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Den Networks Ltd.

BSE: 533137 Sector: Media
NSE: DEN ISIN Code: INE947J01015
BSE LIVE 15:58 | 22 Sep 88.50 -6.05
(-6.40%)
OPEN

94.20

HIGH

94.20

LOW

87.85

NSE 15:31 | 22 Sep 89.45 -5.00
(-5.29%)
OPEN

95.40

HIGH

95.40

LOW

88.10

OPEN 94.20
PREVIOUS CLOSE 94.55
VOLUME 33698
52-Week high 105.00
52-Week low 60.85
P/E
Mkt Cap.(Rs cr) 1,733
Buy Price 0.00
Buy Qty 0.00
Sell Price 88.50
Sell Qty 93.00
OPEN 94.20
CLOSE 94.55
VOLUME 33698
52-Week high 105.00
52-Week low 60.85
P/E
Mkt Cap.(Rs cr) 1,733
Buy Price 0.00
Buy Qty 0.00
Sell Price 88.50
Sell Qty 93.00

Den Networks Ltd. (DEN) - Auditors Report

Company auditors report

TO

THE MEMBERS OF

DEN NETWORKSLIMITED

Report on the Standalone Financial Statements

We have audited the accompanying standalone financial statements of DEN NETWORKSLIMITED ("the Company") which comprise the Balance Sheet as at 31 March 2016the Statement of Profit and Loss andthe Cash Flow Statement for the year then ended and asummary of the significant accounting policies and other explanatory information.

Management's Responsibility for the StandaloneFinancial Statements

The Company's Board of Directors is responsible for the matters stated in Section134(5) of the Companies Act 2013 ("the Act") with respect to the preparation ofthese standalone financial statements that give a true and fair view of the financialposition financial performance and cash flows of the Company in accordance with theaccounting principles generally accepted in India including the Accounting Standardsprescribed under Section 133 of the Act as applicable.

This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding the assets of the Company andfor preventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; and design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the accuracy and completeness ofthe accounting records relevant to the preparation and presentation of the financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on these standalone financial statementsbased on our audit.

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 thereunder and the Order under section 143 (11)of the Act.

We conducted our audit of the standalone financial statementsin accordance with theStandards on Auditing specified under Section 143(10) of the Act. Those Standards requirethat we comply withethical requirements and plan and perform the audit to obtainreasonable assurance about whether the financial statements are free from materialmisstatement.

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 of thefinancial statements whether due to fraud or error. In making those risk assessments theauditor considersinternal financial control relevant to the Company's preparation of thefinancial statements that give a true and fair view in order to design audit proceduresthat are appropriate in the circumstances. An audit also includes evaluating theappropriateness of the accounting policies used and the reasonableness of the accountingestimates made by the Company's Directors as well as evaluating the overall presentationof the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide 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 explanationsgiven to us the aforesaid standalone financial statements give the information requiredby the Act in the manner so required and give a true and fair view in conformity with theaccounting principles generally accepted in India of the state of affairs of the Companyas at 31 March 2016 and its loss and its cash flows for the year ended on that date.

Emphasis of Matters

a) We draw attention to note 44 of the standalone financial statements wherein it isstated that the rates/agreements for Digital Addressable System (DAS) subscription feehave not yet been finalised and the revenue on account of the same has been recognisedbased on estimates which in management's view are reasonable.

b) We draw attention to note 29 of the standalone financial statements wherein it isstated that the managerial remuneration for the year is in excess of the limits prescribedunder the provisions of Sections 197 read with Schedule V of the Companies Act 2013 andfor which approval sought from the Central Government is awaited.

Our opinion is not modified in respect of these matters.

Report on Other Legal and Regulatory Requirements

1. 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. In our opinion proper books of account as required by law have been kept by theCompany 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. In our opinion the aforesaid standalone financial statements comply with theAccounting Standards prescribed under Section 133 of the Act as applicable.

e. On the basis of the written representations received from the directors as on 31March 2016 taken on record by the Board of Directors none of the directors isdisqualified as on 31 March 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 A". Our report expresses an unmodified opinion onthe adequacy and operating effectiveness of the Company's internal financial controls overfinancial reporting.

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:

i. The Company has disclosed the impact of pending litigations on its financialposition in its financial statements — Refer Note 27.b to the standalone financialstatements.

ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses - Refer Note 27. c of the standalonefinancial statements.

iii. There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company - Refer Note 48 of the standalone financialstatements.

2. As required by the Companies (Auditors Report) Order 2016 ("the Order'/'CARO2016") issued by the Central Government in terms of Section 143(11) of the Act wegive in "Annexure B'a statement on the matters specified in paragraphs 3 and 4 of theOrder.

For Deloitte Haskins & Sells

Chartered Accountants

(Firm's Registration No.015125N)

Alka Chadha

Partner

(Membership No. 93474)

NEW DELHI 30 May 2016

ANNEXURE A TO THE INDEPENDENT AUDITORS' REPORT

(Referred to in paragraph 1(f) under ‘Report on Other Legal and RegulatoryRequirements' of our renort of even date)

Report on the Internal Financial Controls Over Financial Reporting under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 ("the Act")

We have audited the internal financial controls over financial reporting of DENNETWORKS LIMITED ("the Company") as of 31 March 2016 in conjunction withour audit of the standalone financial statements of the Company for the year ended on thatdate.

Management's Responsibility for Internal Financial Controls

The Company's management is responsible for establishing and maintaining internalfinancial controls based on "the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls Over Financial Reportingissued by the Institute of Chartered Accountants of India. These responsibilities includethe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to company's policies the safeguarding of its assets the preventionand detection of frauds and errors the accuracy and completeness of the accountingrecords and the timely preparation of reliable financial information as required underthe Companies Act 2013.

Auditor's Responsibility

Our responsibility is to express an opinion on the Company's 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") issued by the Institute of Chartered Accountants of Indiaand the Standards on Auditing prescribed under Section 143(10) of the Companies Act 2013to the extent applicable to an audit of internal financial controls. 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 auditor's judgment 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 Company's internal financial controls systemover financial reporting.

Meaning of Internal Financial Controls Over Financial Reporting

A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedures that (1) pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures of the company are being made only in accordance with authorizations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorized acquisition use or disposition of thecompany'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 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.

Opinion

In our opinion to the best of our information and according to the explanations givento us the Company has in all material respects an adequate internal financial controlssystem over financial reporting and such internal financial controls over financialreporting were operating effectively as at 31 March 2016 based on the internal controlover financial reporting criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note on Audit of Internal FinancialControls Over Financial Reporting issued by the Institute of Chartered Accountants ofIndia.

For Deloitte Haskins & Sells

Chartered Accountants

(Firm's Registration No. 015125N)

Alka Chadha

Partner

(Membership No. 93474)

NEW DELHI

30 May 2016

ANNEXURE B TO THE INDEPENDENT AUDITORS' REPORT

(Referred to in paragraph 2 under ‘Report on Other Legal and RegulatoryRequirements' section of our report of even date)

(i) In respect of its fixed assets:

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

b. The Company has a program of verification of fixed assets to cover all items ina phased manner over a period of three years other than set top boxes which are inpossession of the customers/ third parties and distribution equipment comprising overheadand underground cables. Management is of the view that it is not possible to verify theseassets due to their nature and location. Pursuant to the program certain fixed assetswere physically verified by the Management during the year. According to the informationand explanations given to us no material discrepancies were noticed on such verification.

In our opinion other than for physical verification of set top boxes and distributionequipment referred to above the frequency of verification of fixed assets isreasonablehaving regard to the size of the Company and the nature of its assets.

c. The Company does not have any immovable properties of freehold or leasehold landand building and hence reporting under clause (i)(c) of the CARO 2016 is not applicable.

(ii) As explained to us the inventories were physically verified during the yearby the Management at reasonable intervals and no material discrepancies were noticed onphysical verification.

(iii) According to the information and explanations given to us the Company hasgranted loans secured or unsecured to companies firms or other parties covered in theRegister maintained under Section 189 of the Companies Act 2013 in respect of which:

a. The terms and conditions of the grant of such loans are in our opinion primafacie not prejudicial to the Company's interest.

b. The schedule of repayment of principal and payment of interest has beenstipulated and repayments or receipts of principal amounts and interest have been regularas per stipulations.

c. There is no amount overdue for more than 90 days at the balance sheet date.

(iv) In our opinion and according to the information and explanations given to usthe Company has complied with the provisions of Sections 185 and 186 of the Companies Act2013 in respect of grant of loans making investments and providing guarantees andsecurities as applicable.

(v) According to the information and explanations given to us the Company has notaccepted any deposits from the public. The Company does not have any unclaimed depositsand accordingly the provisions of Sections 73 to 76 or any other relevant provisions ofthe Companies Act 2013 are not applicable to the Company.

(vi) The maintenance of cost records has been specified by the Central Governmentunder section 148(1) of the Companies Act 2013. We have broadly reviewed the cost recordsmaintained by the Company pursuant to the Companies (Cost Records and Audit) Rules 2014as amended and the Cost Records and Audit (Telecommunication Industry) Rules prescribed bythe Central Government under sub-section (1) of Section 148 of the Companies Act 2013and are of the opinion that prima facie the prescribed cost records have beenmade and maintained. We have however not made a detailed examination of the cost recordswith a view to determine whether they are accurate or complete.

(vii) According to the information and explanations given to us in respect ofstatutory dues:

a. The Company has generally been regular in depositing undisputed statutory duesincluding Provident Fund Employees' State Insurance Income-tax Sales Tax Service TaxCustoms Duty Value Added Tax cess and other material statutory dues applicable to itwith the appropriate authorities. According to the information and explanations given tous the Company's operations did not give rise to any Excise Duty.

b. There were no undisputed amounts payable in respect of Provident FundEmployees' State Insurance Income-tax Sales Tax Service Tax Customs Duty ValueAddedTax cess and other material statutory dues in arrears as at 31 March 2016 for aperiod of more than six months from the date they became payable. According to theinformation and explanations given to us the Company's operations did not give rise toany Excise Duty.

c. Details of dues of Sales Tax and Value Added Tax which have not been depositedas on 31 March 2016 on account of disputes are given below:

Name of Statute Nature of Dues Forum where Dispute is Pending Period to which the Amount Relates Amount Unpaid (Rs in million)*
The Uttar Pradesh Value Added Tax Act 2008 Value added tax Commercial Tax Tribunal Lucknow June 2013 8.77
The Uttar Pradesh Value Added Tax Act 2008 Value added tax Deputy Commissioner Lucknow April 2012 to March 2013 151.38
The Uttar Pradesh Value Added Tax Act 2008 Value added tax Deputy Commissioner Lucknow September 2013 to October 2013 20.84
Bihar Value Added Tax Act 2005 Value added tax Joint Commissioner of Commercial Tax (Appeals) April 2012 to March 2014 19.07
Bihar Value Added Tax Act 2005 Value added tax High Court Patna April 2014 to March 2015 73.53
Karnataka Value Added Tax and CST Act 2003 Value added tax and Central Sales Tax Joint Commissioner of Commercial Tax (Appeals) April 2008 to March 2010 34.93
Karnataka Value Added Tax and CST Act 2003 Value added tax and Central Sales Tax High Court/Deputy Commissioner (Appeals) April 2010 to March 2011 29.63
Delhi Value Added Tax Act 2004 Value Added Tax Special Commissioner- Delhi VAT April 2014 to March 2015 0.35
Kerala Value Added Tax and CST Act 2003 Value added tax and Central Sales Tax Assistant Commissioner Appeals Commercial Taxes Ernakulam April 2011 to March 2013 24.60
Kerala Value Added Tax and CST Act 2003 Value added tax and Central Sales Tax High Court Kerala April 2013 to March 2014 27.52

*Net of Rs. 71.18 million under protest.

We are informed that there are no dues in respect of Income-tax Service Tax andCustoms Duty which have not been deposited on account of any dispute. According to theinformation and explanations given to us the Company's operations did not give rise toany Excise Duty.

(viii) In our opinion and according to the information and explanations given tous the Company has not defaulted in the repayment of loans or borrowings to banks andfinancial institutions. The Company has not issued any debentures.

(ix) The Company has not raised moneys by way of initial public offer or furtherpublic offer (including debt instruments) or term loans during the year and hencereporting under clause (ix) of the CARO 2016 is not applicable.

(x) To the best of our knowledge and according to the information and explanationsgiven to us no fraud by the Company and no material fraud on the Company by its officersor employees has been noticed or reported during the year.

(xi) In our opinion and according to the information and explanations given to usthe Company has paid/provided managerial remuneration in excess of the limits andapprovals prescribed under section 197 read with Schedule V to the Companies Act 2013 tothe following managerial personnel:

Managerial

Position

Excess amount of remuneration paid/ provided (Rs. in million) Financial year ending Treatment of the excess remuneration in the respective year financial statements Steps taken by the Company for securing refund
Chairman and Managing Director 7.25 31 March 2016 Charged to Statement of Profit and Loss The Company has filed an application with the Central Government to obtain necessary approval.

(xii) The Company is not a Nidhi Company and hence reporting under clause (xii) ofthe Order is not applicable.

(xiii) In our opinion and according to the information and explanations given to usthe Company is in compliance with Section 177 and 188 of the Companies Act 2013 whereapplicable for all transactions with the related parties and the details of related partytransactions have been disclosed in the financial statements etc. as required by theapplicable accounting standards.

(xiv) During the year the Company has not made any preferential allotment orprivate placement of shares or fully or partly convertible debentures and hence reportingunder clause (xiv) of the Order is not applicable to the Company.

(xv) In our opinion and according to the information and explanations given to usduring the year the Company has not entered into any non-cash transactions with itsdirectors or directors of its holding and subsidiaries company or persons connected withthem 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 theReserve Bank of India Act 1934.

For Deloitte Haskins & Sells
Chartered Accountants
(Firm's Registration No. 015125N)
Alka Chadha
Partner
New Delhi 30May 2016 (Membership No. 93474)