Based on the mitigating factors discussed in the said note, the Management believes that the Going Concern assumption is appropriate.

Other Matter

8. The Deferred Ta x Asset amounts to Rs.1465.16 Lakhs, as of 31st March 2015, considering all eligible carried forward losses, as per AS 22 – Accounting for Taxes on Income. The same has not been provided for, in the books of account, considering the absence of virtual certainty of earning profits and prudence concept.

Report on Other Legal and Regulatory Requirements

9. As required by section 143 (3) of the Act, we report that:

a. We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit;

b. In our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books

c. The 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. The Balance Sheet, Statement of Profit and Loss and Cash Flow Statement comply with the Accounting Standards specified under section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014;

e. The going concern matter, described in paragraph 7 – Emphasis of Matter, as above, in our opinion, may have adverse effect on the functioning of the Company.

f. On the basis of written representations received from the directors as on 31st March 2015, and taken on record by the Board of Directors, none of the directors is disqualified as on 31st March 2015, from being appointed as a director in terms of section 164(2) of the Act.

Annexure -I

ANNEXURE TO INDEPENDENT AUDITOR'S REPORT

Referred to in paragraph 10 of our report of even date

On the basis of checks as we considered appropriate and according to the information and explanations given to us during the course of our audit, we report that:

(i) In respect of Fixed Assets:

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

b. As explained to us, fixed assets have been physically verified by the management at reasonable intervals and no material discrepancies were noticed on such verification.

(ii) In respect of Inventories:

a. As explained to us, the inventory has been physically verified during the year by the management at reasonable intervals.

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

c. In our opinion and according to the information and explanations given to us, the Company is

10. 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 Companies Act, 2013, we give in the Annexure I a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.

11. With respect to other matters to be included in the Auditor's Report in accordance with the 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 S.No.2,10,13,14, and 19 under Note-25 – Notes to Accounts to the financial statements;

(ii) The Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long- term contracts.

(iii) There were no amounts which were required to be transferred, to the Investor Education and Protection Fund, by the Company.

maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and book records were not material and have been properly dealt with in the books of account.

(iii) We are informed that there is no Company, firm or party to be listed in the register referred to in Section 189 of Companies Act, 2013 except Telecommunications Consultants India Limited (TCIL).

(iv) In our opinion and according to the information and explanations given to us, there exists an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchase of inventory, fixed assets and with regard to sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weakness in the internal control system of the company.

(v) The company has not accepted any deposits from public. Hence we have no comments to offer in respect of the same.

(vi) We have broadly reviewed the books of accounts maintained by the company pursuant to the rules made by the Central Government for maintenance of cost records under Sec 148(1) of the Companies Act 2013 and we are of the opinion that prima facie the prescribed accounts and records have been made and maintained.

(vii) In respect of Statutory Dues:

a. The Company has been generally regular in depositing with appropriate authorities undisputed statutory dues including Provident Fund, Income Tax, Sales Tax, Wealth Tax, Service Tax, Excise Duty, Customs Duty, Value added Tax, Cess and other material statutory dues with the appropriate authorities during the year as applicable to it except the Property Ta x amounting to Rs.32,27,400/-.We are informed by the Company that efforts are made to get exemption being a sick Company . We arealso informed that there are no employees who are eligible to becovered under Employees State Insurance scheme.

b. The details of disputed dues of Sales Tax and Customs Duty which have not been deposited, as on 31st March 2015 are as given below

S. No. Name of Nature of dues Amount (in Rs.) Forum where Statute pending

1. Sales Tax Additional sales Tax 1,86,08,794/- Honourable High Court of Madras 2. Sales Tax Non-Submission of 22,95,000/- Commercial Sales

C-forms tax officer.

3. Customs Duty Difference in 31,55,226/- Commissioner of

classification of customs, Chennai Telecommunication

Grade Optic Fibre Cables.

Report on the directions issued by the Comptroller and Auditor General of India, under Section 143(5) of the Companies Act 2013.

Tamilnadu Telecommunications Limited – Statutory Audit for the Year ended 31st March 2015.

On the basis of checks as we considered appropriate and according to the information and explanations given to us, during the course of our audit, we report that:

1. If the Company has been selected for disinvestment, a complete status report in terms of valuation of Assets (including intangible assets and land) and Liabilities (including Committed & General Reserves) may be examined including the mode and present stage of disinvestment process.

The Company has not been selected for disinvestment and hence reporting on this direction does not arise.

2. Please report whether there are any cases of Waiver/ Write-off of debts/loans/interest etc. if yes, the reasons there for and the amount involved.

There were no cases of waiver/write-off of debts, loans/interest etc. during the year.

3. Whether proper records are maintained for inventories lying with third parties & Assets received as gift from Government or other authorities.

There were no inventories lying with third parties and no assets have been received by the company as gift from Government or other authorities, during the year.

4. A report on age- wise analysis of pending legal/ arbitration cases including the reasons of

(viii) The accumulated losses of the company as at 31st March 2015 is more than 50% of its Net worth. The Company has incurred cash loss of Rs.826.59 lakhs during the financial year covered by our audit. The Company has incurred cash loss in the immediately preceding financial year.

(ix) The Company has not borrowed any sums from Banks or Financial Institutions or Debenture holders during the year and hence the question of default in repayment of dues to Banks or Financial Institutions or Debenture holders does not arise.

(x) In our opinion and according to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions. Hence we have no comments to offer, in this regard.

(xi) No term loans were obtained by the company during the year under audit.

(xii) According to the information and explanations given to us, no fraud on or by the company has been noticed or reported during the course of our audit.

pendency and existence/ effectiveness of monitoring mechanism for expenditure on all legal cases (foreign and local) may be given.

Age-wise analysis of pending legal/arbitration cases is as given below:-

S.No. Pending Legal/ 0 - 3 Years 4 - 5 Years More than Arbitration cases 5 Years

1. Commercial Tax - - 1

2. Sales Tax - - 1

3. Custom Duty - - 1

4. Income Tax - - 1

5. Other cases (BSNL) - 1 1

6. Arbitration cases 1 - 2 Total 1 1 7 The details of the above cases are given in S.no.10, 13, 14, 19 and 2 of Note no.25- Notes to Accounts to the financial statements.

As informed to us, the pendency of legal/ arbitration cases is due to legal formalities in Court/arbitration proceedings.

The legal expenses are incurred in accordance with the delegation of powers laid down, in this regard.

For S.VENKATRAM & CO

Chartered Accountants

(FRN: 004656S)

R. Kandavelu Place: New Delhi Partner

Date: 29th May, 2015 (M.No.12811)


Mar 31, 2014

We have audited the accompanying financial statements of M/s. Tamilnadu Telecommunications Limited, which comprise the Balance Sheet as at March 31, 2014, and the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements

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

Auditors'' Responsibility

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

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors'' judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the 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 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:

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

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

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

Emphasis of Matter:

Without qualifying our conclusion, we draw attention to Note No: 3 in the Notes to Accounts. As at March 31, 2014, the Company''s accumulated losses of Rs. 85,30,96,915 has eroded the networth of the Company, indicating the existence of a material uncertainly that may cast a doubt about the Company''s ability to continue as a going concern. The Company has incurred a loss of Rs. 10,23,23,490 for the year under audit. Based on the mitigating factors discussed in the said note, the Management believes that the Going Concern assumption is appropriate.

Other Matter:

The deferred tax asset amounts to Rs.14,46,08,827 as on 31st March 2014 considering all eligible carried forward losses as per AS-22-Accounting for Taxes on Income. The same has not been provided for in the books of account, considering the absence of virtual certainty of earning profits and Prudence concept.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditors'' Report) Order, 2003 issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Companies 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, Statement of Profit and Loss, and Cash Flow Statement dealt with by this Report are in agreement with the books of account.

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

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

The Annexure referred to in paragraph 1 under the heading of "Report on Other Legal and Regulatory Requirements" of our Report of even date.

On the basis of such checks as we considered appropriate and according to the information and explanations given to us during the course of our audit, we report that:

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

(b) As explained to us, fixed assets have been physically verified by the management at reasonable intervals; no material discrepancies were noticed on such verification.

(c) In our opinion and according to the information and explanations given to us, no fixed asset has been disposed during the year so as to affect the going concern assumption.

2. (a) As explained to us, the inventories have been physically verified during the year by the Management at reasonable intervals.

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

(c) In our opinion and according to the information and explanations given to us, the Company has maintained proper records of inventories and no material discrepancies were noticed on physical verification as compared to the books.

3. (a) According to the information and explanations given to us and on the basis of our examination of the books of account, the Company has not granted any loans, secured or unsecured, to companies, firms or other parties listed in the register maintained under Section 301 of the Companies Act, 1956.

(b) The Company has taken loans from, from Companies, firms and other parties covered in the register maintained u/s 301 of the Act. The number of parties and the amount involved are given below:

No. of Parties: 1

Balance outstanding as at 31st March, 2014:

Bridge Loan: Rs. 11,65,73,000

Working Capital Loan: Rs. 57,10,523

Maximum amount outstanding at any time during the year:

Bridge Loan: Rs. 11,65,73,000

Working Capital Loan: Rs. 301,66,969

(c) The rate of interest and the terms and conditions of the loan are not prejudicial to the interest of the Company.

(d) In respect of the above loans, the Bridge Loan is payable as early as possible by arranging for alternative source of funds and Working Capital Loan is payable on receipt of trade realizations in the escrow account maintained for the purpose on revolving basis.

(e) As far as overdue amount is concerned, as per the agreement dated 14/10/2010, the Bridge Loan is repayable as early as possible by arranging alternative source of funds and therefore it is overdue.

4. In our opinion and according to the information and explanations given to us, there is generally an adequate internal control procedure commensurate with the size of the company and the nature of its business, for the purchase of inventories, purchase of fixed assets & with regard to sale of goods and services. During the course of our audit, no major instance of continuing failure to correct any weaknesses in the internal controls has been noticed.

5. a) In our opinion and according to the information and explanations given to us, contracts or agreements in respect of which the particulars need to be entered into the register maintained under section 301 of the Act have been so entered by the company .

b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts/arrangements entered in the register maintained u/s 301 of the Companies Act, 1956 and exceeding the value of Rs. 5 lakhs in respect of each party during the year have been made at prices which appear reasonable as per information available with the company.

6. The Company has not accepted any deposits from the public covered under section 58A and 58AA of the Companies Act, 1956.

7. In our opinion, the Company has an internal audit system commensurate with its size and the nature of its business.

8. We have broadly reviewed the cost records maintained by the Company pursuant to the Companies (Cost Accounting Records) Rules, 2011 prescribed by the Central Government under section 209(1 )(d) of the Companies Act, 1956 and are of the opinion that prima facie the prescribed cost records have been maintained. We have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

9. (a) According to the records of the company, undisputed statutory dues including Provident Fund, Employees State Insurance, Income-tax, Sales tax, Service Tax, Customs duty, Excise duty, cess to the extent applicable and any other statutory dues have generally been regularly deposited with the appropriate authorities. According to the information and explanations given to us, outstanding statutory due as on 31st of March, 2014 for a period of more than six months from the date they became payable is as follows:

S. Nature of due Amount (Rs. ) No

1 Property tax payable 31,75,650

(b) According to the information and explanations given to us, the dues in respect of CST and Customs Duty, which have not been deposited on account of dispute and the forum where the dispute is pending is as under:

S. Name of Nature of dues Amount(Rs. ) Forum where No. Statute pending

1. CST Additional 1,86,08,794/- Honourable High sales tax Court of Madras.

2. Customs Difference in 31,55,226/- Commissioner of Duty classification of Customs, Chennai Telecommunica-tion Grade Optic Fibre Cables

3. Sales Tax Non-Submission of 22,95,000/- Commercial Sales Department C-forms tax Officer, Chengalpatu

10. The accumulated losses of the Company at the end of the financial year, has exceeded the Net Worth of the Company.

The Company has also incurred cash losses during the financial year and immediately preceding financial year.

11. The Company has not borrowed any sums from Banks or financial institutions and hence question of default in repayment of dues to financial institution or bank does not arise.

12. In our opinion and 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. The Company is not a chit fund or a nidhi / mutual benefit fund/ society. Therefore, the provisions of clause (xiii) of the Companies (Auditor''s Report) Order, 2003 are not applicable to the Company.

14. The Company is not dealing or trading in shares, securities, debentures and other investments. Therefore, the provisions of clause (xiv) of Companies (Auditor''s Report) Order, 2003 are not applicable to the Company.

15. According to the information and explanations given to us, the Company has not given any guarantees for loan taken by others from a bank or financial institution.

16. In our opinion, the Company has not taken any term loans during the year.

17. Based on the information and explanations given to us and on an overall examination of the Balance Sheet of the Company as at 31st March, 2014, we report that no funds raised on short-term basis have been used for long-term investment by the Company.

18. The Company has not made any preferential allotment of shares to parties and companies covered in the Register maintained under section 301 of the Companies Act, 1956.

19. The Company has no outstanding debentures during the period under audit.

20. The Company has not raised any money by public issue during the year.

21. Based on the audit procedures performed and the information and explanations given to us, we report that no fraud on or by the Company has been noticed or reported during the year, nor have we been informed of such case by the management.

For Ramesh and Ramachandran Chartered Accountants FRN:002981S G.Suresh

Place : New Delhi (Partner) Date : 29/05/2014 Membership No. :029366


Mar 31, 2013

Report on the Financial Statements

We have audited the accompanying financial statements of M/s. Tamilnadu Telecommunications Limited, which comprise the Balance Sheet as at March 31, 2013, and the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company ]n accordance with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956. 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

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 judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the 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.

Inchon

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 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:

a) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2013; .

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

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

Emphasis of Matter

Without qualifying our conclusion, we draw attention to Note No: 3 in the Notes to Accounts. As at March 31, 2013, the Company''s accumulated losses of Rs. 75,07,73,425 has eroded the net worth of the Company, indicating the existence of a material uncertainty that may cast a doubt about the Company''s ability to continue as a going concern. The Company has incurred a loss of Rs. 8,48,49,176 for the year under audit. Based on the mitigating factors discussed in the said note, the Management believes that the Going Concern assumption is appropriate.

bet Matter

The deferred tax asset amounts to Rs. 9,20,23,736 as on 31sl March

2013 considering all eligible carried forward losses as per AS-22-Accounting for Taxes on Income. The same has not been provided for in the books of account, considering the absence of virtual certainty of earning profits and Prudence concept.

Report on Other Leboa and Regulator Requirements

1. As required by the Companies (Auditors'' Report) Order, 2003 issued by the Central Government of India in terms of subsection (4A) of section 227 of the Companies 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, Statement of Profit and Loss, and Cash Flow Statement dealt with by this Report are in agreement with the books of account.

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

e) on the basis of written representations received from the directors as on March 31,2013, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31,2013, from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

On the basis of such checks as we considered appropriate and according to the information and explanations given to us during the course of our audit, we report that:

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

(b) As explained to us, fixed assets have been physically verified by the management at reasonable intervals; no material discrepancies were noticed on such verification.

(c) In our opinion and according to the information and explanations given to us, no fixed asset has been disposed during the year so as to affect the going concern assumption.

2. (a) As explained to us, the inventories have been physically verified during the year by the Management at reasonable intervals.

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

(c) In our opinion and according to the information and explanations given to us, the Company has maintained proper records of inventories and no material discrepancies Were noticed on physical verification as compared to the books.

3. (a) According to the information and explanations given to us and on the basis of our examination of the books of account, the Company has not granted any loans, secured or unsecured, to companies, firms or other parties listed in the register maintained under Section 301 of the Companies Act, 1956.

(b) The Company has taken loans from, from Companies, firms and other parties covered in the register maintained u/s 301 of the Act. The number of parties and the amount involved are given below:

(c) , The rate of interest and the terms and conditions of the loan are not prejudicial to the interest of the Company.

(d) In respect of the above loans, the Bridge Loan is payable as early as possible by arranging for alternative source of funds and Working Capital Loan is payable'' on receipt of trade realizations in the escrow account maintained for the purpose on revolving basis. (e) As far as overdue amount is concerned, as per the agreement dated 14/10/2010, the Bridge Loan is repayable as early as possible by arranging alternative source of funds and therefore it is overdue.

4. In our opinion and according to the information and explanations - given to us, there is generally an adequate internal control procedure commensurate with the size of the company and the nature of its business, for the purchase of inventories, purchase of fixed assets & with regard to sale of goods and services. During the course of our audit, no major instance of continuing failure to correct any weaknesses in the internal '' controls has been noticed.

5. a) In our opinion and according to the information and explanations given to us, contracts or agreements in I respect of which the particulars need to be entered into '' the register maintained under section 301 of the Act have been so entered by the company.

b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts/arrangements entered in the register maintained u/s 301 of the Companies Act, 1956 and exceeding the value of Rs. 5 lakhs in respect of each party during the year have been made at prices which appear reasonable as per information available with the company.

6. The Company has not accepted any deposits from the public covered under section 58A and 58AA of the Companies Act, 1956.

7. In our opinion, the Company has an internal audit system commensurate with its size and the nature of its business.

8. We have broadly reviewed the cost records maintained by the Company pursuant to the Companies (Cost Accounting Records) Rules, 2011 prescribed by the Central Government under section 209(1 )(d) of the Companies Act, 1956 and or of the opinion that prima facie the prescribed cost records have been maintained. We have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

9. (a) According to the records of the company, undisputed statutory dues including Provident Fund, Employees State Insurance, Income-tax, Sales tax, Service Tax, Customs duty, Excise duty, cess to the extent applicable and any other statutory dues have generally been regularly deposited with the appropriate authorities.

According to the information and explanations given to us, outstanding statutory due as on 31st of March, 2013 for a period of more than six months from the date they became payable is as follows:

No. Nature of due Amount (Rs.)

1 Property tax payable 31,37,750

(b) According to the information and explanations given to . us, the dues in respect of CST and Customs Duty, which have not been deposited on account of dispute and the forum where the dispute is pending is as under:

S. No. Name of Nature of dues Amount (Rs.) Forum where Statute pending

1. CST Additional sales 1,86,08,794/- Honourable High Court of Madras.

2. Customs Difference in 31,55,226/- Commissioner Duty classification of of Customs, Telecommunication Chennai Grade Optic Fibre Cables

10. The accumulated losses of the Company at the end of the financial year, has exceeded the Net Worth of the Company. The Company has also incurred cash losses during the financial year and immediately preceding financial year.

11. The Company has not borrowed any sums from Banks or financial institutions and hence question of default in repayment of dues to financial institution or bank does not arise.

12. In our opinion and 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. The Company is not a chit fund or a nidhi /mutual benefit fund/ society. Therefore, the provisions of clause (xiii) of the Companies (Auditor''s Report) Order, 2003 are not applicable to the Company.

14. The Company is not dealing or trading in shares, securities, debentures and other investments. Therefore, the provisions of Clause (xiv) of Companies (Auditor''s Report) Order, 2003 are not applicable to the Company.

15. According to the information and explanations given to us, the Company has not given any guarantees for loan taken by others from a bank or financial institution.

16. In our opinion, the Company has not taken any term loans , during the year.

17. Based on the information and explanations given to us and on an overall examination of the Balance Sheet of the Company as at 31st March, 2013, we report that no funds raised on short-term basis have been used for long-term investment by the Company.

18. The Company has not made any preferential allotment of shares to parties and companies covered in the Register maintained under section 301 of the Companies Act, 1956.

19. The Company has no outstanding debentures during the period under audit.

20. The Company has not raised any money by public issue during the year.

21. Based on the audit procedures performed and the information and explanations given to us, we report that no fraud on or by the Company has been noticed or reported during the year, nor have we been informed of such case by the management.

For Ramesh and Ramachandran

Chartered Accountants

FRN:002981S

Y. Sridhar

Place : New Delhi (Partner)

Date : 30/05/2013 Membership No. :028149


Mar 31, 2011

1. We have audited the attached Balance Sheet of Tamilnadu Telecommunications Limited, as at 31st March 2011, and also the Profit and Loss account and the Cash Flow Statement for the year ended on the 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 jn 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 as amended, issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Companies Act, 1956, we enclose in the Annexure, a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4. The Impact on the accounts could not be ascertained due to adjustments if any required on account of non confirmation of balances of Debtors, Creditors and Loans and Advances as referred in Note No.3.

5. No provision is made for an amount of Rs. 365.40 lakhs (Previous year Rs.352 lakhs) in the financial statements for certain long outstanding debtors for which the recoverability -is dependent on judgement of Court of Law as referred to in Note No.4. The loss for the year would have been higher by the said amount and consequential impact in accumulated losses in profit and loss account, reserves and surplus.

6. Subject to the above and Further to our comments in the Annexure referred , we report that:

(i) 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;

(ii) 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;

(iii) The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account;

(iv) 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;

(v) As informed to us and based on the verification of records , we report that none of the directors is disqualified as on 31st March 2011 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956;

(vi) In our opinion and to the best of our information and according to the explanations given to us, the said accounts read with the notes thereon 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:

(a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March 2011;

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

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

Annexure referred to in paragraph 3 of our report of even date

1. The provisions of the following clauses of Companies (Auditor's Report) Order, 2003 as amended are not applicable to the company for the year.

a) Clause 4(iii) with regard to loans granted to parties covered in the register maintained under section 301 of the Companies Act, 1956 as there were no such transactions.

b) Clause 4(vi) with regard to acceptance of deposits from the public since the company has not accepted any deposits.

c) Clause 4(xii) with regard to loans granted against pledge of securities since no loans have been granted by the company.

d) Clause 4(xiii) with regard to special statutes applicable to chit funds and nidhis since the company has not carried on such business.

e) Clause 4(xiv) with regard to trading in securities since the company did not carry on such activities.

f) Clause 4(xv) with regard to guarantee given for loans taken by others from bank or financial institutions as the company had not given any guarantees.

g) Clause 4(xvi) with regard to term loan and its application, since no term loan is outstanding in the books.

h) Clause 4(xix) with regard to securities to be created in respect of debentures since no debentures was issued during the year. And

i) Clause 4(xx) with regard to money raised by public issue since no money was raised by public issue during the year.

2. The Company has maintained adequate records for fixed assets to show full particulars including quantitative details and the situation of fixed assets. The assets were physically verified by the management during the year and no material discrepancies were noticed on such verification.

3. The Company has not during the year disposed off any substantial part of fixed assets, which would give rise to the question of impairment of status of the company as a going concern.

4. The management has conducted physical verification of inventory at reasonable intervals.

5. The procedures of 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.

6. On the basis of our examination of the records of inventory, we are of the opinion that the ompany is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book record were not material and have been properly dealt with in the books of account.

7. In our opinion and according to the information and explanations given to us, there is adequate internal control procedure commensurate with the size of the Company and the nature of its business with regard to purchases of inventory, fixed assets and with regard to the sale of goods. During the course of our audit, no majorweakness has been noticed in the internal controls.

8. According to the information and explanations provided by the management, the Company has taken a secured loan from one of the companies listed in the register maintained under section 301 of the Companies Act, 1956. This is as per the Sanctioned Scheme issued by BIFR. The maximum amount due during the year and the amount due as at 31st March 2011 was Rs.1165.73 Lakhs. There are no over dues in this account.

9. In our opinion the rate of interest and other terms and conditions on which the Loans have been taken from the company listed in the register maintained under section 301 of the Companies Act, are not, prima facie, pre-judicial to the interest of company. The interest due amount as at 31st March 2011 is Rs.0.42 Lakhs.

10. In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements entered in the registers maintained under Section 301 and exceeding the value of five lakhs rupees in respect of any party during the year have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

11. In our opinion, the Company has an internal audit system commensurate with the size and nature of its business.

12. We were informed that the Central Government has not prescribed maintenance of cost records for the company under section 209(1) (d) of the Companies Act, 1956 and hence, we are not commenting on the Cost Records maintained by the Company.

13. According to the records of the Company, the Company irregular in depositing with appropriating authorities undisputed statutory dues including Provident Fund, Investor education protection fund, Employees State Insurance, Income-Tax, Sales-Tax, Wealth-Tax, Service Tax, Custom Duty, Excise Duty, profession tax, Cess applicable to it However TDS of Rs. 6.07 lakhs has not been deducted during this year

14. Based on our audit procedures and on the information and explanations given by the management, we furnish below the details of dues of sales tax / income tax / customs duty/ wealth Tax / service Tax / excise Duty / cess which have not been deposited on account of disputes.

SI. Name of Nature of Amount Forum where No. statute the dues in Rs. dispute is pending

1. CST Additional 1.86,08.794/- High Court of Sales 2000-01 & Chennai 2001-02

2. Customs Difference in 31,55,226/- Commissioner Act Classification 2006-07 of Customs. of Telecommuni Chennai cation Grade Optical Fibre Cables

- Rs.75, 00.000/- had been deposited against the demand

15. In our opinion and according to the information and explanations given to us and on an overall examination of the Balance Sheet of the Company, short term funds have not been used to finance long term investments. However, during the year bridge loan of Rs. 1165.73 lakhs raised and utilised as per the Sanctioned Scheme of BIFR

16. The Company has issued shares under preferential allotment to a Company covered in the Register maintained under section 301 of the Companies Act, 1956 at face value as per the Sanctioned Scheme of BIFR, and the same is not prejudicial to the interest of the Company.

17. The accumulated losses of the company at the end of the financial year are not more than its net worth after restructuring as per the Sanctioned Scheme of BIFR. The company has incurred Cash losses during the year.

18. During the course of our examination of the books of account and records of the Company carried out in accordance with the generally accepted auditing practices in India, we have not come across any instance of fraud on or by the company, noticed or reported during the year, nor have been informed of such case by the management.

For N.SANKARAN& CO. CHARTERED ACCOUNTANTS

(R.SUNDARARAJAN.FCA) Place: New Delhi Partner Date : 28.05.2011 Membership No: 25762 FIRM REGN NO.03590S

 
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