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GTL Infrastructure Ltd.

BSE: 532775 Sector: Telecom
NSE: GTLINFRA ISIN Code: INE221H01019
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VOLUME 127473
52-Week high 8.60
52-Week low 3.87
P/E
Mkt Cap.(Rs cr) 2,839
Buy Price 6.22
Buy Qty 5000.00
Sell Price 6.27
Sell Qty 999.00
OPEN 6.16
CLOSE 6.14
VOLUME 127473
52-Week high 8.60
52-Week low 3.87
P/E
Mkt Cap.(Rs cr) 2,839
Buy Price 6.22
Buy Qty 5000.00
Sell Price 6.27
Sell Qty 999.00

GTL Infrastructure Ltd. (GTLINFRA) - Auditors Report

Company auditors report

To

The Members of

GTL INFRASTRUCTURE LIMITED

Report on the Standalone Financial Statements

We have audited the accompanying standalone financial statements of GTL INFRASTRUCTURELIMITED ("the Company") which comprises the Balance Sheet as at 31st March2016 the Statement of Profit and Loss and Cash Flow Statement for the year then endedand a summary of 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 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 (Indian GAAPs) including AccountingStandards prescribed under Section 133 of the Act as applicable.

This responsibility also includes the 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.

Auditors' 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.

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 misstatements.

An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures in the financial statements. The procedures selected depend on the auditor'sjudgment including the assessment of the risks of material misstatement of the financialstatements whether due to fraud or error. In making

those risk assessments the auditor considers internal financial control relevant tothe Company's preparation of the financial statements that give a true and fair view inorder to design audit procedures that are appropriate in the circumstances. An audit alsoincludes evaluating the appropriateness of accounting policies used and the reasonablenessof the accounting estimates made by the Company's directors as well as evaluating theoverall presentation of 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 31st March 2016 and its loss and its cash flows for the year ended on that date.

Emphasis of Matter

We draw attention to the:

a. Note no. 11.3 regarding Company's Investment through tower trust in its associatecompany Chennai Network Infrastructure Limited amounting to ' 18157224000 as at 31stMarch 2016. The associate's net worth has been eroded substantially however no provisionfor diminution in the value of investment has been considered necessary by the managementfor the reasons stated therein.

b. Note no. 22.1 regarding remuneration paid to a Whole Time Director which is subjectto the approval of Central Government.

c. Note no. 30 regarding outstanding trade receivables and other current assets whichare subject to confirmation but considered good for the reasons mentioned therein.

d. Note no. 31 regarding Scheme of Arrangement under section 391 to 394 of theCompanies Act 1956 pending for the necessary modifications and approvals and preparationof financial statements without giving effect of this scheme and to give the effect as andwhen the scheme becomes effective.

e. Note no. 32 regarding preparation of the financial statements of the Company on agoing concern basis notwithstanding the fact that the Company has incurred cash losses andits net worth has been fully eroded as on 31st March 2016. Further the Company's currentliabilities exceed its current assets as at the balance sheet date. These conditionsindicate the existence of a material uncertainty that may cast significant doubt over theCompany's ability to continue as a going concern. However the financial statements of theCompany have been prepared on a going concern basis for the reasons stated in the said

Note. The appropriateness of assumption of going concern is dependent upon theCompany's ability to generate adequate cash flows in future to meet its obligations.

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) The going concern matter described in subparagraph (e) under the Emphasis ofMatters paragraph above in our opinion may have an adverse effect on the functioning ofthe Company.

(f) On the basis of the written representations received from the directors as on 31stMarch 2016 and taken on record by the Board of

Directors none of the directors is disqualified as on March 31 2016 from beingappointed as a director in terms of Section 164 (2) of the Act.

(g) 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".

(h) 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 the financial statements - refer to Note Nos. 26 27 and 28 to the standalonefinancial statements.

ii. The Company does not have any long-term contracts including derivative contractsfor which there were any material foreseeable losses.

iii. There are no amounts which are required to be transferred to the InvestorEducation and Protection Fund by the Company.

2. As required by the Companies (Auditor's Report) Order 2016 ("CARO 2016")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 paragraphs 3 and 4 of CARO2016.

For Chaturvedi & Shah For Yeolekar & Associates
Chartered Accountants Chartered Accountants
Firm Reg. No. - 101720W Firm Reg. No. - 102489W
R. Koria S. S. Yeolekar
Partner Partner
Membership No. - 35629 Membership No. - 36398
Place: Mumbai
Date: 26th April 2016

"ANNEXURE A" TO THE INDEPENDENT AUDITORS' REPORT

(Referred to in paragraph 1(g) under ‘Report on Other Legal and RegulatoryRequirements' of our report of even date to the members of GTL Infrastructure Limited onthe standalone financial statements for the year ended 31st March 2016)

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 GTLInfrastructure Limited ("the Company") as of March 312016 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 Reporting('the Guidance Note') issued by the Institute of Chartered Accountants of India (ICAI).These responsibilities include the design implementation and maintenance of adequateinternal financial controls that were operating effectively for ensuring the orderly andefficient conduct of its business including adherence to Company's policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information as required under the Companies Act 2013.

Auditors' 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 and the Standards on Auditing issued by the ICAI and deemed to beprescribed under Section 143(10) of the Companies Act 2013 to the extent applicable toan audit of internal financial controls. Those Standards and the Guidance Note requirethat we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether adequate internal financial controls over financialreporting was established and maintained and if such controls operated effectively in allmaterial 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 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 authorisations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised 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 adequate internal financial controls overfinancial reporting and such internal financial controls over financial reporting wereoperating effectively as on March 31 2016 based on the internal control over financialreporting criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note issued by the ICAI.

For Chaturvedi & Shah For Yeolekar & Associates
Chartered Accountants Chartered Accountants
Firm Reg. No. - 101720W Firm Reg. No. - 102489W
R. Koria S. S. Yeolekar
Partner Partner
Membership No. - 35629 Membership No. - 36398
Place: Mumbai
Date: 26th April 2016

"ANNEXURE B" TO THE INDEPENDENT AUDITORS' REPORT

(Referred to in paragraph 2 under the heading "Report on Other Legal andRegulatory Requirements" of our report of even date to the members of GTLInfrastructure Limited on the standalone financial statements for the year ended 31stMarch 2016)

i. In respect of its fixed assets:

a. The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets on the basis of available information.

b. As explained to us the Company has physically verified certain assets inaccordance with a phased program of verification which in our opinion is reasonablehaving regard to the size of the Company and the nature of its assets. No materialdiscrepancies were noticed on such physical verification as compared with the availablerecords.

c. According to the information and explanations given to us the title deeds ofimmovable properties are in the name of the Company except in respect of one of theimmovable properties as detailed below:

Sr. No. Particulars of the building Leasehold / Freehold Gross Amount in ' Net Amount in ' Remarks
1 Building at Wanawadi Pune (Pledged with the bank) Freehold 70000000 58338146 The title deed is in the name of Global Electronic Commerce Services Limited which was merged with GTL Limited (the seller).

Further as informed to us in respect of 7 immovable properties having the aggregatecost of ' 427429776 (including 6 immovable properties having cost of ' 427275756 inrespect of which the original title deeds have been deposited with the lenders assecurity) have been verified based on the photocopies of the documents for those immovableproperties and based on such documents the title deeds are held in the name of theCompany.

ii. As explained to us inventories have been physically verified during the year bythe management and in our opinion the frequency of verification is reasonable.Discrepancies noticed on physical verification of the inventories between the physicalinventories and book records were not material having regard to the size of theoperations of the Company and the same have been properly dealt with.

iii. In respect of loans secured or unsecured granted by the company to companiesfirms Limited liability partnerships or other parties covered in the register maintainedunder section 189 of the Act:

a. The company has given advances in the nature of loan to one such party and in ouropinion and according to the information given to us the rate of interest and other termsand conditions on which the loan had been granted to the body corporate listed in theregister maintained under Section 189 of the Act were not prima facie prejudicial to theinterest of the Company.

b. The schedule of repayment of principal and payment of interest has been stipulatedand the repayment of principal amount is generally regular. However interest charged bythe Company for the entire year is outstanding.

c. Out of the total interest charged interest of ' 38496468 is outstanding for morethan ninety days. It is represented by the Management that steps are been taken to recoverthe same.

iv. In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of section 185 and 186 of the Act as applicablein respect of loans granted investments made and guarantees and securities provided.

v. According to the information and explanations given to us the Company has notaccepted any deposits from the public. Therefore the provisions of paragraph 3 (v) of theCARO 2016 are not applicable to the Company.

vi. According to the information and explanations given to us the Central Governmenthas not prescribed the cost records to be maintained under sub-Section (1) of Section 148of the Act in respect of business activities carried on by the Company. Therefore theprovisions of paragraph 3(vi) of the CARO 2016 are not applicable to the Company.

vii. According to the information and explanations given to us in respect of statutorydues:

a. The Company has been generally regular in depositing undisputed statutory duesincluding provident fund employees' state insurance income tax sales-tax service taxduty of customs duty of excise value added tax cess and any other statutory dues asapplicable with the appropriate authorities during the year. According to the informationand explanations given to us no undisputed amounts payable in respect of such statutorydues were outstanding as at 31st March 2016 for a period of more than six months from thedate they became payable except in case of Gram Panchayat tax and Municipal Corporationtax aggregating to ' 33598889 as detailed below.

Name of the Statute Nature of the Dues Period to which it relates Amount (In ')
Gram Panchayat Gram Panchayat tax March'14 to March'15 30863963
Municipal Corporation Municipal Corporation tax December'10 to March'13 2734926
Total 33598889

b. The disputed statutory dues of Sales tax Entry Tax and Value added tax aggregatingto ' 128192981 that have not been deposited on account of Disputed matters pendingbefore appropriate authorities are as under:

Name of the Statute Nature of the Dues Period to which it relates Amount (in ' (*) Forum where the dispute is pending
Central Sales Tax Act Sales Tax / VAT / 2008-09 9128394 High Court
1956 and Sales Tax Acts of various States Entry Tax 2009-10 and 2010-11 656657 Appellate Tribunal
2008-09 and 2009-10 18830428 Commissioner (Appeal)
2007-08 2008-09 and 2009-10 13930775 Additional Commissioner (Appeal)
2008-09 2009-10 2010-112013-14 and 2014-15 889916 Joint Commissioner (Appeal)
2010-11 and 2011-12 4605281 Sr. Joint Commissioner (Appeal)
2007-08 to 2010-11 78726395 Deputy Commissioner (Appeals)
2006-07 325271 Assistant Commissioner
2007-08 2008-09 2009-10 and 2010-11 1099864 Commercial Tax officer
Total 128192981

(*) Net of amount deposited under protests

viii. Based on our audit procedures and information and explanations given by themanagement and considering the Corporate Debt Restructuring (CDR) scheme and otherrestructuring schemes with foreign lender and FCCB holders we are of the opinion that ason 31st March 2016 the Company has defaulted in repayment of loans to banks and financialinstitutions aggregating to ' 315202400. Lender wise details of such default is asunder:

Lenders' Name Amount (in ') Period of default
1 Indian Overseas Bank 47123841 Below 100 days
2 Oriental Bank of Commerce 5111723 Below 100 days
3 Bank of India 22881803 Below 100 days
4 Punjab National Bank 12255455 Below 100 days
5 Bank of Baroda 26090463 Below 100 days
6 Indian Bank 8691727 Below 100 days
7 Corporation Bank 6004897 Below 100 days
8 Union Bank of India 35544254 Below 100 days
9 Andhra Bank 16757241 Below 100 days
10 IDBI Bank 2563405 Below 100 days
11 Canara Bank 10086854 Below 100 days
12 Central Bank of India 16980094 Below 100 days
13 United Bank of India 5330680 Below 100 days
14 State Bank of India 6706818 Below 100 days
15 State Bank of Patiala 4906655 Below 100 days
16 Vijaya Bank 2586266 Below 100 days
17 State Bank of Travancore 1677406 Below 100 days
18 State Bank of Bikaner and Jaipur 13065097 Below 100 days
19 Dena Bank 2984079 Below 100 days
20 Axis Bank 5130542 Below 100 days
21 LIC of India 6465494 Below 100 days
22 Deutsche Investitions- und 28128803 Below 100 days
Entwicklungsgesellschaft mbH (DEG) 28128803 Above 100 days but below 200 days
TOTAL 315202400

ix. The Company did not raise any money by way of initial public offer or furtherpublic offer (including debt instruments) and term loans during the year. Accordinglyprovisions of paragraph 3 (ix) of the CARO 2016 are not applicable to the Company.

x. Based on our audit procedures performed for the purpose of reporting the true andfair view of the financial statements and on the basis of information and explanationsgiven by the management no fraud by the Company or on the Company by its officers oremployees has been noticed or reported during the year.

xi. According to the information and explanations give to us and based on ourexamination of the records of the Company in respect of remuneration of ' 4970616 paidto a Whole Time Director the requisite approval sought by the Company from the CentralGovernment as mandated by the provisions of section 197 read with Schedule V is awaited.

xii. In our opinion and according to the information and explanations given to us theCompany is not a Nidhi company. Therefore the provisions of paragraph 3 (xii) of the CARO2016 are 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 the transactions entered with the relatedparties are in compliance with sections 177 and 188 of the Act where applicable anddetails of such transactions have been disclosed in the financial statements as requiredby the applicable accounting standards.

xiv. According to the information and explanations give to us and based on ourexamination of the records of the Company the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year. Therefore the provisions of paragraph 3 (xiv) of the CARO 2016 are notapplicable to the Company.

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 non-cashtransactions with directors or persons connected with him. Therefore the provisions ofparagraph 3 (xv) of the CARO 2016 are not applicable to the Company.

xvi. I n our opinion and according to information and explanations provided to us theCompany is not required to be registered under section 45-IA of the Reserve Bank of IndiaAct 1934.

For Chaturvedi & Shah For Yeolekar & Associates
Chartered Accountants Chartered Accountants
Firm Reg. No. - 101720W Firm Reg. No. - 102489W
R. Koria S. S. Yeolekar
Partner Partner
Membership No. - 35629 Membership No. - 36398
Place: Mumbai
Date: 26th April 2016