| 1. We have audited the accompanying financial statements of Tamilnadu
Tele communications Limited("the Company"), which comprise the Balance
Sheet as at 31stMarch, 2015, the Statement of Profit and Loss, the Cash
Flow Statement for the year then ended, and a summary of the
significant accounting policies and other explanatory information.
Management's Responsibility for the Financial Statements
2. The Company's Board of Directors is responsible for the matters
stated in Section 134(5) of the Companies Act, 2013 ("the Act") with
respect to the preparation of these financial statements that give a
true and fair view of the financial position, financial performance and
cash flows of the Company in accordance with the accounting principles
generally accepted in India, including the Accounting Standards
specified under Section 133 of the Act, read with Rule 7 of the
Companies (Accounts) Rules, 2014. This responsibility also includes
maintenance of adequate accounting records in accordance with the
provisions of the Act for safeguarding of the assets of the Company and
for preventing and detecting frauds and other irregularities; selection
and application of appropriate accounting policies; making judgments
and estimates that are reasonable and prudent; and design,
implementation and maintenance of adequate internal financial controls,
that were operating effectively for ensuring the accuracy and
completeness of the accounting records, relevant to the preparation and
presentation of the financial statements that give a true and fair view
and are free from material misstatement, whether due to fraud or error.
Auditor's Responsibility
3. Our responsibility is to express an opinion on these financial
statements based on our audit. We have taken into account the
provisions of the Act, the accounting and auditing standards and
matters which are required to be included in the audit report under the
provisions of the Act and the Rules made there under.
4. We conducted our audit in accordance with the Standards on Auditing
specified under Section 143(10) of the Act. Those Standards require
that we comply with ethical requirements and plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free from material misstatement.
5. An audit involves performing procedures to obtain audit evidence
about the amounts and the disclosures in the financial statements. The
procedures selected depend on the auditor's judgment, including the
assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal financial control relevant
to the Company's preparation of the financial statements that give a
true and fair view in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing
an opinion on whether the Company has in place an adequate internal
financial control system over financial reporting and the operating
effectiveness of such controls. An audit also includes evaluating the
appropriateness of the accounting policies used and the reasonableness
of the accounting estimates made by the Company's Directors, as well as
evaluating the overall presentation of the financial statements. We
believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our adverse audit opinion on the
financial statements.
Opinion
6. In our opinion and to the best of our information and according to
the explanations given to us, the aforesaid financial statements give
the information required by the Companies Act, 2013 in the manner so
required and give a true and fair view in conformity with the
accounting principles generally accepted in India:
(a) In the case of the Balance Sheet, of the state of affairs of the
company as at 31st March, 2015;
(b) In the case of the Statement of Profit and Loss, loss for the year
ended on that date; and
(c) In the cash of Cash Flow Statement, of the cash flows for the year
ended on that date.
Emphasis of Matter
7. Without qualifying our conclusion, we draw , attention to S.No - 3-
Note - 25 - Notes to Accounts. As at 31st March 2015, the Company's
accumulated losses of Rs. 9400.69 Lakhs has eroded the Net Worth of
the Company, indicating the existence of material uncertainity that may
cast a doubt about the Company's ability to continue as a going
concern. The Company has incurred a loss of Rs.857.49 Lakhs for the
year under audit. Based on the mitigating factors discussed in the said
note, the Management believes that the Going Concern assumption is
appropriate.
Other Matter
8. The Deferred Ta x Asset amounts to Rs.1465.16 Lakhs, as of 31st
March 2015, considering all eligible carried forward losses, as per AS
22 - Accounting for Taxes on Income. The same has not been provided
for, in the books of account, considering the absence of virtual
certainty of earning profits and prudence concept.
Report on Other Legal and Regulatory Requirements
9. As required by section 143 (3) of the Act, we report that:
a. We have sought and obtained all the information and explanations
which to the best of our knowledge and belief were necessary for the
purpose of our audit;
b. In our opinion, proper books of account as required by law have
been kept by the Company so far as it appears from our examination of
those books
c. The Balance Sheet, the Statement of Profit and Loss and the Cash
Flow Statement dealt with, by this Report are in agreement with the
books of account.
d. The Balance Sheet, Statement of Profit and Loss and Cash Flow
Statement comply with the Accounting Standards specified under section
133 of the Act, read with Rule 7 of the Companies (Accounts) Rules,
2014;
e. The going concern matter, described in paragraph 7 - Emphasis of
Matter, as above, in our opinion, may have adverse effect on the
functioning of the Company.
f. On the basis of written representations received from the directors
as on 31st March 2015, and taken on record by the Board of Directors,
none of the directors is disqualified as on 31st March 2015, from being
appointed as a director in terms of section 164(2) of the Act.
Annexure -I
ANNEXURE TO INDEPENDENT AUDITOR'S REPORT
Referred to in paragraph 10 of our report of even date
\On the basis of checks as we considered appropriate and
according to the information and explanations given to us during the
course of our audit, we report that:
(i) In respect of Fixed Assets:
a. The Company has maintained proper records showing full particulars
including quantitative details and situation of fixed assets.
b. As explained to us, fixed assets have been physically verified by
the management at reasonable intervals and no material discrepancies
were noticed on such verification.
(ii) In respect of Inventories:
a. As explained to us, the inventory has been physically verified
during the year by the management at reasonable intervals.
b. In our opinion and according to the information and explanations
given to us, the procedures of physical verification of inventory
followed by the management are reasonable and adequate in relation to
the size of the Company and the nature of its business.
c. In our opinion and according to the information and explanations
given to us, the Company is
10. As required by the Companies (Auditor's Report) Order, 2015 ("the
Order"), issued by the Central Government of India in terms of
sub-section(11) of section 143 of the Companies Act, 2013, we give in
the Annexure I a statement on the matters specified in paragraphs 3 and
4 of the Order, to the extent applicable.
11. With respect to other matters to be included in the Auditor's
Report in accordance with the Rule 11 of the Companies (Audit and
Auditors) Rules, 2014, in our opinion and to the best of our
information and according to the explanations given to us :
(i) The Company has disclosed the impact of pending litigations on its
financial position in its financial statements -Refer S.No.2,10,13,14,
and 19 under Note-25 - Notes to Accounts to the financial statements;
(ii) The Company has made provision, as required under the applicable
law or accounting standards, for material foreseeable losses, if any,
on long- term contracts.
(iii) There were no amounts which were required to be transferred, to
the Investor Education and Protection Fund, by the Company.
maintaining proper records of inventory. The discrepancies noticed on
verification between the physical stocks and book records were not
material and have been properly dealt with in the books of account.
(iii) We are informed that there is no Company, firm or party to be
listed in the register referred to in Section 189 of Companies Act,
2013 except Telecommunications Consultants India Limited (TCIL).
(iv) In our opinion and according to the information and explanations
given to us, there exists an adequate internal control system
commensurate with the size of the Company and the nature of its
business with regard to purchase of inventory, fixed assets and with
regard to sale of goods and services. During the course of our audit,
we have not observed any continuing failure to correct major weakness
in the internal control system of the company.
(v) The company has not accepted any deposits from public. Hence we
have no comments to offer in respect of the same.
(vi) We have broadly reviewed the books of accounts maintained by the
company pursuant to the rules made by the Central Government for
maintenance of cost records under Sec 148(1) of the Companies Act 2013
and we are of the opinion that prima facie the prescribed accounts and
records have been made and maintained.
(vii) In respect of Statutory Dues:
a. The Company has been generally regular in depositing with
appropriate authorities undisputed statutory dues including Provident
Fund, Income Tax, Sales Tax, Wealth Tax, Service Tax, Excise Duty,
Customs Duty, Value added Tax, Cess and other material statutory dues
with the appropriate authorities during the year as applicable to it
except the Property Ta x amounting to Rs.32,27,400/-.We are informed by
the Company that efforts are made to get exemption being a sick Company
. We arealso informed that there are no employees
who are eligible to becovered under Employees State Insurance scheme.
b. The details of disputed dues of Sales Tax and Customs Duty which
have not been deposited, as on 31st March 2015 are as given below
S.
No. Name of Nature of dues Amount (in Rs.) Forum where
Statute pending
1. Sales Tax Additional sales
Tax 1,86,08,794/- Honourable High
Court of Madras
2. Sales Tax Non-Submission of 22,95,000/- Commercial Sales
C-forms tax officer.
3. Customs
Duty Difference in 31,55,226/- Commissioner of
classification of customs, Chennai
Telecommunication
Grade Optic Fibre Cables.
Report on the directions issued by the Comptroller and Auditor General
of India, under Section 143(5) of the Companies Act 2013.
Tamilnadu Telecommunications Limited - Statutory Audit for the Year
ended 31st March 2015.
On the basis of checks as we considered appropriate and according to
the information and explanations given to us, during the course of our
audit, we report that:
1. If the Company has been selected for disinvestment, a complete
status report in terms of valuation of Assets (including intangible
assets and land) and Liabilities (including Committed & General
Reserves) may be examined including the mode and present stage of
disinvestment process.
The Company has not been selected for disinvestment and hence reporting
on this direction does not arise.
2. Please report whether there are any cases of Waiver/ Write-off of
debts/loans/interest etc. if yes, the reasons there for and the amount
involved.
There were no cases of waiver/write-off of debts, loans/interest etc.
during the year.
3. Whether proper records are maintained for inventories lying with
third parties & Assets received as gift from Government or other
authorities.
There were no inventories lying with third parties and no assets have
been received by the company as gift from Government or other
authorities, during the year.
4. A report on age- wise analysis of pending legal/ arbitration cases
including the reasons of
(viii) The accumulated losses of the company as at 31st March 2015 is
more than 50% of its Net worth. The Company has incurred cash loss of
Rs.826.59 lakhs during the financial year covered by our audit. The
Company has incurred cash loss in the immediately preceding financial
year.
(ix) The Company has not borrowed any sums from Banks or Financial
Institutions or Debenture holders during the year and hence the
question of default in repayment of dues to Banks or Financial
Institutions or Debenture holders does not arise.
(x) In our opinion and according to the information and explanations
given to us, the Company has not given any guarantee for loans taken by
others from banks or financial institutions. Hence we have no comments
to offer, in this regard.
(xi) No term loans were obtained by the company during the year under
audit.
(xii) According to the information and explanations given to us, no
fraud on or by the company has been noticed or reported during the
course of our audit.
pendency and existence/ effectiveness of monitoring mechanism for
expenditure on all legal cases (foreign and local) may be given.
Age-wise analysis of pending legal/arbitration cases is as given
below:-
S.No. Pending Legal/ 0 - 3 Years 4 - 5 Years More than
Arbitration
cases 5 Years
1. Commercial Tax - - 1
2. Sales Tax - - 1
3. Custom Duty - - 1
4. Income Tax - - 1
5. Other cases
(BSNL) - 1 1
6. Arbitration
cases 1 - 2
Total 1 1 7
The details of the above cases are given in S.no.10, 13, 14, 19 and 2
of Note no.25- Notes to Accounts to the financial statements.
As informed to us, the pendency of legal/ arbitration cases is due to
legal formalities in Court/arbitration proceedings.
The legal expenses are incurred in accordance with the delegation of
powers laid down, in this regard.
For S.VENKATRAM & CO
Chartered Accountants
(FRN: 004656S)
R. Kandavelu Place: New Delhi Partner
Date: 29th May, 2015 (M.No.12811) |