To the Members of ALLIED DIGITAL SERVICES LTD
Report on the Financial Statements
We have audited the accompanying standalone financial statements of ALLIED DIGITALSERVICES LTD ("the Company") which comprise the Balance Sheet as at 31stMarch 2016 the Statement of Profit and Loss the Cash Flow Statement for the year thenended and a summary of significant accounting policies and other explanatory information.
Management Responsibility for the Financial Statements
The Companys Board of Directors is responsible for the matters stated in Section134(5) of the Companies Act 2013 ("the Act") with respect to the preparationand presentation of these financial statements that give a true and fair view of thefinancial position financial performance and cash flows of the Company in accordance withthe accounting principles generally accepted in India including the Accounting Standardsspecified under Section 133 of the Act read with Rule 7 of the Companies (Accounts)Rules 2014. This responsibility also includes maintenance of adequate accounting recordsin accordance with the provisions of the Act for safeguarding the assets of the Companyand for preventing and detecting frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; and design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe financial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.
Our responsibility is to express an opinion on these financial statements based on ouraudit.
We have taken into account the provisions of the Act the accounting and auditingstandards and matters which are required to be included in the audit report under theprovisions of the Act and the Rules made there under.
We conducted our audit in accordance with the Standards on Auditing specified underSection 143(10) of the Act. Those Standards require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetherthe financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the financial statements. The procedures selected depend on theauditors judgment including the assessment of the risks of material misstatement ofthe financial statements whether due to fraud or error. In making those risk assessmentsthe auditor considers financial control relevant to the Companys preparation of thefinancial statements that give a true and fair view in order internal to design auditprocedures that are appropriate in the circumstances. An audit also includes evaluatingthe appropriateness of the accounting policies used and the reasonableness of theaccounting estimates made by the Companys Directors as well as evaluating theoverall presentation of the financial statements. We believe that the audit evidence wehave obtained is sufficient and appropriate to provide a basis for our qualified auditopinion on the financial statements.
Basis for Qualified Opinion
We draw attention to the following:
1. In respect of Bad Debts written off amounting to Rs 229.43 Crores these have notbeen debited to the Statement of Profit and Loss and have been directly adjusted againstthe opening balance of Surplus (Profit and Loss Account) which in our opinion is not inaccordance with Accounting Standard 5 Net Profit or Loss for the Period PriorPeriod Items and Changes in Accounting Policies. Accordingly profit for the year isoverstated to that extent.
In our opinion and to the best of our information and according to the explanationsgiven to us except for the possible effects of the matters described in the Basisfor Qualified Opinion paragraph above the aforesaid financial statements give theinformation required by the Act in the manner so required and give a true and fair view inconformity with the accounting principles generally accepted in India of the state ofaffairs of the company as at 31st March 2016 and its profit and its cash flows for theyear ended on that date.
Emphasis of Matters
Without qualifying our opinion we invite attention to the following matters:
1. Balances relating to Trade Receivables and Loans and Advances are pending forconfirmations from the respective parties. Adjustments if any will be made in the year inwhich the confirmations are received.
2. In respect of Investment in subsidiaries the Company has not made any provisionsfor diminution in the value of these Investments inspite of their being negative networth.
Our opinion is not modified in respect of these matters.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditors Report) Order 2016 (theorder)issued by Central Government of India in terms of sub-section (11) of section143 of the Act we give in the "Annexure A" a statement on the mattersspecified paragraph 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 bestof our knowledge and belief were necessary for the purposes of our audit.
(b) Except for the effects of the matter described in the Basis for Qualified Opinionparagraph above in our opinion proper books of account as required by law have been keptby 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 Statementdealt with by this report are in agreement with the books of account.
(d) Except for the effects of the matter described in the Basis for Qualified Opinionparagraph above in our opinion the aforesaid financial statements comply with theAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014.
(e) On the basis of the written representations received from the directors as on 31stMarch 2016 taken on record by the Board of Directors none of the directors isdisqualified as on 31stMarch 2016 from being appointed as a director in terms of Section164 (2) of the Act.
(f) With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate report in "Annexure B" and
(g) With respect to the other matters to be included in the Auditors Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our information and according to the explanations given to us:
a. the Company has disclosed the impact of pending litigations on its financialposition in its financial statements- Refer Note 24 to the financial statements;
b. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses.
c. There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company as on 31.03.2016.
For SHAH & TAPARIA
Membership No. : 103840
Mumbai 23rd May 2016
"Annexure A" to Independent Auditors Report
Referred to in paragraph 1 under the heading "Report on Other Legal and regulatoryRequirements" of our Report of even date to the financial statements of the companyfor the year ended March 31 2016
(i) (a) The company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets;
(b) The company has a regular programme of physical verification of its fixed assets bywhich fixed assets were physically verified during the year by management. According tothe information and explanations given to us no material discrepancies were noticed onsuch verification;
(c) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the title deeds of immovable properties areheld in the name of the company.
(ii) The inventory have been physically verified during the year by the management. Inour opinion the frequency of verification is reasonable. As per the information anexplanation given to us no material discrepancies were noticed on physical verification.
(iii) The company has granted interest free unsecured loan to two parties covered inthe register maintained under section 189 of the Companies Act:
a) The terms and conditions of the grant of such loans are not prejudicial to theCompanys interest.
b) The terms of arrangements do not stipulate any repayment schedule and these arerepayable on demand. Accordingly reporting requirements of clause 3(iii) (b) and (c) ofthe Order are not applicable to the Company.
(iv) In our opinion and according to information and explanation given to us theCompany has granted loan to one of the relatives of the Director to the tune of Rs 6.72lakh without approval from its Board in violation of Section 185. The company also havingdefaulted in repayment of overdue public deposits and interest payable thereon during theyear has made investment in shares of another company to the tune of Rs 500 lacs.
(v) During the FY 2015-16 the company has not accepted any deposits from the public.However in respect of existing deposits accepted during the preceding years the Companyhas defaulted in repayment of Principal and Interest due thereon as under:
|Principal amount due as on 31.03.2016 ||Interest due upto 31.03.2016 ||Total dues as at 31.03.2016 |
|Rs. 181.49 lacs ||Rs. 31.21 lacs ||Rs. 212.70 lacs |
(vi) As informed to us the maintenance of Cost Records has not been prescribed by theCentral Government under subsection (1) of section 148 of the Act in respect of any ofthe activities carried out by the company.
(vii) According to the information and explanations given to us in respect ofstatutory dues
(a) The Company has not generally been regular in depositing undisputed statutory duesincluding Provident Fund Employees State Insurance Sales Tax and Value Added TaxService Tax and other material statutory dues applicable to it with the appropriateauthorities.
There were undisputed amounts payable in respect of Provident Fund Employees StateInsurance Sales Tax and Value Added Tax Service Tax Cess and other material statutorydues in arrears as at 31st March 2016 for a period of more than six months from the datethey became payable. Details are as under:-
|Particulars ||Period ||Amount (Rs. In Lacs) |
|Provident Fund ||2013-14 ||134.81 |
|Provident Fund ||2014-15 ||182.03 |
|Provident Fund ||2015-16 ||160.52 |
|ESIC ||2014-15 ||14.11 |
|ESIC ||2015-16 ||14.09 |
|Profession Tax ||2015-16 ||10.35 |
|MVAT ||2014-15 ||88.09 |
|MVAT ||2015-16 ||99.43 |
|SERVICE TAX ||2015-16 ||183.88 |
(c) Details of dues of Sales Tax and Value Added Tax Service Tax and Income Tax whichhave not been deposited as at March 31 2016 on account of disputes are given as below:
|S. No. ||Name of the Statute ||Nature of Dues ||Amount (Rs. In lacs)* ||Period to which the amount relates ||Forum where dispute is pending |
|1 ||Income Tax Act 1961 ||Income Tax ||511.17 ||AY 2006-07 2007-08 2008-09 2010-11 2011- 12 2012-13 ||Dy. Commissioner of Income Tax / Income Tax Appellate Tribunal |
|2 ||MVAT Act 2002 ||Value Added Tax Penalty Interest ||8683.18 ||FY 2005-06 2008-09 2010-11 ||Sales Tax Tribunal |
|3 ||MVAT Act 2002 ||Value Added Tax Penalty Interest ||2862.30 ||FY 2006-07 2007-08 2011-12 ||DC (Appeals) |
| ||Total || ||12056.65 || || |
*net of amounts paid under protest.
(viii) In our opinion and according to the information and explanations given to usthe company has not defaulted in repayment of dues to bank.
The Company has not taken any loan from financial institution or the government and hasnot issued any debentures during the year.
(ix) Based upon the audit procedures performed and the information and explanationsgiven by the management the company did not raise any money by way of initial publicoffer or further public offer including debt instruments. The terms loans outstanding atthe beginning of the current year and those raised during the current year have beenapplied for the purposes for which those were raised.
(x) Based upon the audit procedures performed and the information and explanationsgiven by the management we report that no fraud by the Company or on the company by itsofficers or employees has been noticed or reported during the year.
(xi) According to information and explanations given to us and based on our examinationof the records of the company the company has paid/provided for the managerialremuneration in excess of the limits as provided under section 197 read with Schedule V ofthe Act. The Company has initiated the process of obtaining the waiver for said excesspayment from members and subsequently from relevant authority.
|PARTICULARS ||AMOUNT |
|Maximum Remuneration payable as per Section 197 read with Schedule V ||2635576/- |
|Remuneration paid/provided by the Company to its Managerial Personnel ||8972592/- |
|Excess remuneration ||6337016/- |
(xii) In our opinion and according to the information and explanations give to us theCompany is not a Nidhi Company. Therefore the provisions of clause 4 (xii) of the Orderare not applicable to the Company.
(xiii) According to the information and explanations given to us and based on ourexamination of the records of the Company transactions with the related parties are incompliance with section 177 and 188 of Companies Act 2013 and the details of suchtransactions have been disclosed in the Financial Statements as required by the applicableaccounting standards.
(xiv) According to the information and explanations given to us and based on ourexamination of the records of the Company the company has made preferential issue of4018801shares against share warrants during the year under audit. However the same havenot been allotted and the Company is under the process of making allotment of theseshares. The Company has not made preferential allotment or private placement of fully orpartly convertible debentures during the year.
(xv) According to the information and explanations given to us and based on ourexamination of the records of the Company the company has not entered into any non-cashtransactions with directors or persons connected with him. Accordingly the provisions ofclause 3 (xv) of the Order are not applicable to the Company and hence not commented upon.
(xvi) In our opinion the company is not required to be registered under section 45-IAof the Reserve Bank of India Act 1934 and accordingly the provisions of Clause 3(xvi) ofthe Order are not applicable to the Company and hence not commented upon.
For SHAH & TAPARIA
Membership No. : 103840
Mumbai 23rd May 2016
"Annexure B" to the Independent Auditors Report of even date on theStandalone Financial Statements of Allied Digital Services Limited
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act")
We have audited the internal financial Allied Digital Services Limited("the Company") as of March 31 2016 in conjunction with our audit of thefinancial statements of the Company for the year ended on that date.
Managements Responsibility for Internal Financial Controls
The Companys management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial considering theessential components of internal control stated in the Guidance Note on Audit of InternalFinancial Controls over Financial Reporting issued by the Institute of CharteredAccountants of India (ICAI). These responsibilities include the design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the orderly and efficient conduct of its business including adherence tocompanys policies the safeguarding of its assets the prevention and detection offrauds and errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Companies Act 2013.
Our responsibility is to express an opinion on the Companys internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting(the "Guidance Note") and the Standards on Auditing issued by ICAI and deemedto be prescribed under section 143(10) of the Companies Act 2013 to the extentapplicable to an audit of internal financial controls both of Internal Financial Controlsand both issued by the Institute of Chartered Accountants of India. Those Standards andthe Guidance Note require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance about whether adequate internal financialcontrols over financial reporting was established and maintained and if such controlsoperated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditors judgement including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Companys internal financial controlssystem over financial reporting.
Meaning of Internal Financial Controls over Financial Reporting
A companys internal financial control over financial reporting is a processdesigned to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance withgenerally accepted accounting principles. A companys internal financial control overfinancial reporting includes those policies and procedures that (1) pertain to themaintenance of records that in reasonable detail accurately and fairly reflect thetransactions and dispositions of the assets of the company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation offinancialstatements in accordance with generally accepted accounting principles and thatreceipts and expenditures of the company are being made only in accordance withauthorizations of management and directors of the company; and (3) provide reasonableassurance regarding prevention or timely detection of unauthorized acquisition use ordisposition of the companys assets that could have a material effect on thefinancial statements.
Inherent Limitations of Internal Financial Controls over Financial Reporting
Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.
In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at March 31 2016 based on theinternal control over financial reporting criteria established by the Company consideringthe essential control stated in the Guidance Note on Audit of Internal Financial ControlsOver Financial Reporting issued by the Institute of Chartered Accountants of India.
For SHAH & TAPARIA
Membership No. : 103840
Mumbai 23rd May 2016