TO THE MEMBERS OF HATHWAY CABLE & DATACOM LIMITED
Report on the Standalone Financial Statements
We have audited the accompanying standalone financial statements of HATHWAY CABLE& DATACOM LIMITED (the Company) which comprise the Balance Sheet asat March 31 2016 the Statement of Profit and Loss the Cash Flow Statement for the yearthen ended and a summary of significant accounting policies and other explanatoryinformation.
Managements Responsibility for the Standalone 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 preparation ofthese standalone financial statements that give a true and fair view of the financialposition financial performance and cash flows the Company in accordance with theaccounting 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 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 misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures 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 internal financial control relevant to the Companyspreparation of the financial statements that give a true and fair view in order to designaudit procedures that are appropriate in the circumstances. An audit also includesevaluating the appropriateness of the accounting policies used and the reasonableness ofthe accounting estimates made by the Companys 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.
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 March 31 2016 and its loss and its cash flows for the year ended on that date.
Emphasis of Matter a. We draw attention to note no. 4.27 to the accounts relatingto manner and basis of recognition of subscription income in respect of Cable Televisionbusiness.
b. Attention is also invited to note no. 4.29 regarding managerial remuneration paidduring the year to the Managing Director and CEO where approval from the CentralGovernment is pending.
Our opinion is not qualified in respect of these matters.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditors Report) Order 2016 ("theOrder") as amended issued by the Central Government of India in terms of section143(11) of the Act we give in the "Annexure A" statement on the mattersspecified in the 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) 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 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 March31 2016 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2016 from being appointed as a director in terms of section 164(2) of theAct;
(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: i. TheCompany has disclosed the impact of pending litigations on its financial position in itsfinancial statements. Refer note 4.01 to the financial statements;
ii. The Company has made provision as required under the applicable law or accountingstandard for material foreseeable losses if any on long-term contracts includingderivative contracts.
Refer note 4.20 to the financial statements; and
iii. There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company.
"ANNEXURE A" TO THE 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 records of fixed assets showing particulars of assetsincluding quantitative details and location except in case of certain types ofdistribution equipments like cabling line equipments access devices with subscribers/local cable operators. In view of the management nature of such assets and business issuch that maintaining location-wise particulars is impractical;
(b) Distribution equipments like cabling and other line equipments of selected networkswere verified. The management plans to verify balance networks in a phased manner. Fixedassets other than distribution equipments and access devices with the subscribers / localcable operators were physically verifiedduring the year based on verification programmeadopted by the management. As per this programme all assets will be verified atleast oncein a period of three years. The management has represented that physical verification ofaccess devices with the subscribers / local cable operators is impractical; however thesame can be tracked in case of most of the networks through subscribers managementsystem; The Company is in the process of reconciling book records with outcome of physicalverification wherever physical verification was carried out and have accounted for thediscrepancies observed on such verification;
In our opinion frequency and procedure for verification of distribution equipments andcertain Head-end Equipments under the control of local cable operators and subsequentreconciliation with book records need to be strengthened;
(c) The Company does not hold any immovable properties. Accordingly the paragraph3(i)(c) of the Order regarding title deeds of immovable properties is not applicable;
ii. (a) Inventories have been physically verified during the year by the management. Inour opinion the frequency of verification is reasonable;
(b) The discrepancies noticed on physical verification as compared to the book recordswere not material and have been properly dealt within the books of account;
iii. The Company has granted unsecured loan to nine companies covered in the registermaintained under section 189 of the Act;
(a) In our opinion the rate of interest and other terms and conditions on which suchloans had been granted were not prima facie prejudicial to the interest of the Company;
(b) According to the information and explanation given to us no repayment schedule hasbeen specified for the outstanding balance amount of the loan given by the Company andaccordingly the question of regularity in repayment of principal amount does not arise;and (c) There are no overdue amounts in respect of such loans;
iv. Based on the audit procedures applied by us during the year under audit theCompany has not granted loans guarantee and security or made investments which requirecompliance in terms of the provisions contained in the section 185 or section 186 of theAct. The Management has based on legal opinion represented that overdue book debts arenot in the nature of loan and hence do not fall within the scope of section 185 of theAct. In such circumstances para 3(iv) of the Order is not applicable;
v. In our opinion and according to the information and explanation given to us theCompany has not accepted deposits from the public and therefore the provisions containedin sections 73 to 76 or any other relevant provisions of the Act and Rules framed thereunder are not applicable to the Company. We have been informed that no order has beenpassed by Company Law Board or National Company Law Tribunal or Reserve Bank of India orany Court or any other Tribunal;
vi. The Central Government has prescribed maintenance of cost records under section148(1) of the Act for the products manufactured by the Company. We have broadly reviewedthe books of account maintained and in our opinion; prima facie the prescribed accountsand records have been made and maintained by the Company. We have not however made adetailed examination of the records with a view to determine whether they are accurate orcomplete;
vii. (a) Based on the records produced before us the Company has been generallyregular in depositing with appropriate authorities undisputed statutory dues such asprovident fund employees state insurance income-tax sales-tax service tax duty ofcustoms duty of excise value added tax cess and other statutory dues applicable to it.According to the information and explanations given to us no undisputed amount payable inrespect of outstanding statutory dues were in arrears as at March 31 2016 for a period ofmore than six months from the date they became payable; (b) The details of disputedstatutory dues which have not been deposited by the Company are as under:
|Name of the Statute ||Nature of the Dues ||Rupees ||Period to which the amount relates ||Forum where dispute is pending |
|1 Bombay Entertainments Duty Act 1923 ||Entertainment Tax & penalty thereon Thane ||0.89 ||June 2006 to May 2007 ||Entertainment Tax Department Thane |
|2 Bombay Entertainments Duty Act 1923 ||Entertainment Tax ||1.591 ||May 2009 to October 2010 ||Court of Divisional Commissioner Aurangabad division |
|3 Hyderabad Entertainment Duty Act 1939 ||Entertainment Tax ||0.58 ||May 2005 to June 2006 ||Andhra Pradesh High Court |
|4 Uttar Pradesh Entertainment Tax Rules ||Entertainment Tax ||0.12 ||NA ||District Magistrate Agra |
| || ||1.05 ||April2014 to Sept 2014 || |
| || ||0.13 ||Oct 2014 to November2014 || |
| || ||0.67 ||December 2014 to June 2015 || |
|5 Uttar Pradesh Entertainment and Betting Act 1979 ||Entertainment Tax ||1.41 ||April 2013 to January 2014 ||District Magistrate Ghaziabad |
|6 The Maharashtra Value Added Tax 2002 ||Value Added Tax ||0.682 ||April 2008 to March 2009 ||Maharashtra VAT Tribunal |
|7 Finance Act 1994 ||Service Tax ||0.16 ||April 2003 to March 2004 ||Service Tax Department |
|8 Madhya Pradesh Vilasita Manoranjan Amod Evam Vigyapan Kar Adhiniyam 2011 ||Commercial Taxes ||0.813 ||July 01 2011 to March 17 2012 ||Settlement Authority |
|9 Andhra Pradesh Value Added Tax 2005 ||Value Added Tax ||18.054 ||April 2008 to March 2009 ||Sales Tax App ellate Tribunal Andhra Pradesh |
|10 Delhi Entertainment & Betting Tax Act 1996 ||Entertainment Tax ||5.955 ||April 2013 to May 2013 ||Delhi High Court |
| || ||23.36 ||June 2013 to March 2014 || |
| || ||27.78 ||April 2014 to March 2015 || |
|11 Maharashtra Entertainments Duty Act 1923 ||Entertainment Tax ||4.57 ||Up to October 2014 ||Writ Petition to Bombay High Court |
|12 The Karnataka Entertainments Tax Act 1958 ||Value Added Tax ||10.28 ||2011-12 2012-13 2013-14 ||Writ Petition to Karnataka High Court |
|13 Income Tax Act1961 ||Tax Deducted at Source & interest thereon ||3.996 ||April 2000 to March 2004 ||Commissioner of Income Tax(Appeals) |
|14 Bombay Sales Tax Act 1959 ||Sales Tax ||0.007 ||1999-2000 ||Assistant Comm. of Sales Tax Appeals |
|15 Commercial Tax Act ||Sales Tax/VAT ||0.887 ||Apil 2013-March 14 ||Deputy Commissioner Commercial tax |
|16 Commercial Tax Act ||Sales Tax ||0.278 ||2012-13 ||Deputy Commissioner Commercial tax |
|17 Maharashtra Entertainments Duty Act 1923 ||Entertainment Tax ||0.14 ||2013-14 ||Bombay High Court |
|18 Andhra Pradesh Value Added Tax Act 2005 ||Value Added Tax ||0.05 ||April 2005 to Nov 2008 ||Commercial Tax Officer |
1 Amount paid is Rs 1.15
2 Amount paid is Rs 0.23
3 Amount demanded is fully paid
4 Rs 9.03 is paid as pre-deposit
viii. Based on our audit procedure and according to the information and explanationsgiven to us the Company has not defaulted in repayment of dues to the financialinstitutions bank and government. The Company has not issued any debentures;
ix. In our opinion and according to the information and explanations given to us andbased on overall examination of records the term loans have been applied for the purposefor which the loans were obtained; The Company did not raise any money by way of initialpublic offer or further public offer or debt instrument;
x. During the course of our examination of the books and records of the Company carriedout in accordance with generally accepted auditing practices in India and according to theinformation and explanations given to us no material fraud by the Company or on theCompany by its officers or employees has been noticed or reported during the year;
xi. The managerial remuneration has been provided and paid in accordance with therequisite approvals mandated by the provisions of section 197 read with Schedule V to theAct except that as stated in the note no. 4.29 of the financial statements approval fromthe Central
Government in respect of excess remuneration paid during the year amounting to Rs 0.47to the Managing Director & C.E.O. on account of inadequacy of profit is pending. Tosecure refund of such excess amount the Company has obtained an undertaking from the saidmanagerial personnel wherein he has undertaken to refund the excess amount as may bedetermined on disposal of the application by the Central Government;
xii. The Company is not Nidhi company. Accordingly paragraph 3(xii) of the Order isnot applicable;
5 Amount paid Rs 3.14
6 Part payment made to department Rs 1.99
7 Part payment made to department Rs 0.22
8 Part payment made to department Rs 0.026
xiii. According to the information and explanations given to us the Companytransactions with the related parties are in compliance with sections 177 and 188 of theAct where applicable. The details of such transactions have been disclosed in thefinancial statements as required by the applicable accounting standards;
xiv. Based on the audit procedure performed and information and explanations given bythe management the Company has not made any preferential allotment or private placementof shares or fully or partly convertible debentures during the year. Accordingly theprovision of clause 3(xiv) of the Order are not applicable to the Company;
xv. The Company has not entered into non-cash transaction with directors. We have beeninformed that no such transactions have been entered into with persons connected withdirectors. Accordingly para 3(xv) of the Order is not applicable to the Company;
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 provision of clause 3(xvi) ofthe Order are not applicable to the Company;
"ANNEXURE B" TO THE AUDITORS REPORT
Referred to in Paragraph 2(f) under the heading "Report on Other Legal andRegulatory Requirements" of our report of even date to the financial statements ofthe Company for the year ended March 31
We have audited the internal financial controls over financial reporting of HATHWAYCABLE & DATACOM LIMITED ("the Company") as of March 31 2016 inconjunction with our audit of the standalone financial statements of the Company for theyear 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 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 (ICAI). Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to companys policies the safeguardingof its assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation 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 applicable to an audit ofInternal Financial Controls and both issued by the Institute of Chartered Accountants ofIndia. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls over financial reporting was established andmaintained and if such controls operated 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 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 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 of financialstatements in accordance with generally accepted accounting principles and that receiptsand expenditures 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 theCompanys 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.
In our opinion the Company has maintained in all material respects adequate internalfinancial controls over financial reporting and such internal financial controls overfinancial reporting were operating effectively as of March 31 2016 based on the internalcontrol over financial reporting criteria established by the Company considering theessential components of internal financial control stated in the Guidance Notes on auditof internal financial controls over financial reporting issued by the Institute ofChartered Accountants of India.
| ||For G. M. Kapadia & Co. |
| ||Chartered Accountants |
| ||Firm Registration No.104767W |
| ||Viren Thakkar |
|Place : Mumbai ||Partner |
|Dated: May 26 2016 ||Membership No. 49417 |