Mar 31, 2023
Report on the Audit of the Standalone Financial Statements
We have audited the accompanying standalone financial statements of Tata Communications Limited (the "Companyâ), which comprise the Balance sheet as at March 31 2023, the Statement of Profit and Loss, including the statement of Other Comprehensive Income, the Cash Flow Statement and the Statement of Changes in Equity for the year then ended, and notes to the standalone financial statements, including a summary of significant accounting policies and other explanatory information.
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 Companies Act, 2013, as amended (the "Actâ) 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 March 31, 2023, its profit including other comprehensive income, its cash flows and the changes in equity for the year ended on that date.
We conducted our audit of the standalone financial statements in accordance with the Standards on Auditing (SAs), as specified under section 143(10) of the Act. Our responsibilities under those Standards are further described in the âAuditor''s Responsibilities for the Audit of the Standalone Financial Statements'' section of our report. We are independent of the Company in accordance with the âCode of Ethics'' issued by the Institute of Chartered Accountants of India together with the ethical requirements that are relevant to our audit of the 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 our audit opinion on the standalone financial statements.
As fully discussed in note 49(a)(2)(ii) to the standalone financial statements for the year ended March 31, 2023, the
Company had received demands during the year ended March 31, 2020 from Department of Telecommunications (DoT) towards license fee on its Adjusted Gross Revenue (AGR) for FY 2006-07 to 2017-18, for Rs 6,633.43 crores. In October 2022, the Company received revised demands for certain periods (included in the aforesaid) aggregating to Rs 5,174.78 crores. The Company has disclosed Rs 5,008.74 crores as part of contingent liability and believes that the likelihood of the demand Rs 166.04 crores materializing is remote. Also, as fully discussed in note 50, pending clarification on the new AGR definition from the DOT, the Company has considered its non-licenced services outside the purview of the revised AGR definition effective October 1, 2021. The Company believes that it has grounds to defend its above positions and has also obtained independent legal opinions in this regard and accordingly, no provision has been made in the accompanying standalone financial statements. Our opinion is not modified in this regard.
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the standalone financial statements for the financial year ended March 31, 2023. 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. For each matter below, our description of how our audit addressed the matter is provided in that context.
We have determined the matters described below to be the key audit matters to be communicated in our report. 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 matters |
How our audit addressed the key audit matter |
Impairment of investments in Subsidiaries and Associates (as described in note 11 of the standalone financial statements) |
|
Annually, the management assesses the existence of impairment |
Our audit procedures related to this key audit |
indicators for each non-current investment and in case of occurrence, |
matters included the following: |
such investments are subjected to an impairment test. |
We assessed the processes and key controls |
As at the reporting date, the Company has non-current investments in |
implemented by the Company related to |
subsidiaries, associates and others amounting to Rs 3,725.06 crores, out |
the identification of impairment loss and |
of which, the management has identified impairment indicators such |
determination of necessary impact thereof. |
as net worth erosion and loss in the current year, in respect of certain |
We obtained the business projections, specified |
investments in subsidiaries. |
in the Annual Operating Plan of the Company for |
Accordingly, these investments have been tested for impairment as at |
the financial year 2023-24. We have understood |
year end in accordance with Indian Accounting Standard (âInd AS'') 36, |
the reasons for the projected growth basis our |
âImpairment of Assetsâ. |
discussion with the management and compared |
Based on the management''s assessment, an impairment provision of Rs. |
the projections with the past trend. |
322.76 crores has been recorded in the books as the year-end. |
We assessed the valuation methodology and |
In consideration of the judgments required in particular with reference |
evaluated the key assumptions used by the |
to the forecast of cash flows and the assumptions used in estimating the |
management in the valuations, by comparing |
value-in-use of these subsidiaries, we have identified this matter to be a |
with those prevailing in the sector, using valuation |
key audit matter. |
experts, who also performed an independent calculation and sensitivity analysis on key assumptions. We assessed the disclosure made in the standalone financial statements. |
Receivable on account of Access Facilitation Charges (âAFCâ) (as described in note 16(i) of the standalone financial statements) |
|
On November 28, 2018, Telecom Regulatory Authority of India (âTRAl'') re-enacted schedules to 2012 Regulation, containing AFC and Operation & Maintenance (âO&M'') recovery rates with respect to the use of Cable Landing Stations (âCLS''), pursuant to the High Court judgement dated July 2, 2018 and the Hon''ble Supreme Court judgment dated October 8, 2018. TRAI specified that these revised rates are applicable prospectively. The Company was recognizing AFC revenue and recovery of the O&M charges, as per the erstwhile rates specified in schedules to 2012 Regulation. In view of above facts, during the year ended March 31, 2019 the Company recognized the differential AFC revenue and O&M charges of Rs 348.75 crores for the period January 2013 to November 2018, as per the rates specified in the contracts with the customers. The customers contested the revised order in the Hon''ble Supreme Court, which in its meeting held on January 28, 2019 directed the TDSAT for evaluation. The TDSAT issued an order dated April 16, 2020 stating the rates are applicable prospectively from November 28, 2018. The customers have preferred an appeal in Hon''ble Supreme Court against the TDSAT order seeking an interim stay on the order, which is pending. During the year, based on the Hon''ble Supreme Court direction, one of the customers paid Rs 70.00 crores for these services. The Company as at March 31, 2023 has gross receivable of Rs 111.71 crores towards these services Considering the significance of the amount to the standalone financial statements, the fact that the matter is currently litigative, and management judgement of considering the receivable towards the AFC revenue as recoverable and good, we have considered the matter to be key audit matter. |
Our audit procedures related to this key audit matters included the following: We evaluated the customer correspondences and various judgements pronounced by the Hon''ble High court, the Hon''ble Supreme Court and TDSAT. We tested the underlying computation of necessary adjustments recorded in the books. We have verified the relevant Supreme Court direction and relevant communications between the Company and the customer. We also verified the monies received and necessary adjustments in the books. We assessed the disclosure made in these standalone financial statements. |
Information Other than the Financial Statements and Auditorâs Report Thereon
The Company''s Board of Directors is responsible for the other information. The other information comprises the information included in the Annual report, but does not include the standalone financial statements and our auditor''s report thereon.
Our opinion on the standalone financial statements does 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 and, in doing so, consider whether such other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of Management for the Standalone Financial Statements
The Company''s Board of Directors 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 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 the Companies (Indian Accounting Standards) Rules, 2015, as amended. 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 the 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.
In preparing the standalone financial statements, management 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 management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are also responsible for overseeing the Company''s financial reporting process.
Auditorâs 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 skepticism 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 control 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 with reference to financial statements 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 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.
Funding Party (Ultimate Beneficiaries) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries; and
c) Based on such audit procedures performed that have 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 final dividend paid by the Company during the year in respect of the same declared for the previous year is in accordance with section 123 of the Act to the extent it applies to payment of dividend.
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 for the financial year ended March 31, 2023 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.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor''s Report) Order, 2020 (the "Orderâ), issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in the "Annexure 1â 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 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 including the Statement of Other Comprehensive Income, the Cash Flow Statement 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 Accounting Standards specified under Section 133 of the Act, read with Companies (Indian Accounting Standards) Rules, 2015, as amended;
(e) On the basis of the written representations received from the directors as on March 31, 2023 taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2023 from being appointed as a director in terms of Section 164 (2) of the Act;
(f) With respect to the adequacy of the internal financial controls with reference to standalone financial statements and the operating effectiveness of such controls, refer to our separate Report in "Annexure 2â to this report;
(g) In our opinion, the managerial remuneration for the year ended March 31, 2023 has been paid / provided by the Company to its directors in accordance with the provisions of section 197 read with Schedule V to the Act;
(h) 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 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 49(a) 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;
iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company;
iv. a) The management has represented 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 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
As stated in note 20(c) to the standalone financial statements, the Board of Directors of the Company have proposed final dividend for the year which is subject to the approval of the members at the ensuing Annual General Meeting. The dividend declared is in accordance with section 123 of the Act to the extent it applies to declaration of dividend; and
vi. As proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 is applicable for the Company only w.e.f. April 1, 2023, reporting under this clause is not applicable.
Chartered Accountants
ICAI Firm Registration Number: 101049W/E300004
Partner
Membership Number: 110797
UDIN: 23110797BGYJSZ6332
Place of Signature: Mumbai
Date: April 19, 2023
Mar 31, 2022
Report on the Audit of the Standalone Financial Statements
Opinion
We have audited the accompanying standalone financial statements of Tata Communications Limited (the "Companyâ), which comprise the Balance sheet as at March 31, 2022, the Statement of Profit and Loss, including the statement of Other Comprehensive Loss, the Cash Flow Statement and the Statement of Changes in Equity for the year then ended, and notes to the standalone financial statements, including a summary of significant accounting policies and other explanatory information.
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 Companies Act, 2013, as amended (the "Actâ) 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 March 31, 2022, its profit including other comprehensive loss, its cash flows and the changes in equity for the year ended on that date.
Basis for Opinion
We conducted our audit of the standalone financial statements in accordance with the Standards on Auditing (SAs), as 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 âCode of Ethics'' issued by the Institute of Chartered Accountants of India together with the ethical requirements that are relevant to our audit of the 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 our audit opinion on the standalone financial statements.
Emphasis of Matter
i. As fully discussed in note 48(2) to the standalone financial statements for the year ended March 31, 2022, the Company had received demands dated September 12, 2019 from Department of
Telecommunications (DoT) towards license fee on its Adjusted Gross Revenue (AGR) for FY 2006-07 to 2017-18, for Rs 6,633.43 crores. Of this amount, the Company has provided Rs 337.17 crores with respect to the demand of Rs 5,433.70 crores and believes that the likelihood of the balance demand Rs 5,096.53 crores materializing is remote. Further, the Company has disclosed the demand of Rs 1,199.73 crores as part of contingent liability. Also, pending clarification on the new AGR definition from the DoT, the Company has considered its non-licenced services outside the purview of the revised AGR definition effective October 1, 2021. The Company believes that it has grounds to defend its above positions and has also obtained independent legal opinions in this regard.
ii. We draw attention to note 10 of the standalone financial statement, regarding the impact of COVID-19 and its consequential impact on management''s assessment of the key assumptions related to recoverability of the carrying value of investment in Tata Communications Payment Solutions Limited of Rs 1,033.04 crores.
Our opinion is not modified in respect of these matters.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the standalone financial statements for the financial year ended March 31, 2022. 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. For each matter below, our description of how our audit addressed the matter is provided in that context.
We have determined the matters described below to be the key audit matters to be communicated in our report. 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 matters |
How our audit addressed the key audit matter |
Impairment of investments in Subsidiaries and Associates (as described in note 10 of the financial statements) |
|
Annually, the management assesses the existence of |
Our audit procedures related to this key audit matters |
impairment indicators for each non-current investment |
included the following: |
and in case of occurrence, such investments are subjected to an impairment test. |
We assessed the processes and key controls implemented by the Company related to the identification of |
As at the reporting date, the Company has non-current |
impairment loss and determination of necessary impact |
investments in subsidiaries, associates and others |
thereof. |
amounting to Rs 3,856.88 crores, out of which, the management has identified impairment indicators such as net worth erosion and loss in the current year, in respect of certain investments in subsidiaries. |
We obtained the business projections, specified in the Annual Operating Plan of the Company for the financial year 2022-23. We have understood the reasons for the projected growth basis our discussion with the |
Accordingly, these investments have been tested for |
Management and compared the projections with the |
impairment as at year end in accordance with Indian |
past trend. |
Accounting Standard (âInd AS'') 36, "Impairment of Assetsâ. |
We assessed the valuation methodology and evaluated the key assumptions used by the management in the |
In consideration of the judgments required in particular |
valuations, by comparing with those prevailing in the |
with reference to the forecast of cash flows and the |
sector, using valuation experts, who also performed an |
assumptions used in estimating the value-in-use of these |
independent calculation and sensitivity analysis on key |
subsidiaries, we have identified this matter to be a key |
assumptions. |
audit matter. |
We assessed the disclosure made in the standalone financial statements. |
Receivable on account of Access Facilitation Charges (âAFCâ) (as described in note 15(i) of the standalone financial |
|
statements) |
|
On November 28, 2018, Telecom Regulatory Authority of |
Our audit procedures related to this key audit matters |
India (âTRAl'') re-enacted schedules to 2012 Regulation, |
included the following: |
containing AFC and Operation & Maintenance (âO&M'') recovery rates with respect to the use of Cable Landing Stations (âCLS''), pursuant to the High Court judgement dated July 2, 2018 and the Hon''ble Supreme Court |
We evaluated the customer correspondences and various judgements pronounced by the Hon''ble High court, the Hon''ble Supreme Court and TDSAT. |
judgment dated October 8, 2018. TRAI specified that |
We tested the underlying computation of necessary |
these revised rates are applicable prospectively. |
adjustments recorded in the books. |
The Company was recognizing AFC revenue and |
We assessed the disclosure made in these standalone |
recovery of the O&M charges, as per the erstwhile rates specified in schedules to 2012 Regulation. In view of above facts, during the year ended March 31, 2019 the Company recognized the differential AFC revenue and O&M charges of Rs 348.75 crores for the period January 2013 to November 2018, as per the rates specified in the contracts with the customers. |
financial statements. |
The customers contested the revised order in the Hon''ble Supreme Court, which in its meeting held on January 28, 2019 directed the TDSAT for evaluation. The TDSAT issued an order dated April 16, 2020 stating the rates are applicable prospectively from November 28, 2018. |
Key audit matters How our audit addressed the key audit matter The customers have preferred an appeal in Hon''ble Supreme Court against the TDSAT order seeking an interim stay on the order, which is pending. The Company as at March 31, 2022 has receivable of Rs 164 crores towards the AFC revenue for the period January 2013 to November 2018. Considering the significance of the amount to the standalone financial statements, the fact that the matter is currently litigative, and management judgement of considering the receivable towards the AFC revenue as recoverable and good, we have considered the matter to be key audit matter. |
Standards) Rules, 2015, as amended. 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 the 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.
In preparing the standalone financial statements, management 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 management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
Those Charged with Governance are also responsible for overseeing the Company''s financial reporting process.
Auditorâs 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
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 for the financial year ended March 31, 2022 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.
Report on Other Legal and Regulatory
Requirements
1. As required by the Companies (Auditor''s Report) Order, 2020 (the "Orderâ), issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in the "Annexure 1â 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 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 including the Statement of Other Comprehensive Income, the Cash Flow Statement
Information Other than the Financial Statements and Auditorâs Report Thereon
The Company''s Board of Directors is responsible for the other information. The other information comprises the information included in the Annual report, but does not include the standalone financial statements and our auditor''s report thereon.
Our opinion on the standalone financial statements does 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 and, in doing so, consider whether such other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of Management for the Standalone Financial Statements
The Company''s Board of Directors 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 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 the Companies (Indian Accounting
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 skepticism 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 control 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 with reference to financial statements 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 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
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 Accounting Standards specified under Section 133 of the Act, read with Companies (Indian Accounting Standards) Rules, 2015, as amended;
(e) On the basis of the written representations received from the directors as on March 31, 2022 taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2022 from being appointed as a director in terms of Section 164 (2) of the Act;
(f) With respect to the adequacy of the internal financial controls with reference to these standalone financial statements and the operating effectiveness of such controls, refer to our separate Report in "Annexure 2â to this report;
(g) In our opinion, the managerial remuneration for the year ended March 31, 2022 has been paid / provided by the Company to its directors in accordance with the provisions of section 197 read with Schedule V to the Act;
(h) 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 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 48 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;
iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company;
iv. a) The management has represented 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 ("Intermediariesâ), 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 Beneficiariesâ) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries;
b) The management has represented 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 Partiesâ), 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 id entified in any manner whatsoever by or on behalf of the Funding Party ("Ultimate Beneficiariesâ) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries; and
c) Based on such audit procedures that were 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 dividend paid during the year by the Company is in compliance with section 123 of the Act.
For S.R. Batliboi & Associates LLP
Chartered Accountants
ICAI Firm Registration Number: 101049W/E300004
per Prashant Singhal
Partner
Membership Number: 93283
UDIN: 22093283AHNEME9324
Place of Signature: Mumbai
Date: April 21, 2022
Mar 31, 2021
Report on the Audit of the Standalone Financial Statements
We have audited the accompanying standalone financial statements of Tata Communications Limited ("the Companyâ), which comprise the Balance sheet as at March 31, 2021 the Statement of Profit and Loss, including the statement of Other Comprehensive Income, the Cash Flow Statement and the Statement of Changes in Equity for the year then ended, and notes to the standalone financial statements, including a summary of significant accounting policies and other explanatory information.
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 Companies Act, 2013, as amended ("the Actâ) 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 March 31, 2021, its profit including other comprehensive loss, its cash flows and the changes in equity for the year ended on that date.
We conducted our audit of the standalone financial statements in accordance with the Standards on Auditing (SAs), as 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 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 our audit opinion on the standalone financial statements.
i. As fully discussed in note 45(a)(2)(ii) to the standalone financial statements for the year, the Company had received demands dated September 12, 2019 from Department of Telecommunications (DoT) towards license fee on its Adjusted Gross Revenue (AGR) for FY 2006-07 to 2017-18, for H6,633.43 crores. Of this amount, the Company has provided H337.17 crores with respect to the demand of H5,433.70 crores and believes that the likelihood of the balance demand H5,096.53 crores materializing is remote. Further, the Company has disclosed the demand of H1,199.73 crores as part of contingent liability. The Company believes that it has grounds to defend its position and has also obtained a legal opinion in this regard.
ii. As fully discussed in Note 7 to the standalone financial statements, the recoverability of the carrying value of the investment in Tata Communications Payment Solutions Limited (''TCPSL'' - wholly owned subsidiary of the Company) of H923.03 crores is significantly dependent upon the achievement of the key assumptions related to increase in the Inter Bank Rate (IBR) which is pending regulatory clearances/ approval. Subject to the positive outcome of the above; and based on the business plan assessment done by the management during the year ended March 31, 2021, the management is of the view that the carrying value of the investment in TCPSL as at March 31, 2021 is appropriate.
Our opinion is not modified in respect of these matters.
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the standalone financial statements for the financial year ended March 31, 2021. 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. For each matter below, our description of how our audit addressed the matter is provided in that context.
We have determined the matters described below to be the key audit matters to be communicated in our report. 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 matters |
How our audit addressed the key audit matter |
Impairment of investments in Subsidiaries and Associates (as described in note 7 of the financial statements) |
|
Annually, the management assesses the existence of |
Our audit procedures related to this key audit matters |
impairment indicators for each non-current investment |
included the following: |
and in case of occurrence, such investments are subjected to an impairment test. |
We assessed the processes and key controls implemented by the Company related to the identification of impairment |
As at the reporting date, the Company has noncurrent investments in subsidiaries, associates and others amounting to H3,577.28 crores, out of which, the management has identified impairment indicators such as net worth erosion and loss in the current year, in respect of certain investments in subsidiaries. Accordingly, these investments have been tested for impairment as at year end in accordance with Indian |
loss and determination of necessary impact thereof. We obtained the business projections, specified in the Annual Operating Plan of the Company for the financial year 2021-22. We have understood the reasons for the projected growth basis our discussion with the Management and compared the projections with the past trend. |
Accounting Standard (''Ind AS'') 36, "Impairment of |
We assessed the valuation methodology and evaluated |
Assetsâ. |
the key assumptions used by the management in the |
In consideration of the judgments required in particular with reference to the forecast of cash flows and the assumptions used in estimating the value-in-use of these subsidiaries, we have identified this matter to be a key |
valuations, by comparing with those prevailing in the sector, using valuation experts, who also performed an independent calculation and sensitivity analysis on key assumptions. |
audit matter. |
We assessed the disclosure made in the standalone financial statements. |
Receivable on account of Access Facilitation Charges (''AFC'') (as described in note 11(i) of the standalone |
|
financial statements) |
|
On November 28, 2018, Telecom Regulatory Authority of |
Our audit procedures related to this key audit matters |
India (''TRAl'') re-enacted schedules to 2012 Regulation, |
included the following: |
containing AFC and Operation & Maintenance (''O&M'') recovery rates with respect to the use of Cable Landing Stations (''CLS''), pursuant to the High Court judgement dated July 2, 2018 and the Hon''ble Supreme Court |
We evaluated the customer correspondences and various judgements pronounced by the High court, the Hon''ble Supreme Court and TDSAT. |
judgment dated October 8, 2018. TRAI specified that |
We tested the underlying computation of necessary |
these revised rates are applicable prospectively. |
adjustments recorded in the books. We assessed the disclosure made in these standalone financial statements. |
Assessment of impairment of Receivables due to the impact of Covid (as described in note 49 of the standalone financial statements) Covid-19 outbreak continues to spread across the globe Our audit procedures related to this key audit matters and India, which has contributed to significant impact to included the following: the global financial and economic activities. The Company We tested the effectiveness of controls over the has assessed the impact of the global pandemic on the development of the methodology for the allowance for financial statements, including the subsequent events credit losses, including consideration of the current and upto the reporting date as below; , lr , estimated future economic conditions. The Company determines the allowance for credit losses We validated the estimates and assumptions used by based on historical loss experience adjusted to reflect the management in determining the carrying value of current and estimated future economic conditions at receivables by verifying the underlying calculations each reporting date. The management has considered and reviewing historical defaults in payment by the impact of the pandemic on the customer''s industry- r â customers of the Company. segment to estimate the probability of default in future on the receivable. We reviewed the industry-segment assessment of the management, evaluated the same basis publicly available In consideration of the judgments required and considering information and compared with our assessment. the uncertainty of estimations, we have considered the matter to be a key audit matter. We also made corroborative inquires with appropriate level of management. We tested the mathematical accuracy of the computation done of the allowances. We assessed the disclosure made in the standalone financial statements. |
Key audit matters How our audit addressed the key audit matter The Company was recognizing AFC revenue and recovery of the O&M charges, as per the erstwhile rates specified in schedules to 2012 Regulation. In view of above facts, during the year ended March 31, 2019 the Company recognized the differential AFC revenue and O&M charges of H348.75 crores for the period January 2013 to November 2018, as per the rates specified in the contracts with the customers. The customers contested the revised order in the Hon''ble Supreme Court, which in its meeting held on January 28, 2019 directed the TDSAT for evaluation. The TDSAT issued an order dated April 16, 2020 stating the rates are applicable prospectively from November 28, 2018. The customers have preferred an appeal in Hon''ble Supreme Court against the TDSAT order seeking an interim stay on the order, which is pending. The Company as at March 31, 2021 has receivable of H164.11 crores towards the AFC revenue for the period January 2013 to November 2018. Considering the significance of the amount to the standalone financial statements, the fact that the matter is currently litigative, and management judgement of considering the receivable towards the AFC revenue as recoverable and good, we have considered the matter to |
Information Other than the Financial Statements and Auditorâs Report Thereon
The Company''s Board of Directors is responsible for the other information. The other information comprises the information included in the Annual report, but does not include the standalone financial statements and our auditor''s report thereon.
Our opinion on the standalone financial statements does 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 and, in doing so, consider whether such other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of Management for the Standalone Financial Statements
The Company''s Board of Directors 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 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 the Companies (Indian Accounting Standards) Rules, 2015, as amended. 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 the 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.
In preparing the standalone financial statements, management 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 management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
Those Charged with Governance are also responsible for overseeing the Company''s financial reporting process.
Auditorâs 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 skepticism 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 control 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 with reference to financial statements 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 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 for the financial year ended March 31, 2021 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.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor''s Report) Order, 2016 ("the Orderâ), issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in the "Annexure 1â 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 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 including the Statement of Other Comprehensive Income, the Cash Flow Statement 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 Accounting Standards specified under Section 133 of the Act, read with Companies (Indian Accounting Standards) Rules, 2015, as amended;
(e) On the basis of the written representations received from the directors as on March 31, 2021 taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2021 from being appointed as a director in terms of Section 164 (2) of the Act;
(f) With respect to the adequacy of the internal financial controls with reference to standalone financial statements and the operating effectiveness of such controls, refer to our separate Report in "Annexure 2â to this report;
(g) In our opinion, the managerial remuneration for the year ended March 31, 2021 has been paid / provided by the Company to its directors in accordance with the provisions of section 197 read with Schedule V to the Act;
(h) 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 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 45 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
Ioccdc
iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company
Chartered Accountants
ICAI Firm Registration Number: 101049W/E300004
Partner
Membership Number: 93283
Place of Signature: New Delhi Date: April 28, 2021
Mar 31, 2019
Report on the Audit of the Standalone Ind AS Financial Statements
Opinion
We have audited the accompanying standalone Ind AS financial statements of Tata Communications Limited (the âCompanyâ), which comprise the Balance sheet as at March 31, 2019, the Statement of Profit and Loss, including the statement of Other Comprehensive Income, the Cash Flow Statement and the Statement of Changes in Equity for the year then ended, and notes to the financial statements, including a summary of significant accounting policies and other explanatory information.
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 Companies Act, 2013, as amended (the âActâ) 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 March 31, 2019, its loss including other comprehensive income its cash flows and the changes in equity for the year ended on that date.
Basis for Opinion
We conducted our audit of the standalone Ind AS financial statements in accordance with the Standards on Auditing (SAs), as specified under section 143(10) of the Act. Our responsibilities under those Standards are further described in the âAuditorâs Responsibilities for the Audit of the Standalone Ind AS Financial Statementsâ section of our report. We are independent of the Company in accordance with the âCode of Ethicsâ issued by the Institute of Chartered Accountants of India together with the ethical requirements that are relevant to our audit of the 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 our audit opinion on the standalone Ind AS financial statements.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the standalone Ind AS financial statements for the financial year ended March 31, 2019. These matters were addressed in the context of our audit of the standalone Ind AS financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided in that context.
We have determined the matters described below to be the key audit matters to be communicated in our report. We have fulfilled the responsibilities described in the Auditorâs responsibilities for the audit of the standalone Ind AS 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 Ind AS 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 Ind AS financial statements.
Key audit matters |
How our audit addressed the key audit matter |
Impairment of investments in Subsidiaries and Associate (as described in note 6 of the financial statements) |
|
Annually, the management assesses the existence of impairment |
Our audit procedures related to this key audit |
indicators for each non-current investment and in case of |
matters included the following: |
occurrence, such investments are subjected to an impairment test. |
We assessed the processes and key controls |
implemented by the Company related to |
|
As at the reporting date, the Company has non-current |
the identification of impairment loss and |
investments in subsidiaries, associates and others amounting |
determination of necessary impact thereof. |
to RS.3,423.59 crs, out of which, the management has identified impairment indicators such as net worth erosion and loss in the current year, in respect of certain investments in subsidiaries. |
We obtained the business projections, specified in the Annual Operating Plan of the Company for the financial year 2019-20. We have understood |
Accordingly, these investments have been tested for impairment |
the reasons for the projected growth basis our |
as at year end in accordance with Indian Accounting Standard |
discussion with the Management and compared |
(âInd ASâ) 36, âImpairment of Assetsâ |
the projections with the past trend. |
Based on the managementâs assessment, an impairment provision |
We assessed the valuation methodology and |
of RS.660.02 crs has been recorded in the books as at the year-end. |
evaluated the key assumptions used by the |
In consideration of the judgments required in particular with reference to the forecast of cash flows and the assumptions used in estimating the value-in-use of these subsidiaries, we have identified this matter to be a key audit matter. |
management in the valuations, by comparing with those prevailing in the sector, using valuation experts, who also performed an independent calculation and sensitivity analysis on key assumptions. |
Income from Access Facilitation Charges (âAFCâ) on Cable Landing Stations (âCLSâ) (as described in note 24(i) of |
|
the financial statements) |
|
On November 28, 2018, Telecom Regulatory Authority of India |
Our audit procedures related to this key audit |
(âTRAIâ) re-enacted schedules to 2012 Regulation, containing |
matters included the following: |
AFC and Operation & Maintenance (O&M) recovery rates with respect to the use of CLS, pursuant to the High Court judgement dated July 2, 2018 and the Honâble Supreme Court judgment dated October 8, 2018. TRAI specified that these revised rates are applicable prospectively. |
We have evaluated the customer correspondences and various judgements pronounced by the High court / the Honâble Supreme Court and relied upon the independent legal opinions obtained by the Company in this |
The Company had been recognizing AFC revenue and recovery of |
regard. |
the O&M charges, as per the erstwhile rates specified in schedules to 2012 Regulation. |
We checked the underlying computation of |
necessary adjustments recorded in the books. |
|
In view of above facts, during the current year, the Company |
|
has recognized the differential AFC revenue of RS.89.94 crs and |
|
recovery of the O&M charges of RS.258.81 crs, for the period |
|
January 2013 to November 2018, as per the rates specified in the |
|
contracts with the customers. Further, there is a corresponding |
|
increase in Network and transmission expenses due to transfer |
|
pricing adjustment. |
|
The customers have contested the revised order in the Honâble |
|
Supreme Court, indicating potential uncertainty with respect to |
|
its collection. |
|
The Honâble Supreme Court in its hearing held on January 28, |
|
2019, have directed the matter to TDSAT for evaluation and have |
|
requested the service providers to continue with the services till |
|
the disposal of the matter. |
|
Considering the fact that the matter is currently litigative and the |
|
management has exercised significant judgement in accounting for |
|
the same, we have considered the matter to be a key audit matter. |
As at year end, the Company has contingent liabilities on account |
Our audit procedures related to this key audit |
of claims raised by various government authorities and litigations in progress. Such claims and litigations primarily include income tax and license fee related matters. |
matters included the following: We have assessed the managementâs assessment of such claims and litigations with |
Income tax matters mainly relate to disallowance of deductions claimed under section 80 IA of the Income Tax Act, 1961 from assessment years 1996-97 onwards and transfer pricing adjustments added to the assessed income by the revenue |
the help of experts. With respect to the license fee matters, we have read the independent legal opinions, obtained |
authorities. License fee matters comprise of the litigation for renewal of Internet Service Provider license, demands from Department of Telecommunication on the Statement of Adjusted Gross Revenue and License Fees, submitted for the financial years starting from 2002-03 to 2005-06 and demands based on special audit for the financial years 2006-07 and 2007-08. Considering the complexity and uncertainty involved in these litigations and judgement applied in determination of potential outflow as possible, the matter has been considered to be a key audit matter. |
by the management, to substantiate its positions on the litigated matters. Besides, we have read and checked the underlying supporting documents such as demand letters, computations, etc in order to assess the accuracy and completeness of the amounts disclosed. |
Information Other than the Financial Statements and Auditorâs Report thereon
The Companyâs Board of Directors is responsible for the other information. The other information comprises the information included in the Annual Report (but does not include the standalone Ind AS financial statements and our auditorâs report thereon). The Annual Report is expected to be made available to us after the date of this auditorâs report.
Our opinion on the standalone Ind AS financial statements does not cover the other information and we do not and will not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information identified above when it becomes available and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.
When we read the annual report, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance and perform all procedures as required by SA 720.
Responsibilities of Management for the Standalone Ind AS Financial Statements
The Companyâs Board of Directors is responsible for the matters stated in section 134(5) of 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 the Companies (Indian Accounting Standards) Rules, 2015, as amended. 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 the 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.
In preparing the standalone Ind AS financial statements, management is responsible for assessing the Companyâs ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
Those Board of Directors are also responsible for overseeing the Companyâs financial reporting process.
Auditorâs Responsibilities for the Audit of the Standalone Ind AS Financial Statements
Our objectives are to obtain reasonable assurance about whether the standalone Ind AS financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditorâs 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 Ind AS financial statements.
As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
- Identify and assess the risks of material misstatement of the standalone Ind AS 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 control 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 managementâs 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 Companyâs ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditorâs report to the related disclosures in the 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 auditorâs 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 Ind AS financial statements, including the disclosures, and whether the standalone Ind AS 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 Ind AS financial statements for the financial year ended March 31, 2019 and are therefore the key audit matters. We describe these matters in our auditorâs 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.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditorâs Report) Order, 2016 (the âOrderâ), issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in the âAnnexure 1â 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 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 including the Statement of Other Comprehensive Income, the Cash Flow Statement 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 Accounting Standards specified under Section 133 of the Act, read with Companies (Indian Accounting Standards) Rules, 2015, as amended;
(e) On the basis of the written representations received from the directors as on March 31, 2019 taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2019 from being appointed as a director in terms of Section 164 (2) of the Act;
(f) With respect to the adequacy of the internal financial controls over financial reporting of the Company with reference to these standalone Ind AS financial statements and the operating effectiveness of such controls, refer to our separate Report in âAnnexure 2â to this report;
(g) In our opinion, the managerial remuneration for the year ended March 31, 2019 has been paid / provided by the Company to its directors in accordance with the provisions of section 197 read with Schedule V to the Act;
(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, as amended 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 44 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.
(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.
(b) All fixed assets were physically verified by the management in the previous year in accordance with a planned programme of verifying them once in three years which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verification.
(c) According to the information and explanations given by the management, the title deeds of immovable properties included in property, plant and equipment and investment property are held in the name of the Company except three immovable properties aggregating to gross block of RS.34.58 crores and net block of RS.22.15 crores as at March 31, 2019, for which title deeds were pending registration or not available with the Company and hence, we are unable to comment on the same.
(ii) The management has conducted physical verification of inventory at reasonable intervals during the year and no material discrepancies were noticed on such physical verification. There was no inventory lying with third parties.
(iii) According to the information and explanations given to us, 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 Companies Act, 2013. Accordingly, the provisions of clause 3(iii)(a), (b) and (c) of the Order are not applicable to the Company and hence not commented upon.
(iv) In our opinion and according to the information and explanations given to us, provisions of section 185 and 186 of the Companies Act 2013 in respect of loans to directors including entities in which they are interested and in respect of loans and advances given, investments made and, guarantees, and securities given have been complied with by the Company, to the extent these sections are applicable on the Company.
(v) The Company has not accepted any deposits within the meaning of Sections 73 to 76 of the Act and the Companies (Acceptance of Deposits) Rules, 2014 (as amended). Accordingly, the provisions of clause 3(v) of the Order are not applicable.
(vi) We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under section 148(1) of the Act, related to International long distance services, National long distance services, Internet service provider services and certain other services and are of the opinion that prima facie, the specified accounts and records have been made and maintained. We have not, however, made a detailed examination of the same.
(vii)(a) The Company is regular in depositing with appropriate authorities undisputed statutory dues including provident fund, employeesâ state insurance, income-tax, sales-tax, service tax, duty of custom, value added tax, goods and service tax, cess and other statutory dues applicable to it.
(b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, employeesâ state insurance, income-tax, service tax, value added tax, goods and service tax, sales tax, duty of custom, cess and other material statutory dues were outstanding, at the year end, for a period of more than six months from the date they became payable.
(c) According to the records of the Company, the dues outstanding of income tax, sales tax, service tax, value added tax and other statutory dues on account of any dispute, are as follows:
Name of Statute |
Nature of dues |
Amount (Rs. in crores) |
Period to which the amount relates |
Forum where dispute is pending |
Income Tax Act, 1961 |
Income Tax |
672.78 |
FY 2006-07 to FY 2010-11 |
Income Tax Appellate Tribunal |
Income Tax Act, 1961 |
Income Tax |
1.02 |
FY 1996-1997 |
Appellate Authority, Income Tax Officer |
Income Tax Act, 1961 |
Income Tax |
48.40 |
FY 2012-13 |
Appellate Authority, Income Tax Officer |
Income Tax Act, 1961 |
Income Tax |
72.78 |
FY 2013-14 |
Income Tax Appellate Tribunal |
Income Tax Act, 1961 |
Income Tax |
203.89 |
FY 02-03 to 04-05 |
Income Tax Appellate Tribunal |
Income Tax Act, 1961 |
Income Tax |
0.15 |
FY 06-07 |
Income Tax Appellate Tribunal |
Income Tax Act, 1961 |
Income Tax |
74.42 |
FY 08-09 to 10-11 |
Income Tax Appellate Tribunal |
Income Tax Act, 1961 |
Income Tax |
224.83 |
FY 98-99 to FY 00-01 |
High Court |
Income Tax Act, 1961 |
Income Tax |
141.49 |
FY 01-02 |
High Court |
Income Tax Act, 1961 |
Income Tax |
0.35 |
FY 05-06 |
High Court |
Income Tax Act, 1961 |
Income Tax |
3.74 |
FY 05-06 |
Supreme Court |
Income Tax Act, 1961 |
Income Tax - TDS |
1.99 |
Various Years |
Commissioner (Appeal) (TDS) - Income Tax |
Income Tax Act, 1961 |
Income Tax - TDS |
0.26 |
Various Years |
Income Tax Appellate Tribunal |
Sales Tax, West Bengal |
Sales Tax |
1.86 |
FY 2006-07 to 2007-08 |
High Court of West Bengal |
Finance Act, 1994 |
Service Tax |
23.14 |
Various Years |
Central Excise and Service Tax Appellate Tribunal |
Goods And Services Tax Act, 2017 |
Goods and Service Tax |
0.16 |
FY 17-18 |
The Deputy Commissioner (Appeals)- Gujarat |
Value Added Tax, West Bengal |
Value Added Tax |
1.90 |
FY 2014-15 |
Fast Track Revisional Authority, Commercial Taxes, West Bengal |
(viii) In our opinion and according to the information and explanations given by the management, the Company has not defaulted in repayment of loans or borrowing to a financial institution, bank or government or dues to debenture holders.
(ix) According to the information and explanations given by the management, the Company has not raised any money way of debentures, initial public offer / further public offer and term loans, hence, reporting under clause (ix) is not applicable to the Company and not commented upon.
(x) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and according to the information and explanations given by the management, we report that no material fraud on the Company or by the officers and employees of the Company has been noticed or reported during the year.
(xi) According to the information and explanations given by the management, the managerial remuneration has been paid / provided in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Act.
(xii)In our opinion, the Company is not a nidhi Company. Therefore, the provisions of clause 3(xii) of the Order are not applicable to the Company and hence, not commented upon.
(xiii) According to the information and explanations given by the management, transactions with the related parties are in compliance with section 177 and 188 of Companies Act, 2013 where applicable and the details have been disclosed in the notes to the financial statements, as required by the applicable accounting standards.
(xiv) According to the information and explanations given to us and on an overall examination of the balance sheet, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review and hence, reporting requirements under clause 3(xiv) are not applicable to the Company and not commented upon.
(xv) According to the information and explanations given by the management, the Company has not entered into any non-cash transactions with directors or persons connected with him as referred to in section 192 of the Act.
(xvi) According to the information and explanations given to us, the provisions of section 45-IA of the Reserve Bank of India Act, 1934 are not applicable to the Company.
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 (the âActâ)
We have audited the internal financial controls over financial reporting of Tata Communications Limited (the âCompanyâ) as of March 31, 2019 in conjunction with our audit of the standalone 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. 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 the 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 Companies Act, 2013.
Auditorâs Responsibility
Our responsibility is to express an opinion on the Companyâs internal financial controls over financial reporting with reference to these standalone financial statements 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 as specified under section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls and, both issued by the Institute of Chartered Accountants of India. 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 with reference to these standalone financial statements 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 over financial reporting with reference to these standalone financial statements and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting with reference to these standalone financial statements, 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 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 internal financial controls over financial reporting with reference to these standalone financial statements.
Meaning of Internal Financial Controls Over Financial Reporting With Reference to these Financial Statements
A companyâs internal financial control over financial reporting with reference to these standalone financial statements 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 with reference to these standalone financial statements 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 With Reference to these Standalone Financial Statements
Because of the inherent limitations of internal financial controls over financial reporting with reference to these standalone financial statements, 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 with reference to these standalone financial statements to future periods are subject to the risk that the internal financial control over financial reporting with reference to these standalone financial statements 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, adequate internal financial controls over financial reporting with reference to these standalone financial statements and such internal financial controls over financial reporting with reference to these standalone financial statements were operating effectively as at March 31, 2019, 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.
For S.R. Batliboi & Associates LLP
Chartered Accountants
ICAI Firm Registration Number: 101049W/E300004
per Prashant Singhal
Partner
Membership Number: 93283
Place of Signature: Mumbai
Date: May 8, 2019
Mar 31, 2018
INDEPENDENT AUDITORâS REPORT
To the Members of Tata Communications Limited
Report on the Standalone Financial Statements
We have audited the accompanying standalone financial statements of Tata Communications Limited (the ''Company''), which comprise the Balance Sheet as at March 31, 2018, the Statement of Profit and Loss, including the Statement of Other Comprehensive Income, the Cash Flow Statement and the Statement of Changes in Equity for the year then ended, and a summary of significant accounting policies and other explanatory information.
Managementâs 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 including other comprehensive income, cash flows and changes in equity of the Company in accordance with accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) specified under section 133 of the Act, read with the Companies (Indian Accounting Standards) Rules, 2015, as amended. 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 the design, implementation and maintenance of adequate internal financial control 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.
Auditorâs 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 there under. We conducted our audit of the standalone financial statements in accordance with the Standards on Auditing, issued by the Institute of Chartered Accountants of India, as 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 judgment, including the assessment of the risks of material misstatement of the standalone 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 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 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 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 March 31, 2018, its profit including other comprehensive income, its cash flows and the changes in equity for the year ended on that date.
Other Matter
The financial statements of the Company for the year ended March 31, 2017, included in these standalone financial statements, have been audited by the predecessor auditor who expressed an modified opinion on those statements on May 4, 2017.
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 give in the Annexure 1 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 it appears from our examination of those books;
c. The Balance Sheet, Statement of Profit and Loss including the Statement of Other Comprehensive Income, the Cash Flow Statement 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 Accounting Standards specified under section 133 of the Act, read with Companies (Indian Accounting Standards) Rules, 2015, as amended;
e. On the basis of written representations received from the Directors as on March 31, 2018, and taken on record by the Board of Directors, none of the Directors are disqualified as on March 31, 2018, from being appointed as a Director in terms of section 164 (2) 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 âAnnexure 2â to this report;
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 44(a) 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;
iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.
Re: Tata Communications Limited (the âCompanyâ)
i. a. The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.
b. All the fixed assets were physically verified by the management during the year in accordance with a planned programme of verifying them once in three years, which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verification.
c. According to the information and explanations given by the management, the title deeds of immovable properties included in property, plant and equipment and investment property are held in the name of the Company except three immovable properties aggregating to gross block of Rs 34.58 crores and net block of Rs 22.69 crores as at March 31, 2018, for which title deeds were pending registration or not available with the Company and hence, we are unable to comment on the same.
ii. The management has conducted physical verification of inventory at reasonable intervals during the year and no material discrepancies were noticed on such physical verification.
iii.The Company has granted loan to one company covered in the register maintained under section 189 of the Act. In our opinion and according to the information and explanations given to us:
a. The terms and conditions of the grant of such loan are not prejudicial to the Company''s interest;
b. The schedule of repayment of principal and payment of interest has been stipulated for the loans granted and the repayment / receipts are regular;
c. There are no amounts of loans granted to companies, firms or other parties listed in the register maintained under section 189 of the Act, which are overdue for more than ninety days.
v. In our opinion and according to the information and explanations given to us, provisions of sections 185 and 186 of the Act in respect of loans and advances given, investments made and, guarantees, and securities given have been complied with by the Company, to the extent these sections are applicable on the Company.
v. The Company has not accepted any deposits within the meaning of Sections 73 to 76 of the Act and the Companies (Acceptance of Deposits) Rules, 2014 (as amended). Accordingly, the provisions of clause 3(v) of the Order are not applicable.
vi. We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under section 148(1) of the Act, related to International long distance services, National long distance services, Internet service provider services and certain other services and are of the opinion that prima facie, the specified accounts and records have been made and maintained. We have not, however, made a detailed examination of the same.
vii. a. The Company is regular in depositing with appropriate authorities undisputed statutory dues including provident fund, employees'' state insurance, income-tax, sales-tax, service tax, duty of custom, value added tax, goods and service tax, cess and other statutory dues applicable to it.
b. According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, employees'' state insurance, income-tax, service tax, value added tax, goods and service tax, sales tax, duty of custom, cess and other material statutory dues were outstanding, at the year end, for a period of more than six months from the date they became payable.
c. According to the records of the Company, the dues outstanding of income tax, sales tax, service tax, value added tax and other statutory dues on account of any dispute, are as follows:
viii. In our opinion and according to the information and explanations given by the management, the Company has not defaulted in repayment of loans or borrowing to a financial institution, bank or government or dues to debenture holders.
Name of the statute |
Nature of dues |
Amount |
Period to which amount |
Forum where dispute is pending |
|
(Rs crores) |
relates |
||||
Income Tax Act, 1961 |
Income Tax |
672.78 |
FY 2006-07 to FY 2010-11 |
Income Tax Appellate Tribunal |
|
Income Tax Act, 1961 |
Income Tax |
1.02 |
FY 1996-97 |
Assessing officer, Income Tax |
|
Income Tax Act, 1961 |
Income Tax |
48.40 |
FY 2012-13 |
Assessing officer, Income Tax |
|
Income Tax Act, 1961 |
Income Tax |
203.89 |
FY 2002-03 to 2004-05 |
Income Tax Appellate Tribunal |
|
Income Tax Act, 1961 |
Income Tax |
0.15 |
FY 2006-07 |
Income Tax Appellate Tribunal |
|
Income Tax Act, 1961 |
Income Tax |
74.42 |
FY 2008-09 to 2010-11 |
Income Tax Appellate Tribunal |
|
Income Tax Act, 1961 |
Income Tax |
242.09 |
FY 1998-99 to 2000-01 |
High Court |
|
Income Tax Act, 1961 |
Income Tax |
0.80 |
FY 2003-04 |
High Court |
|
Income Tax Act, 1961 |
Income Tax |
0.35 |
FY 2005-06 |
High Court |
|
Income Tax Act, 1961 |
Income Tax |
3.74 |
FY 2005-06 |
Supreme Court |
|
Income Tax Act, 1961 |
Income Tax - |
TDS |
5.78 |
FY 2005-06 to 2016-17 |
Commissioner (Appeal) (TDS) - Income Tax |
Income Tax Act, 1961 |
Income Tax - |
TDS |
1.33 |
FY 2007-08 to 2009-10 |
Assessing Officer, TDS - Income Tax |
Sales Tax Act |
Sales Tax |
1.86 |
FY 2006-07 to 2007-08 |
High Court of West Bengal |
|
Central Sales Tax Act |
Central Sales Tax |
0.06 |
FY 2011-12 |
West Bengal Commercial Tax Appellate and Revision Board |
|
Central Sales Tax Act |
Central Sales Tax |
0.03 |
FY 2011-12 to FY 2014-15 |
Assistant Commissioner Commercial Tax, Bihar |
|
Finance Act, 1994 |
Service Tax |
24.11 |
Various years |
Central Excise and Service Tax Appellate Tribunal |
ix. In our opinion and according to the information and explanations given by the management, the Company has utilized the monies raised by way of debentures for the purposes for which they were raised.
According to the information and explanations given by the management, the Company has not raised any money way of initial public offer / further public offer and term loans, hence, reporting under clause (ix) is not applicable to the Company and not commented upon.
x. Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and according to the information and explanations given by the management, we report that no fraud by the Company or no fraud on the Company by the officers and employees of the Company has been noticed or reported during the year.
xi. According to the information and explanations given by the management, the managerial remuneration has been paid / provided in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Act.
xii. In our opinion, the Company is not a nidhi Company. Therefore, the provisions of clause 3(xii) of the Order are not applicable to the Company and hence, not commented upon.
xiii. According to the information and explanations given by the management, transactions with the related parties are in compliance with section 177 and 188 of Companies Act, 2013 where applicable and the details have been disclosed in the notes to the financial statements, as required by the applicable accounting standards.
xiv. According to the information and explanations given to us and on an overall examination of the balance sheet, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review and hence, reporting requirements under clause 3(xiv) are not applicable to the Company and not commented upon.
xv. According to the information and explanations given by the management, the Company has not entered into any non-cash transactions with directors or persons connected with him as referred to in section 192 of the Act.
xvi. According to the information and explanations given to us, the provisions of section 45-IA of the Reserve Bank of India Act, 1934 are not applicable to the Company.
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 (the âActâ)
We have audited the internal financial controls over financial reporting of Tata Communications Limited (the ''Company'') as of March 31, 2018 in conjunction with our audit of the standalone financial statements of the Company for the year ended on that date.
Managementâs 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. 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 the 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.
Auditorâs 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 as specified under section 143(10) of the Act, to the extent applicable to an audit of internal financial controls and both issued by the Institute of Chartered Accountants of India. 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 judgement, including the assessment of the risks of material misstatement of the 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 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 March 31, 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 Institute of Chartered Accountants of India.
For S.R. Batliboi & Associates LLP
Chartered Accountants
ICAI Firm Registration Number: 101049W/E300004
per Prashant Singhal Partner
Membership Number: 93283
Place of Signature: Mumbai
Date: May 10, 2018
Mar 31, 2017
TO THE MEMBERS OF TATA COMMUNICATIONS LIMITED
Report on the Standalone Ind AS Financial Statements
We have audited the accompanying standalone Ind AS financial statements of Tata Communications Limited ("the Company"), which comprise the Balance Sheet as at 31 March, 2017, and the Statement of Profit and Loss (including Other Comprehensive Income), the Cash Flow Statement and the Statement of Changes in Equity for the year then ended, and a summary of the significant accounting policies and other explanatory information.
Management''s Responsibility for the Standalone Ind AS
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 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) prescribed 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 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.
Auditor''s Responsibility
Our responsibility is to express an opinion on these standalone Ind AS financial statements based on our audit.
In conducting 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 obtained by us is sufficient and appropriate to provide a basis for our qualified audit opinion on the standalone Ind AS financial statements.
Basis for Qualified Opinion
As described in Note No 6(VI) to the standalone Ind AS financial statements, the fair value of the Company''s investment in the unquoted equity shares of Tata Teleservices Limited (TTSL) has not been determined as at 31 March, 2017. Accordingly, we are unable to comment whether the carrying value of the investment in TTSL of Rs 515.53 crore represents the fair value as at 31 March, 2017 and whether any consequent adjustment is required to be recognized in Other Comprehensive Income, and whether the expense for provision for contractual obligation, as described in Note No 29 to the standalone Ind AS financial statements, is adequate.
Qualified Opinion
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 matters described in the 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 of the state of affairs of the Company as at 31 March, 2017, and its profit, total comprehensive income, its cash flows and the changes in equity for the year ended on that date. _
Report on Other legal and Regulatory Requirements
1. As required by Section 143(3) of the Act:
a) We have sought and except for the matters described in the Basis for Qualified Opinion paragraph above, 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 for 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 and the reports of the other auditors.
c) The Balance Sheet, the Statement of Profit and Loss including Other Comprehensive Income, the Cash Flow Statement and Statement of Changes in Equity dealt with by this Report are in agreement with the books of account.
d) Except for the possible effects of the matters described in the Basis for Qualified Opinion paragraph above, in our opinion, the aforesaid standalone Ind AS financial statements comply with the Indian Accounting Standards prescribed under section 133 of the Act.
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 Section 164(2) of the Act.
f) The qualification relating to the maintenance of accounts and other matters connected there with are as stated in the Basis for Qualified Opinion paragraph above.
g) With respect to the adequacy of the internal financial controls over financial reporting of the Company, refer to our separate Report in "Annexure A". Our report expresses a qualified opinion on the operating effectiveness of the Company''s internal financial controls over financial reporting.
h) 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, 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;
ii. Except for the possible effects of the matter described in the Basis for Qualified Opinion paragraph above, the Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on 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.
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 8th November, 2016 of the Ministry of Finance, during the period from 8th November, 2016 to 30th 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.
2. As required by the Companies (Auditor''s Report) Order, 2016 ("the Order") issued by the Central Government in terms of Section 143(11) of the Act, we give in "Annexure B" a statement on the matters specified in paragraph 3 and 4 of the Order.
Report on the Internal Financial controls Over Financial Reporting under clause (i) of Sub-section 3 of Section 143 of the companies Act, 2013 ("the Act")
We have audited the internal financial controls over financial reporting of Tata 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. 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 Companies Act, 2013.
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") issued by the Institute of Chartered Accountants of India and the Standards on Auditing prescribed under Section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls. 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 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 qualified 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.
Basis for Qualified Opinion
According to the information and explanations given to us and based on our audit, and as described in note No 6(VI) to the standalone Ind AS financial statements in the absence of a valuation report to determine the fair value as at 31 March,
2017 of an unquoted investment, a material weakness has been identified as in the Company relating to inadequate internal financial controls over financial reporting in respect of the carrying amount of this investment.
A ''material weakness'' is a deficiency, or a combination of deficiencies, in internal financial control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company''s annual or interim financial statements will not be prevented or detected on a timely basis.
Qualified opinion
In our opinion, to the best of our information and according to the explanations given to us, except for the possible effects of the material weakness described above on the achievement of the objectives of the control criteria, the Company has maintained, in all material respects, adequate internal financial controls over financial reporting and such internal financial controls over financial reporting were operating effectively as of 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 said Guidance Note.
We have considered the material weaknesses identified and reported above in determining the nature, timing, and extent of audit tests applied in our audit of the standalone Ind AS financial statements of the Company for the year ended 31 March, 2017.
Report on Companies (Auditor''s Report) Order, 2016 (''the Order'') issued by the Central Government in terms of Section 143(11) of the Companies Act, 2013 (''the Act'') of Tata Communications Limited (''the Company'')
(i) In respect of its fixed assets:
(a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.
(b) The fixed assets were physically verified during the year by the Management in accordance with a regular programme of verification which, in our opinion, provides for physical verification of all the fixed assets at reasonable intervals. Pursuant to the program, certain fixed assets were physically verified by the Management during the year. According to the information and explanations given to us, no material discrepancies were noticed on such verification.
(c) According to the information and explanations given to us and the records examined by us and based on the examination of the registered sale deed, conveyance deed and transfer deed of the Government of India vide its letter no -G-25015/6/86OC dated 23 October, 2001 provided to us, we report that, the title deeds, comprising all the immovable properties of land and buildings which are freehold, are held in the name of the Company, except the following :
Particulars of land and building |
Carrying amount as on 31 March, 2017 '' in crores |
Remarks |
Building located at Gandhinagar GIDC admeasuring 840 Sq. meter |
Nil |
The title deed is not registered in the name of the Company. |
Buildings located at Oshiwara Jogeshwari Ground floor Plus 7 floor in building 31, 32 and 33. |
22.10 |
The title deeds are not registered in the name of the Company and matter is pending in Honorable Bombay High Court. |
In respect of immovable properties of land and buildings that have been taken on lease and disclosed as fixed asset in the financial statements, the lease agreements are in the name of the Company, where the Company is the lessee in the agreement.
(ii) As explained to us, the inventories were physically verified during the year by the Management at reasonable intervals and no material discrepancies were noticed on physical verification.
(iii) According to the information and explanations given to us, the Company has granted loans, secured or unsecured, to companies, firms, Limited Liability Partnerships or other parties covered in the register maintained under section 189 of the Companies Act, 2013. m respect of which:
a. The terms and conditions of the grant of such loans are, in our opinion, prima facie, not prejudicial to the Company''s interest.
b. The schedule of repayment of principal and payment of interest has been stipulated and repayments or receipts of principal amounts and interest have been regular as per stipulations.
c. There is no overdue amount remaining outstanding as at the year-end.
(iv) In our opinion and according to the information and explanations given to us, the Company has complied with the provisions of Sections 185 and 186 of the Companies Act, 2013 in respect of grant of loans, making investments and providing guarantees and securities, as applicable.
(v) According to the information and explanations given to us, the Company has not accepted any deposit during the year and does not have unclaimed deposits as at 31 March, 2017 and therefore reporting under clause 3(v) of the Order is not applicable to the Company.
(vi) The maintenance of cost records has been specified by the Central Government under section 148(1) of the Companies Act, 2013. Specified activities include International long distance services, Cable landing station, national long distance services, internet service provider services and certain other services. We have broadly reviewed the cost records maintained by the Company pursuant to the Companies (Cost Records and Audit) Rules, 2014, as amended prescribed by the Central Government under sub-section (1) of Section 148 of the Companies Act, 2013, and are of the opinion that, prima facie, the prescribed cost records have been made and maintained. We have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.
(vii) According to the information and explanations given to us in respect of statutory dues:
(a) The Company has generally been regular in depositing undisputed statutory dues, including provident fund,
employees'' state insurance, income-tax, sales tax, service tax, customs duty, excise duty, value added tax, cess and other material statutory dues applicable to it with the appropriate authorities.
(b) There were no undisputed amounts payable in respect of provident fund, employees'' state insurance, income-tax, sales tax, service tax, customs duty, excise duty, value added tax, cess and other material statutory dues in arrears as at 31 March, 2017 for a period of more than six months from the date they became payable.
(c) Details of dues of Income-tax, Sales Tax, Service Tax, Customs Duty, Excise Duty, and Value Added Tax which have not been deposited as on 31 March, 2017 on account of disputes are given below:
Name of the Statute |
Nature of the Dues |
Amount ('' In crores) |
Period to which the Amount Relates |
Forum where dispute is pending |
Income Tax Laws |
Income Tax |
855.84 |
AY 2007-08 to AY 2011-12 |
Appellate Authority -Tribunal Level |
Income Tax Laws |
Income Tax |
1.02 |
AY 1997-1998 |
Appellate Authority - Income Tax Officer |
Income Tax Laws |
Income Tax |
91.26 |
AY 2012-13 |
Appellate Authority - Income Tax Officer |
Income Tax Laws |
Income Tax - TDS |
15.99 |
AY 2006-07 to 2015-16 |
Appellate Authority -Commissioner (Appeal)(TDS) |
Income Tax Laws |
Income Tax - TDS |
1.33 |
AY 2008-09 to 2010-11 |
Appellate Authority - Income Tax Officer TDS |
Sales Tax laws |
Sales Tax |
1.86 |
FY 2006-08 |
West Bengal Commercial Tax Appellate and Revision Board |
Central Sales Tax laws |
Central sales Tax |
0.06 |
FY 2011-12 |
West Bengal Commercial Tax Appellate and Revision Board |
Central Sales Tax laws |
Central sales Tax |
0.03 |
FY 2011-12 to FY 2014-15 |
Asst. Comm Commercial Tax, Bihar, Patliputra |
Out of the total disputed dues aggregating Rs 967.39 crores as above, Rs 869.51crores has been stayed for recovery by the respective authority.
(viii) In our opinion and according to the information and explanations given to us, the Company has not defaulted in the repayment of loans or borrowings to financial institutions, banks and government and dues to debenture holders.
(ix) The Company has not raised moneys by way of initial public offer or further public offer (including debt instruments). The term loans have been applied by the Company for the purpose for which they were raised.
(x) To the best of our knowledge and according to the information and explanations given to us, no fraud by the Company and no material fraud on the Company by its officers or employees has been noticed or reported during the year.
(xi) In our opinion and according to the information and explanations given to us, the Company has paid/ provided managerial remuneration in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Companies Act, 2013.
(xii) The Company is not a Nidhi Company and hence reporting under clause 3(xii) of the Order is not applicable.
(xiii) In our opinion and according to the information and explanations given to us the Company is in compliance with Section 177 and 188 of the Companies Act, 2013, where applicable, for all transactions with the related parties and the details of related party transactions have been disclosed in the financial statements etc. as required by the applicable accounting standards.
(xiv) During the year, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures and hence reporting under clause 3(xiv) of the Order is not applicable to the Company.
(xv) In our opinion and according to the information and explanations given to us, during the year the Company has not entered into any non-cash transactions with its directors or persons connected with him and hence provisions of section 192 of the Companies Act, 2013 are not applicable.
(xvi) The Company is not required to be registered under section 45-IA of the Reserve Bank of India Act, 1934.
For S. B. BILLIMORIA & CO.
Chartered Accountants
(Firm''s Registration No. 101496W)
Gurvinder Singh
Partner
(Membership No.110128)
Mumbai, 4 March 2017
Mar 31, 2015
We have audited the accompanying standalone financial statements of
Tata Communications Limited ("the Company"), which comprise the Balance
Sheet as at March 31, 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 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
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 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 misstatements, 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, but not for the purpose of expressing
an opinion on whether the Company has in place an adequate internal
financial controls system over financial reporting and the operating
effectiveness of such controls. An audit also includes evaluating 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 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 March 31, 2015, and its profit and its cash flows for the year ended
on that date.
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 in terms of Section 143(11) of
the Act, we give in the Annexure a statement on the matters specified
in paragraphs 3 and 4 of the Order.
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
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.
(e) On the basis of the written representations received from the
directors as on March 31, 2015 taken on record by the Board of
Directors, none of the directors is disqualified as on March 31, 2015
from being appointed as a director in terms of Section 164 (2) of the
Act.
(f) With respect to the other matters to be included in the 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 in accordance with
generally accepted accounting practice - also refer Note 35 and
36(a)(ii to v) 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 including derivative contracts;
iii) There has been no delay in transferring amounts, required to be
transferred, to the Investor Education and Protection Fund by the
Company.
ANNEXURE TO THE INDEPENDENT AUDITORS' REPORT
(Referred to in paragraph 1 under 'Report on Other Legal and Regulatory
Requirements' section of our report of even date)
1. In respect of the Company's fixed assets:
(a) The Company has maintained proper records showing full particulars,
including quantitative details and situation of fixed assets.
(b) The Company has a program of verification of fxed assets to cover
all the items in a phased manner over a period of three years which, in
our opinion, is reasonable having regard to the size of the Company and
the nature of its assets. Pursuant to the program, certain fixed
assets were physically verified by the Management during the year.
According to the information and explanations given to us, no material
discrepancies were noticed on such verification.
2. In respect of the Company's inventories:
(a) As explained to us, the inventories were 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 were 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 has maintained proper records of its
inventories and no material discrepancies were noticed on physical
verification.
3. According to the information and explanations given to us, the
Company has granted unsecured loans to companies, firms or other
parties covered in the Register maintained under Section 189 of the
Companies Act, 2013. In respect of such loans:
a) The receipts of principal amounts and interest have been regular /
as per stipulations.
b) There is no overdue amount in excess of Rs. 1 lakh remaining
outstanding as at the year-end.
4. In our opinion and according to the information and explanations
given to us, having regard to the explanations that some of the items
purchased are of special nature and suitable alternative sources are
not readily available for obtaining comparable quotations, there is an
adequate internal control system commensurate with the size of the
Company and the nature of its business with regard to purchase of
inventory and fixed assets and for the sale of goods and services.
During the course of our audit, we have not observed any major weakness
in such internal control system.
5. According to the information and explanations given to us, the
Company has not accepted any deposits during the year and accordingly
the question of complying with Section 73 and Section 76 of the
Companies Act, 2013 does not arise. In respect of unclaimed deposits,
the Company has complied with the provision of Sections 74 and 75 or
any other relevant provisions of the Companies Act, 2013. According to
the information and explanations given to us, no Order has been passed
by the Company Law Board or the National Company Law Tribunal or the
Reserve Bank of India or any Court or any other Tribunal on the
Company.
6. We have broadly reviewed the cost records maintained by the Company
pursuant to the Companies (Cost Records and Audit) Rules, 2014, as
amended and prescribed by the Central Government under sub- section (1)
of Section 148 of the Companies Act, 2013, and are of the opinion that,
prima facie, the prescribed cost records have been made and maintained.
We have, however, not made a detailed examination of the cost records
with a view to determine whether they are accurate or complete.
7. According to the information and explanations given to us, in
respect of statutory dues:
(a) The Company has generally been regular in depositing undisputed
statutory dues, including provident fund, employees' state insurance,
income tax, sales tax, wealth tax, service tax, customs duty, excise
duty, value added tax, cess and other material statutory dues
applicable to it with the appropriate authorities.
(b) There were no undisputed amounts payable in respect of provident
fund, employees' state insurance, income tax, sales tax, wealth tax,
service tax, customs duty, excise duty, value added tax, cess and other
material statutory dues in arrears as at March 31, 2015 for a period of
more than six months from the date they became payable.
(c) Details of dues of income-tax, sales tax, wealth tax, service tax,
customs duty, excise duty, value added tax and cess which have not been
deposited as on March 31, 2015 on account of disputes are given below:
Name of Statute Nature of dues Forum where dispute is pending
Income Tax Act,1961 Income Tax Appellate Authority - Tribunal
Level
Income Tax Act,1961 Income Tax - TDS Appellate Authority -
Commissioner
(Appeal) (TDS)
Income Tax Act,1961 Income Tax - TDS Appellate Authority -
Commissioner
(Appeal) (TDS)
Income Tax Act,1961 Income Tax Appellate Authority - Deputy
Commissioner of Income tax
Central Sales
Tax/Sales Sales Tax West Bengal Commercial
Tax Appellate
Tax Laws and Revision Board
VAT Laws VAT Joint Commissioner of
Commercial Taxes
Name of Statute Period to which the Amount
amount relates involved
(Rs. crores)
Income Tax Act 1961 AY 2007-08 and 306.78
2008-09
Income Tax Act 1961 AY 2007-08 to 15.56
2015-16
Income Tax Act 1961 AY 2009-10 to 1.33
2011-12
Income Tax Act 1961 AY 1997-1998, 304.09
2009-10 to 2010-11
Central Sales Tax Sales FY 2006-07, 2007-08, 1.27
Tax Laws 2011-12
VAT Laws FY 2009-10 0.18
Out of the total disputed dues aggregating Rs. 629.21 crores as above, Rs.
306.78 crores has been stayed for recovery by the respective
authorities.
(d) The Company has been regular in transferring amounts to the
Investor Education and Protection Fund in accordance with the relevant
provisions of the Companies Act, 1956 (1 of 1956) and Rules made
thereunder within time.
8. The Company does not have accumulated losses at the end of the
financial year and the Company has not incurred cash losses during the
financial year covered by our audit and in the immediately preceding
financial year.
9. In our opinion and according to the information and explanations
given to us, the Company has not defaulted in the repayment of dues to
financial institutions, banks and debenture holders.
10. In our opinion and according to the information and explanations
given to us, the terms and conditions of the guarantees given by the
Company for loans taken by wholly owned subsidiaries from banks and
financial institutions are not, prima facie, prejudicial to the
interests of the Company.
11. In our opinion and according to the information and explanations
given to us, the term loans have been applied by the Company during the
year for the purposes for which they were obtained.
12. To the best of our knowledge and according to the information and
explanations given to us, no fraud by the Company and no material fraud
on the Company has been noticed or reported during the year.
For S. B. BILLIMORIA & CO.
Chartered Accountants
(Firm's Registration No. 101496W)
R. A. BANGA
Partner
(Membership No. 037915)
Mumbai, July 28, 2015
Mar 31, 2014
We have audited the accompanying financial statements of TATA
COMMUNICATIONS LIMITED ("the Company"), which comprise the Balance
Sheet as at 31 March, 2014, and the Statement of Profit and Loss and
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
The Company''s 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 notified under the Companies
Act, 1956 ("the Act") (which continue to be applicable in respect of
Section 133 of the Companies Act, 2013 in terms of General Circular
15/2013 dated 13 September, 2013 of the Ministry of Corporate Affairs)
and in accordance with the accounting principles generally accepted in
India. 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 the disclosures in the financial statements. The
procedures selected depend on the auditors'' judgment, including the
assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal 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 Company''s internal control. An audit also includes
evaluating the appropriateness of the accounting policies used and the
reasonableness of the accounting estimates made by the 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 aforesaid financial
statements give the information required by the Act in the manner so
required and give a true and fair view in conformity with the
accounting principles generally accepted in India:
(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 fows of the
Company for the year ended on that date.
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 in terms of Section 227(4A) 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 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 Balance Sheet, the Statement of Profit and
Loss, and the Cash Flow Statement comply with the Accounting Standards
notified under the Act (which continue to be applicable in respect of
Section 133 of the Companies Act, 2013 in terms of General Circular
15/2013 dated 13 September, 2013 of the Ministry of Corporate Affairs).
(e) On the basis of the written representations received from the
directors as on 31 March, 2014 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 Section 274(1)(g) of the
Act.
ANNEXURE TO THE INDEPENDENT AUDITORS'' REPORT (Referred to in paragraph
1 under ''Report on Other Legal and Regulatory Requirements'' section of
our report of even date)
(i) Having regard to the nature of the Company''s business/ activities/
result during the year, clauses (x), (xiii), (xiv) and (xviii) of
paragraph 4 of the Order are not applicable to the Company.
(ii) In respect of its fixed assets:
(a) The Company has maintained proper records showing full particulars,
including quantitative details and situation of fixed assets.
(b) The Company has a program of verification of fixed assets to cover
all the items in a phased manner over a period of 3 years which, in our
opinion, is reasonable having regard to the size of the Company and the
nature of its assets. Pursuant to the program, certain fixed assets
were physically verified by the Management during the year. According
to the information and explanations given to us, no material
discrepancies were noticed on such verification.
(c) The fixed assets disposed off during the year, in our opinion, do
not constitute substantial part of fixed assets of the Company.
(iii) In respect of its inventory:
(a) As explained to us, the inventories were 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 were 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 has maintained proper records of its
inventories and no material discrepancies were noticed on physical
verification.
(iv) In respect of unsecured loans granted by the Company to companies,
firms or other parties covered in the Register maintained under Section
301 of the Companies Act, 1956 and according to the information and
explanations given to us:
(a) During the year, the Company has granted unsecured interest-bearing
loans aggregating Rs. 217.74 crores to one party. At the year end, the
outstanding balances of loans granted aggregated Rs. 318.43 crores
(number of parties 2) and the maximum amount involved during the year
was Rs. 318.43 crores (number of parties 2).
(b) The rate of interest and other terms and conditions of such loans
are, in our opinion, prima facie not prejudicial to the interests of
the Company.
(c) The receipt of principal amounts and interest have been as per
stipulations.
(d) There are no overdue amounts and hence the provisions of sub-clause
(d) of clause 4(iii) of CARO are not applicable to the Company.
(e) During the year, the Company has not taken any loans secured or
unsecured, from companies, frms or other parties covered in the
Register maintained under Section 301 of the Companies Act, 1956.
(v) In our opinion and according to the information and explanations
given to us, having regard to the explanation that certain items
purchased and sold are of special nature and their prices cannot be
compared with alternative quotation, there is adequate internal control
system commensurate with the size of the Company and the nature of its
business for the purchase of inventory and fixed assets and for the
sale of goods and services. During the course of our audit, we have not
observed any continuing major weakness in such internal control system.
(vi) In respect of contracts or arrangements entered in the Register
maintained in pursuance of Section 301 of the Companies Act, 1956, to
the best of our knowledge and belief and according to the information
and explanations given to us:
(a) The particulars of contracts or arrangements referred to Section
301 that needed to be entered in the Register maintained under the said
Section have been so entered.
(b) Where each of such transaction is in excess of Rs. 5 lakhs in respect
of any party, having regard to the explanations that some of the items
purchased and sold, are of special nature and their prices cannot be
compared with alternative quotations, the transactions have been made
at prices which are prima facie reasonable having regard to the
prevailing market prices at the relevant time.
(vii) According to the information and explanations given to us, the
Company has not accepted any deposits from the public during the year.
In respect of unclaimed deposits, the Company has complied with the
provisions of Sections 58A and 58AA or any other relevant provisions of
the Companies Act, 1956.
(viii) In our opinion, the Company has an adequate internal audit
system commensurate with the size and nature of its business.
(ix) We have broadly reviewed the books of account and records
maintained by the Company relating to telecommunication activities
pursuant to the Rules made by the Central Government for the
maintenance of cost records under Section 209(1)(d) of the Companies
Act, 1956 and are of the opinion that prima facie, the prescribed
accounts and records have been made and maintained. We have, however,
not made a detailed examination of the records with a view to
determining whether they are accurate or complete.
(x) (a) According to the information and explanations given to us in
respect of statutory dues, the Company has generally been regular in
depositing undisputed statutory dues including provident fund, investor
education and protection fund, employees'' state insurance, income-tax,
sales tax, wealth tax, service tax, customs duty, excise duty, cess and
other material statutory dues applicable to it with the appropriate
authorities.
(b) According to the information and explanations given to us, there
were no undisputed amounts payable in respect of provident fund,
investor education and protection fund, employees'' state insurance,
income tax, sales tax, wealth tax, service tax, customs duty, excise
duty, cess 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.
(c) According to the information and explanations given to us, details
of dues of income-tax, sales tax, wealth tax, service tax, custom duty,
excise duty and cess which have not been deposited as on 31 March, 2014
on account of any dispute are given below:
Name of Statute Nature of Dues Forum where the dispute is pending
Income Tax Laws Income Tax Appellate Authority - Tribunal Level
Income Tax Laws Income Tax Appellate Authority -Commissioner
(Appeals)
Income Tax Laws Income Tax- TDS Appellate Authority -Commissioner
(Appeals)
Income Tax Laws Income Tax Appellate Authority - Income
Tax Officer
Income Tax Laws Income Tax -TDS Appellate Authority - Income
Tax Officer
ESI Act ESI Appellate Authority - ESIC Court
Sales Tax Laws Sales Tax West Bengal Commercial Tax Appellate
and Revision Board
Central Sales
Tax Laws Central Sales Tax West Bengal Commercial Tax Appellate
and Revision Board
VAT Act VAT Joint Commissioner of Commercial
Taxes
Name of Statue Period to which the Amount
amount relates involved
(Rs. in crores)
Income Tax Laws AY 2007-08, 2008-09 306.78
Income Tax Laws AY 2010-11 15.41
Income Tax Laws AY 2007-08 to AY 65.54
2012-13
Income Tax Laws AY 1997-98, 2009-10 200.39
Income Tax Laws AY 2006-07, 2008-09 1.13
to 2013-14
ESI Act February 2008 to 33.74
March 2014
Sales Tax Laws FY 2006-07 0.02
Central Sales Tax Laws FY 2006-07, 2007-08 1.08
VAT Act FY 2009-10 0.18
Out of the above amounts aggregating Rs. 624.27 crores, Rs. 521.84 crores
have been stayed for recovery by the relevant authorities.
(xi) In our opinion and according to the information and explanations
given to us, the Company has not defaulted in repayment of dues to
financial institutions or banks or debenture holders.
(xii) 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.
(xiii) According to the information and explanations given to us, the
Company has not given any guarantees for loans taken by others from
banks or financial institutions, the terms and conditions, whereof, in
our opinion are prejudicial to the interests of the Company.
(xiv) In our opinion and according to the information and explanations
given to us, the term loans have been applied by the Company during the
year for the purposes for which they were obtained.
(xv) 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, we report that funds raised on short term basis, have not been
used during the year for long term investment.
(xvi) According to the information and explanations given to us and the
records examined by us, security/ charges have been created in respect
of secured debentures issued.
(xvii) During the year covered by our report, the Company has not
raised any money by way of public issues.
(xviii)To the best of our knowledge and belief and according to the
information and explanations given to us, no fraud by the Company and
no material fraud on the Company was noticed or reported during the
year.
For S. B. BILLIMORIA & CO.
Chartered Accountants
(Registration No. 101496W)
R. A. BANGA
Partner
(Membership No. 037915)
MUMBAI, 13 May, 2014
Mar 31, 2013
Report on the Financial Statements
We have audited the accompanying financial statements of TATA
COMMUNICATIONS LIMITED ("the Company"), which comprise the Balance
Sheet as at 31 March, 2013 and the Statement of Profit and Loss and 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
The Company''s 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 Section 211(3C)
of the Companies Act, 1956 ("the Act") and in accordance with the
accounting principles generally accepted in India. 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 the disclosures in the financial statements. The
procedures selected depend on the auditors'' judgment, including the
assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal 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 Company''s internal control. An audit also includes
evaluating the appropriateness of the accounting policies used and the
reasonableness of the accounting estimates made by the 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 aforesaid financial statements give the
information required by the Act in the manner so required and give a
true and fair view in conformity with the accounting principles
generally accepted in India:
(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 for the year ended on that date.
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 in terms of Section 227(4A) 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 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 Balance Sheet, the Statement of Profit and
Loss, and the Cash Flow Statement comply with the Accounting Standards
referred to in Section 211(3C) of the Act.
(e) On the basis of the written representations received from the
directors as on 31 March, 2013 taken on record by the Board of
Directors, none of the directors is disqualified as on 31 March, 2013
from being appointed as a director in terms of Section 274(1)(g) of the
Act.
(i) Having regard to the nature of the Company''s business/ activities/
result during the year, clauses (x), (xiii), (xiv) and (xviii) of
paragraph 4 of the Order are not applicable to the Company.
(ii) In respect of its fixed assets:
(a) The Company has maintained proper records showing full particulars,
including quantitative details and situation of fixed assets.
(b) The Company has a program of verification of fixed assets to cover
all the items in a phased manner over a period of 3 years which, in our
opinion, is reasonable having regard to the size of the Company and the
nature of its assets. Pursuant to the program, certain fixed assets
were physically verified by the Management during the year. According
to the information and explanations given to us, no material
discrepancies were noticed on such verification.
(c) The fixed assets disposed off during the year, in our opinion, do
not constitute substantial part of fixed assets of the Company.
(iii) In respect of its inventory:
(a) As explained to us, the inventories were 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 were 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 has maintained proper records of its
inventories and no material discrepancies were noticed on physical
verification.
(iv) In respect of unsecured loans granted by the Company to companies
covered in the Register maintained under Section 301 of the Companies
Act, 1956 and according to the information and explanations given to us
(a) During the year, the Company has granted unsecured interest-bearing
loans aggregating Rs. 249.26 crores to two wholly owned subsidiaries.
At the year end, the loans granted to the two subsidiaries aggregated
Rs. 180.20 crores and the maximum balance outstanding during the year
was Rs. 1048.95 crores.
(b) The rate of interest and other terms and conditions of such loans
are, in our opinion, prima facie not prejudicial to the interests of
the Company.
(c) The receipt of principal amounts and interest have been as per
stipulations.
(d) There are no overdue amounts and hence the provisions of sub-clause
(d) of clause 4(iii) of CARO are not applicable to the Company.
(e) During the year, the Company has not taken any loans secured or
unsecured, from companies, firms or other parties covered in the
Register maintained under Section 301 of the Companies Act, 1956.
(v) In our opinion and according to the information and explanations
given to us, having regard to the explanation that certain items
purchased and sold are of special nature and their prices cannot be
compared with alternative quotation, there is adequate internal control
system commensurate with the size of the Company and the nature of its
business for the purchase of inventory and fixed assets and for the
sale of goods and services. During the course of our audit, we have not
observed any major weakness in such internal control system.
(vi) In respect of contracts or arrangements entered in the Register
maintained in pursuance of Section 301 of the Companies Act, 1956, to
the best of our knowledge and belief and according to the information
and explanations given to us:
(a) The particulars of contracts or arrangements referred to Section
301 that needed to be entered in the Register maintained under the said
Section have been so entered.
(b) Where each of such transaction is in excess of Rs. 5 lakhs in
respect of any party, and having regard to our comment in para (v)
above, the transactions have been made at prices which are prima facie
reasonable having regard to the prevailing market prices at the
relevant time.
(vii) According to the information and explanations given to us, the
Company has not accepted any deposits from the public during the year.
In respect of unclaimed deposits, the Company has complied with the
provisions of Sections 58A and 58AA or any other relevant provisions of
the Companies Act, 1956.
(viii) In our opinion, the Company has an adequate internal audit
system commensurate with the size and nature of its business.
(ix) We have broadly reviewed the books of account and records
maintained by the Company relating to telecommunication activities
pursuant to the Rules made by the Central Government for the
maintenance of cost records under Section 209(1)(d) of the Companies
Act, 1956 and are of the opinion that prima facie, the prescribed
accounts and records have been made and maintained. We have, however,
not made a detailed examination of the records with a view to
determining whether they are accurate or complete.
(x) (a) According to the information and explanations given to us in
respect of statutory dues, the Company has generally been regular in
depositing with appropriate authorities undisputed statutory dues
including provident fund, investor education and protection fund,
employees'' state insurance, income-tax, wealth tax, sales tax, customs
duty, excise duty, service tax, cess and other material statutory dues
applicable to it.
(b) According to the information and explanations given to us, no
undisputed amounts payable in respect of provident fund, investor
education and protection fund, employees'' state insurance, income tax,
sales tax, customs duty, excise duty and cess were in arrears, as at 31
March, 2013 for a period of more than six months from the date they
became payable.
(c) According to the information and explanations given to us, details
of dues of income-tax, sales tax, wealth tax, service tax, custom duty,
excise duty and cess which have not been deposited as on 31 March, 2013
on account of any dispute are given below:
Name of Statute Nature of
Dues Forum where the dispute is pending
Sales Tax Laws Sales Tax West Bengal Commercial Tax Appellate
and Revision Board
Central Sales
Tax Laws Central
Sales Tax West Bengal Commercial Tax Appellate
and Revision Board
VAT Act VAT Joint Commissioner of Commercial Taxes
Income Tax Act Income Tax Income Tax Appellate Tribunal
Income Tax Act Income Tax Income Tax Appellate Tribunal
Income Tax Act Income Tax Income Tax Appellate Tribunal
Income Tax Act Income Tax Commissioner of Income-tax (Appeals)
Income Tax Act Income Tax Commissioner of Income-tax (Appeals)
Income Tax Act Income Tax TDS Officer
Income Tax Act Income Tax Rectification Application Before TDS
officers
Name of Statute Period to which the Amount
amount relates involved
(Rs. in crores)
Sales Tax Laws FY 2006-07 0.02
Central Sales Tax Laws FY 2006-07, 2007-08 1.08
VAT Act FY 2009-10 0.18
Income Tax Act AY 2004-05 1.37
Income Tax Act AY 2007-08 152.19
Income Tax Act AY 2008-09 174.59
Income Tax Act AY 2010-11 22.74
Income Tax Act AY 2007-08 - 49.06
AY 2012-13
Income Tax Act AY 2008-09 0.01
Income Tax Act AY 2006-07, AY 2008- 0.47
09 - AY 2012-13
Out of the above amounts aggregating Rs. 401.71 crores, Rs. 296.01
crores have been stayed for recovery by the relevant authorities.
(xi) In our opinion and according to the information and explanations
given to us, the Company has not defaulted in repayment of dues to
financial institutions or banks or debenture holders.
(xii) 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.
(xiii) 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 others from banks or financial
institutions are not, prima facie, prejudicial to the interest of the
Company.
(xiv) In our opinion and according to the information and explanations
given to us, the term loans have been applied by the Company during the
year for the purposes for which they were obtained.
(xv) 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, funds raised on short term basis have prima facie not been
used during the year for long term investment.
(xvi) According to the information and explanations given to us and the
records examined by us, security/ charges have been created in respect
of secured debentures issued.
(xvii) During the year covered by our report, the Company has not
raised any money by way of public issues.
(xviii) To the best of our knowledge and belief and according to the
information and explanations given to us, no fraud by the Company and
no material fraud on the Company was noticed or reported during the
year.
For S. B. BILLIMORIA & CO.
Chartered Accountants
(Registration No. 101496W)
R. A. BANGA
Partner
MUMBAI, 28 May, 2013 (Membership No. 037915)
Mar 31, 2012
1. We have audited the attached Balance Sheet of TATA COMMUNICATIONS
LIMITED ("the Company") as at 31 March, 2012, the Statement of Profit
and Loss and the Cash Flow Statement of the Company for the year ended
on that date, both 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 misstatements. An audit
includes examining, on a test basis, evidence supporting the amounts
and the disclosures in the financial statements. An audit also includes
assessing the accounting principles used and the significant estimates
made by the 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 (CARO)
issued by the Central Government in terms of Section 227(4A) 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. Further to our comments in the Annexure referred to in paragraph 3
above, 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 it appears from our examination of
those books;
(iii) 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;
(iv) in our opinion, the Balance Sheet, the Statement of Profit and
Loss and the Cash Flow Statement dealt with by this report are in
compliance with the Accounting Standards referred to in Section 211(3C)
of the Companies Act, 1956;
(v) 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:
(a) in the case of the Balance Sheet, of the state of affairs of the
Company as at 31 March, 2012;
(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.
5. On the basis of the written representations received from the
Directors as on 31 March, 2012 taken on record by the Board of
Directors, we report that none of the Directors is disqualified as on
31 March, 2012 from being appointed as a director in terms of Section
274(1)(g) of the Companies Act, 1956.
(i) Having regard to the nature of the Company's business/ activities/
result for the year, clauses (x), (xiii), (xiv) and (xviii) of CARO are
not applicable to the Company.
(ii) In respect of its fixed assets:
(a) The Company has maintained proper records showing full particulars,
including quantitative details and situation of fixed assets.
(b) According to the information and explanations given to us, the
fixed assets were physically verified by the management in accordance
with the programme of verification, which in our opinion, is reasonable
having regard to the size of the Company and the nature of its assets.
According to information and explanation given to us, no material
discrepancies were noticed on such verification
(c) The fixed assets disposed off during the year, in our opinion, do
not constitute substantial part of fixed assets of the Company and such
disposal has, in our opinion, not affected the going concern status of
the Company.
(iii) In respect of its inventory:
(a) As explained to us, the stocks of stores and spares have been
verified by the Management in accordance with the programme of
verification. In our opinion, the frequency of verification is
reasonable.
(b) In our opinion and according to the information and explanations
given to us, the procedures of physical verification of stocks 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 maintaining proper records of inventory.
The discrepancies noticed on verification between the physical stocks
and book records were not material having regard to the size of the
operations of the Company.
(iv) In respect of unsecured loans granted by the Company to companies
covered in the Register maintained under Section 301 of the Companies
Act, 1956 and according to the information and explanations given to
us:
(a) During the year, the Company has granted unsecured interest-bearing
loans aggregating Rs 773.04 crores to four wholly owned subsidiaries
listed in the register maintained under Section 301 of the Companies
Act, 1956. At the year end, the loans granted to the four subsidiaries
aggregate Rs 880.75 crores. The maximum balance outstanding during the
year was Rs 1,535.13 crores.
(b) The rate of interest and other terms and conditions of such loans
are, in our opinion, prima facie not prejudicial to the interests of
the Company.
(c) The receipts of principal amounts and interest have been as per
stipulations.
(d) There are no overdue amounts and hence the provisions of sub-clause
(d) of clause 4(iii) of CARO are not applicable to the Company.
(e) During the year the Company has not taken any interest-bearing loan
from a wholly owned subsidiary listed in the register maintained under
Section 301 of the Companies Act, 1956. The maximum amount of loan
outstanding during the year was Rs 20 crores.
(f) In our opinion, the rate of interest and other terms and conditions
on which the loan was taken from companies listed in the register
maintained under Section 301 of the Companies Act, 1956 are not, prima
facie, prejudicial to the interest of the Company.
(g) In the case of loans taken from companies, parties listed in the
register maintained under Section 301, the Company has been regular in
repaying the principal amounts as stipulated and in the payment of
interest.
(v) In our opinion and according to the information and explanations
given to us, there is adequate internal control system commensurate
with the size of the Company and the nature of its business for the
purchase of inventory and fixed assets and the sale of goods and
services. We have not observed any continuing major weakness in the
internal control systems.
(vi) In respect of contracts or arrangements entered in the Register
maintained in pursuance of Section 301 of the Companies Act, 1956, to
the best of our knowledge and belief and according to the information
and explanations given to us:
(a) The particulars of contracts or arrangements referred to Section
301 that need to be entered in the Register maintained under the said
Section have been so entered.
(b) Where each of such transaction is in excess of Rs 5 lakhs in respect
of any party, the transactions have been made at prices which are prima
facie reasonable having regard to the prevailing market prices at the
relevant time.
(vii) According to the information and explanations given to us, the
Company has not accepted any deposit from the public during the year.
In respect of unclaimed deposits, the Company has complied with the
provisions of Sections 58A & 58AA or any other relevant provisions of
the Companies Act, 1956.
(viii) In our opinion, the Company has an internal audit system
commensurate with the size and nature of its business.
(ix) We have broadly reviewed the books of account and records
maintained by the Company relating to telecommunication activities
pursuant to the Rules made by the Central Government for the
maintenance of cost records under Section 209(1)(d) of the Companies
Act, 1956 and are of the opinion that prima facie, the prescribed
accounts and records have been made and maintained. We have, however,
not made a detailed examination of the records with a view to
determining whether they are accurate or complete.
(x) (a) According to the information and explanations given to us in
respect of statutory dues, the Company is generally regular in
depositing with appropriate authorities undisputed statutory dues
including Provident Fund, Investor Education and Protection Fund,
Employees' State Insurance, Income tax, Wealth tax, Sales tax, Customs
duty, Excise Duty, Service tax, Cess and other material statutory dues
applicable to it.
(b) According to the information and explanations given to us, no
undisputed amounts payable in respect of Provident fund, Investor
Education and Protection Fund, Employees' state insurance, Income tax,
Sales tax, Customs duty, Excise duty and cess were in arrears, as at 31
March, 2012 for a period of more than six months from the date they
became payable.
(c) According to the information and explanations given to us, details
of dues of Sales tax, Service tax, Cess and Income tax which have not
been deposited as on 31 March, 2012 on account of any dispute are given
below:
Particulars Nature of Period to Forum where Amount
Dues which the the dispute (Rs.in
amount is pending crores)
relates
Sales Tax Levy of
sales tax
on FY 2006-07,
2007-08, Joint Commissioner of 74.94
telecommuni
cations
service 2008-09 Commercial Taxes
Central
Sales Tax Levy
of CST on
interstate FY 2005-06,
2006-07, Joint Commissioner of 2.79
purchase 2007-08 Commercial Taxes
VAT Levy of
sales tax
on FY 2008-09 Joint Commissioner of 0.11
telecommuni
cations
service Commercial Taxes
Cess Cess FY 2005-06
to 2008-09 Navi Mumbai Municipal 1.14
Corporation
Income Tax
Act Penalty on
Disallowance AY 2004-05 Income Tax Apellate
Tribunal 1.37
on Depre
ciation
Income Tax
Act Demand
notice AY 2007-08 Income Tax Apellate
Tribunal 197.18
Income Tax
Act Tax deducted
at Source AY 2008-09, TDS Officer 0.01
AY 2009-10
Income Tax
Act Tax deducted
at Source AY 2007-08,
AY 2008-09, Rectification
Application 1.29
AY 2009-10,
AY 2010-11, Before TDS officers
AY 2011-12
Income Tax
Act Tax deducted
at Source AY 2007-08,
AY 2008-09, Commissioner of 52.97
AY 2009-10,
AY 2010-11, Income-tax (Appeals)
AY 2011-12
(xi) In our opinion and according to the information and explanations
given to us, the Company has not defaulted in repayment of dues to
financial institutions or banks or debenture holders.
(xii) 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.
(xiii) 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 loans taken by others from banks or financial
institutions are not prima facie prejudicial to the interest of the
Company.
(xiv) In our opinion and according to the information and explanations
given to us, the term loans have been applied for the purposes for
which they were obtained.
(xv) In our opinion and according to the information and explanations
given to us and on an overall examination of the Balance Sheet,
short-term funds aggregating to Rs 716.38 crores have, prima facie, been
used for long term purposes.
(xvi) According to the information and explanations given to us and the
records examined by us, security/ charges have been created in respect
of secured debentures issued.
(xvii) During the year covered by our report, the Company has not
raised any money by way of public issues.
(xviii) To the best of our knowledge and belief and according to the
information and explanations given to us, no fraud by the Company and
no material fraud on the Company was noticed or reported during the
year.
For S. B. BILLIMORIA & CO.
Chartered Accountants
(Registration No. 101496W)
Saira Nainar
Partner
(Membership No. 040081)
MUMBAI, 21 May, 2012
Mar 31, 2011
1. We have audited the attached Balance Sheet of TATA COMMUNICATIONS
LIMITED ("the Company") as at 31 March, 2011, the Profit and Loss
Account and the Cash Flow Statement of the Company for the year ended
on that date, both 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 misstatements. An audit
includes examining, on a test basis, evidence supporting the amounts
and the disclosures in the financial statements. An audit also includes
assessing the accounting principles used and the significant estimates
made by the Management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable
basis for our opinion.
3. The financial statements for the year ended 31 March, 2011 were
audited by us and our report dated 29 May, 2011 expressed an
unqualified opinion on those financial statements. Consequent to order
dated 20 August, 2011 of the Honourable High Court of Bombay
sanctioning the merger of Tata Communications Internet Services Limited
with the Company, the audited financial statements for year ended 31
March, 2011 were revised by the Company to give effect to the said
merger, effective from 01 April, 2010. We have accordingly carried out
audit procedures and amended the date of our audit report in respect of
this subsequent event. (Refer Note B 9 of Schedule 19 to the financial
statements.)
4. As required by the Companies (Auditor's Report) Order, 2003 (CARO)
issued by the Central Government in terms of Section 227(4A) 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.
5. Further to our comments in paragraph 3 and in the Annexure referred
to in paragraph 4 above, 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 it appears from our examination of
those books;
(iii) the Balance Sheet, the Profit and Loss Account and the Cash Flow
Statement dealt with by this report are in agreement with the books of
account;
(iv) in our opinion, the Balance Sheet, the Profit and Loss Account and
the Cash Flow Statement dealt with by this report are in compliance
with the Accounting Standards referred to in Section 211(3C) of the
Companies Act, 1956;
(v) 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:
(a) in the case of the Balance Sheet, of the state of affairs of the
Company as at 31 March, 2011;
(b) in the case of the Profit and Loss Account, 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.
6. On the basis of the written representations received from the
Directors as on 31 March, 2011 taken on record by the Board of
Directors, we report that none of the Directors is disqualified as on
31 March, 2011 from being appointed as a director in terms of Section
274(1)(g) of the Companies Act, 1956.
ANNEXURE TO THE AUDITORS' REPORT
(Referred to in paragraph 4 of our report of even date)
(i) Having regard to the nature of the Company's business/ activities/
result for the year, clauses (x), (xiii), (xiv) and (xviii) of CARO are
not applicable to the Company.
(ii) In respect of its fixed assets:
(a) The Company has maintained proper records showing full particulars,
including quantitative details and situation of fixed assets.
(b) According to the information and explanations given to us, the
fixed assets were physically verified by the management in accordance
with the programme of verification, which in our opinion, is reasonable
having regard to the size of the Company and the nature of its assets.
The differences identified pursuant to the physical verification have
been duly adjusted in the books of account. Having regard to the size
of the Company and on the basis of the explanations received, in our
opinion, the net unadjusted differences were not significant.
(c) The fixed assets disposed off during the year, in our opinion, do
not constitute substantial part of fixed assets of the Company and such
disposal has, in our opinion, not affected the going concern status of
the Company.
(iii) In respect of its inventory:
(a) As explained to us, the stocks of stores and spares have been
verified by the Management in accordance with the programme of
verification. In our opinion, the frequency of verification is
reasonable.
(b) In our opinion and according to the information and explanations
given to us, the procedures for physical verification of stocks
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 maintaining proper records of inventory.
The discrepancies noticed on verification between the physical stocks
and book records were not material having regard to the size of the
operations of the Company.
(iv) In respect of unsecured loans granted by the Company to companies
covered in the Register maintained under Section 301 of the Companies
Act, 1956 and according to the information and explanations given to
us:
(a) During the year, the Company has granted unsecured interest-bearing
loans aggregating Rs. 577.17 crores to four wholly owned subsidiaries
listed in the register maintained under Section 301 of the Companies
Act, 1956. At the year end, the loans granted to the four subsidiaries
aggregate Rs. 840.63 crores. The maximum balance outstanding during the
year was Rs. 1,666.75 crores.
(b) The rate of interest and other terms and conditions of such loans
are, in our opinion, prima facie not prejudicial to the interests of
the Company.
(c) The receipts of principal amounts and interest have been as per
stipulations.
(d) There are no overdue amounts and hence the provisions of sub-clause
(d) of clause 4(iii) of CARO are not applicable to the Company.
(e) During the year the Company has taken an interest- bearing loan
aggregating Rs. 20 crores from a wholly owned subsidiary listed in the
register maintained under Section 301 of the Companies Act, 1956.The
maximum amount of loan outstanding during the year was Rs. 20 crores.
(f) In our opinion, the rate of interest and other terms and conditions
on which loans have been taken from companies listed in the register
maintained under section 301 of the Companies Act, 1956 are not, prima
facie, prejudicial to the interest of the company.
(g) In the case of loans taken from companies parties listed in the
register maintained under section 301, the company has been regular in
repaying the principal amounts as stipulated and in the payment of
interest.
(v) In our opinion and according to the information and explanations
given to us, there is adequate internal control system commensurate
with the size of the Company and the nature of its business for the
purchase of inventory and fixed assets and the sale of goods and
services. We have not observed any continuing major weakness in the
internal control systems.
(vi) In respect of contracts or arrangements entered in the Register
maintained in pursuance of Section 301 of the Companies Act, 1956, to
the best of our knowledge and belief and according to the information
and explanations given to us:
(a) The particulars of contracts or arrangements referred to Section
301 that needed to be entered in the Register maintained under the said
Section have been so entered.
(b) Where each of such transaction is in excess of Rs. 5 lakhs in
respect of any party, the transactions have been made at prices which
are prima facie reasonable having regard to the prevailing market
prices at the relevant time.
(vii) According to the information and explanations given to us, the
Company has not accepted any deposit from the public during the year.
In respect of unclaimed deposits, the Company has complied with the
provisions of Sections 58A & 58AA or any other relevant provisions of
the Companies Act, 1956.
(viii) In our opinion, the Company has an internal audit system
commensurate with the size and nature of its business.
(ix) We have broadly reviewed the books of account and records
maintained by the Company relating to telecommunication activities
pursuant to the Rules made by the Central Government for the
maintenance of cost records under Section 209(1)(d) of the Companies
Act, 1956 and are of the opinion that prima facie, the prescribed
accounts and records have been made and maintained. We have, however,
not made a detailed examination of the records with a view to
determining whether they are accurate or complete.
(x) (a) According to the information and explanations given to us in
respect of statutory dues, the Company is generally regular in
depositing with appropriate authorities undisputed statutory dues
including Provident Fund, Investor Education and Protection Fund,
Employees' State Insurance, Income tax, Wealth tax, Sales tax, Customs
duty, Excise Duty, Service tax, Cess and other material statutory dues
applicable to it.
(b) According to the information and explanations given to us, no
undisputed amounts payable in respect of Investor Education and
Protection Fund, Employees' state insurance, Income tax, Sales tax,
Customs duty, Excise duty and cess were in arrears, as at 31 March,
2011 for a period of more than six months from the date they became
payable.
(c) As at 31 March, 2011, the Company has an arrears for provident fund
dues of Rs. 1.19 lakhs outstanding for a period of more than six months
from the date they became payable.
(d) According to the information and explanations given to us, details
of dues of Sales tax, Service tax, Cess and Income tax which have not
been deposited as on 31 March, 2011 on account of any dispute are given
below:
Particulars Nature of Period to Forum where Amount
Dues which the the dispute (Rs. in
amount is pending crores)
relates
Sales Tax Levy of sales
tax on 2005-06,
2006-07, Joint Commissioner of 119.43
telecommunica
-tions service 2007-08 Commercial Taxes
Central Sales
Tax Levy of CST on
interstate 2005-06,
2006-07, Joint Commissioner of 2.87
purchase 2007-08 Commercial Taxes
Sales Tax Levy due to
movement 2005-06 Deputy commissioner of 0.01
of material
without road Commercial tax
permit(UP)
Cess Cess 2005-06 to
2008-09 Navi Mumbai Municipal 1.00
Corporation
Income Tax Act Penalty on
Disallowance
on 2004-05 Income Tax Apellate
Tribunal 1.37
Depreciation
of Iridium
assets and
House property
Income Tax Act Tax deducted
at Source- 2004-05 Income Tax Apellate
Tribunal 1.37
Penalty
Kolkata
Income Tax Act Tax deducted
at Source- 2004-05 Income Tax Appellate
Tribunal 0.10
Penalty
Kolkata
Income Tax Act Tax deducted
at Source 2008-09,
AY 2009-10 Commissioner of
Income-tax 24.85
(Appeals)
Income Tax Act Section 80IA
Deduction 2005-06 and
2006-07 Commissioner of
Income Tax 4.08
(Appeals)
Income Tax Act Tax Deducted
at Source 2008-09 Commissioner of
Income Tax 1.79
(Appeals)
Income Tax Act Tax Deducted
at Source 2009-10 Income Tax Officer 0.76
(xi) In our opinion and according to the information and explanations
given to us, the Company has not defaulted in repayment of dues to
financial institutions or banks or debenture holders.
(xii) 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.
(xiii) 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 loans taken by others from banks or financial
institutions are not prima facie prejudicial to the interest of the
Company.
(xiv) In our opinion and according to the information and explanations
given to us, the term loans have been applied for the purposes for
which they were obtained.
(xv) According to the information and explanations given to us, and on
an overall examination of the Balance Sheet of the Company, funds
raised on short term basis have prima facie not been used during the
year for long term investment.
(xvi) According to the information and explanations given to us and the
records examined by us, security/ charges have been created in respect
of secured debentures issued.
(xvii) During the year covered by our report, the Company has not
raised any money by way of public issues.
(xviii) To the best of our knowledge and belief and according to the
information and explanations given to us, no fraud by the Company and
no material fraud on the Company was noticed or reported during the
year.
For S. B. BILLIMORIA & CO.
Chartered Accountants
(Registration No. 101496W)
Saira Nainar
Partner
(Membership No. 040081)
MUMBAI, 29 May, 2011 (30 August, 2011 as to effect the amendment
discussed in paragraph 3 above)