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Paramount Communications Ltd.

BSE: 530555 Sector: Engineering
NSE: PARACABLES ISIN Code: INE074B01023
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NSE 15:29 | 22 Aug 6.15 -0.25
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OPEN 6.63
PREVIOUS CLOSE 6.38
VOLUME 25169
52-Week high 8.08
52-Week low 2.66
P/E
Mkt Cap.(Rs cr) 77
Buy Price 6.11
Buy Qty 1379.00
Sell Price 6.28
Sell Qty 500.00
OPEN 6.63
CLOSE 6.38
VOLUME 25169
52-Week high 8.08
52-Week low 2.66
P/E
Mkt Cap.(Rs cr) 77
Buy Price 6.11
Buy Qty 1379.00
Sell Price 6.28
Sell Qty 500.00

Paramount Communications Ltd. (PARACABLES) - Auditors Report

Company auditors report

TO THE MEMBERS OF

PARAMOUNT COMMUNICATIONS LIMITED

Report on the Standalone Financial Statements

1. We have audited the accompanying Standalone financial statements of ParamountCommunications Limited ("the Company") which comprise the Balance Sheet asat 31st March 2016 the Statement of Profit and Loss the Cash Flow Statementfor the year then ended and a summary of the significant accounting policies and otherexplanatory information.

Management’s Responsibility for the Standalone Financial Statements

2. 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 to 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 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 of 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.

Auditor’s Responsibility

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

4. We have taken into account the provisions of the Act and the Rules made thereunderincluding the accounting standards and matters which are required to be included in theaudit report.

5. We conducted our audit in accordance with the Standards on Auditing specified underSection 143(10) of the Act and other applicable authoritative pronouncements issued by theInstitute of Chartered Accountants of India. Those Standards and pronouncements requirethat we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether the financial statements are free from materialmisstatement.

6. An audit involves performing procedures to obtain audit evidence about the amountsand the disclosures in the financial statements. The procedures selected depend on theauditor's 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 considers internal 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.

7. 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

8. 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 onthat date.

Emphasis of Matter

9. We draw attention to

a. Note 36 to the financial statements. The accompanying financial statements have beenprepared on a going concern basis despite negative net worth overdue in repayment of loaninstallments interest to banks working capital facilities from banks overdue inredemption of Foreign Currency Convertible Bonds (FCCBs). The appropriateness of the saidbasis is inter-alia dependent on Company's ability to generate profit in future years andmeet its financial obligations and also dependent on induction of financial investors inthe company and/or joint venture with foreign companies.

b. Wherever interest on borrowings has not been applied by banks interest on thoseborrowings has been provided as per best estimates of the management. (Refer Note 25.1)

c. During the year a bank has assigned and transferred the loan together with allunderlying securities thereto and rights etc. to a Securitisation and AssetReconstruction Company (Refer Note 9.3)

Our opinion is not modified in respect of these matters.

Report on Other Legal and Regulatory Requirements

10. As required by ‘the Companies (Auditor's Report) Order 2016' issued by theCentral Government of India in terms of subsection (11) of section 143 of the Act(hereinafter referred to as the "Order") and on the basis of such checks of thebooks and records of the Company as we considered appropriate and according to theinformation and explanations given to us we give in the Annexure B a statement on thematters specified in paragraphs 3 and 4 of the Order.

11. 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 written representation received from the directors as on 31stMarch 2016 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2016 from being appointed as a director in termsof Section 164 (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.

(g) The going concern matter described in sub-paragraph 9 (a) under the Emphasis ofMatter paragraph above in our opinion may have an adverse effect on the functioning ofthe Company.

(h) With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our knowledge and belief and according to the information andexplanations given to us:

i. The Company has disclosed the impact of pending litigations as at 31stMarch 2016 on its financial position in its financial statements - Refer Note No. 34.1& 34.3

ii. The Company did not have any long-term contracts including derivative contracts asat 31st March 2016

iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company during the year ended on 31stMarch 2016

For JAGDISH CHAND & CO.

Firm Registration Number: 000129N

Chartered Accountants

(J.C. Gupta)

Partner

Membership Number: 06107

Place of signature : New Delhi

Date : 27th May 2016

ANNEXURE A TO INDEPENDENT AUDITORS’ REPORT

Referred to in paragraph 11 (f) of the Independent Auditors’ Report of even dateto the members of Paramount Communications Limited on the standalone financial statementsfor the year ended 31st March 2016

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Act

1. We have audited the internal financial controls over financial reporting ofParamount Communications Limited ("the Company") as of 31st March2016 in conjunction with our audit of the standalone financial statements of the Companyfor the year ended on that date.

Management’s Responsibility for Internal Financial Controls

2. The Company's management is responsible for establishing and maintaininginternal financial controls based on the internal control over financial reportingcriteria established by the Company considering the essential components of internalcontrol stated in the Guidance Note on Audit of Internal Financial Controls over FinancialReporting issued 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 company's policies the safeguarding ofits 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 Act.

Auditors’ Responsibility

3. 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") and the Standards on Auditing deemed to be prescribedunder section 143(10) of the Act to the extent applicable to an audit of internalfinancial controls both applicable to an audit of internal financial controls and bothissued by the ICAI. Those Standards and the Guidance Note require that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance aboutwhether adequate internal financial controls over financial reporting was established andmaintained and if such controls operated effectively in all material respects.

4 Our audit involves performing procedures to obtain audit evidence about the adequacyof the 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.

5. 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

6. A company's 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 company's 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 thecompany's assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls Over Financial Reporting

7. 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

8. 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 31st March 2016based on the internal control over financial reporting criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Note onAudit of Internal Financial Controls Over Financial Reporting issued by the Institute ofChartered Accountants of India.

For JAGDISH CHAND & CO.

Firm Registration Number: 000129N

Chartered Accountants

(J.C. Gupta)

Partner

Membership Number: 06107

Place of signature : New Delhi

Date : 27th May 2016

Annexure B to Independent Auditors’ Report

Referred to in paragraph 10 of the Independent Auditors’ Report of even date tothe members of Paramount Communications Limited on the Standalone financial statements asof and for the year ended 31st March 2016

i. (a) The Company is maintaining proper records showing full particulars includingquantitative details and situation of fixed assets.

(b) The fixed assets of the Company have been physically verified by the Managementduring the year. The discrepancies noticed on such verification were not material and havebeen properly dealt with in the books of account. In our opinion the frequency ofverification is reasonable.

(c) The title deeds of immovable properties as disclosed in Note 11 on fixed assets tothe financial statements are held in the name of the Company except for details as givenbelow:

• In case of Land :-

Total number of cases: 01
Whether lease hold/ free hold: Free Hold
Gross Block & Net Block (as at 31.03.2016): ' 7886689/-

ii. The physical verification of inventory (excluding stocks with third parties) havebeen conducted at reasonable intervals by the Management during the year. In respect ofinventory lying with third parties these have substantially been confirmed by them. Thediscrepancies noticed on physical verification of inventory as compared to book recordswere not material.

iii. The Company has not granted any loans secured or unsecured to companies firmslimited liability partnerships or other parties covered in the register maintained underSection 189 of the Act. There is one party covered in the register maintained underSection 189 of the Act to which Company has given security deposits as per contractualobligations. (Refer Note 13.1)

(a) In respect of the aforesaid deposit the terms and conditions under which suchdeposit was granted are not prejudicial to the Company's interest.

(b) Since it is a security deposit no schedule for repayment of deposit is applicableand no interest was charged.

(c) In respect of the aforesaid deposit there is no amount which is overdue for morethan ninety days.

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 Companies Act 2013in respect of the loans and investments made and guarantees and security provided by it.

v. The Company has not accepted any deposits from the public within the meaning ofSections 73 74 75 and 76 of the Act and the rules framed there under to the extentnotified.

vi. Pursuant to the rules made by the Central Government of India the Company isrequired to maintain cost records as specified under Section 148(1) of the Act in respectof its products.We have broadly reviewed the same and are of the opinion that primafacie the prescribed accounts and records have been made and maintained. We have nothowever made a detailed examination of the records with a view to determine whether theyare accurate or complete.

vii. (a) According to the records of the Company and information and explanations givento us and the records of the Company examined by us the Company has been generallyregular in depositing the undisputed statutory dues including provident fund employeesstate insurance income tax Investor education and protection fund sales tax servicetax customs duty excise duty cess and other material statutory dues applicable to itwith the appropriate authorities.

(b) According to the information and explanations given to us and the records of theCompany examined by us the particulars of dues of Income Tax Service Tax Customs Dutyand Excise Duty as at 31st March 2016 which have not been deposited on accountof a dispute are as follows:

Name of the Statute Nature of the Due Amount Period to which the amount relates Forum where dispute is pending
Central Excise Act Excise Duty 203757113/- Various years for 2002-03 to 2014-15 CESTAT
9835976/- Various years for 2007-08 to 2014-15 Commissioner (Appeals)

 

Name of the Statute Nature of the Due Amount Period to which the amount relates Forum where dispute is pending
Finance Act Service Tax 31399088/- Various years for 2005-06 to 2009-10 CESTAT
178378/- 2005-06 Commissioner (Appeals)
Customs Act Customs Duty 5247875/- 2005-06 2006-07 2010-11 & 2011-12 CESTAT
Income Tax Act1961 Income tax 44298650/- 2007-08 & 2008-09 Commissioner (Appeals)

viii. Based on our audit procedures and as per the information and explanations givenby the management the Company has defaulted in repayment of loans/ borrowings to banksand Foreign Currency Convertible Bond Holders (FCCBs) as per details given below. (Alsorefer Note 4.2 7.2 9.1 & 9.3).

Name of the Leader Nature of dues Period of default Amount of default '
State Bank of India Rupee Term Loans Since June 2013 202239737/-
Foreign Currency Term Loan Since September 2014 190146042/-
Rupee Working Capital Loans Since November 2014 539432964/-
IDBI Bank Limited Rupee Term Loans From November 2014 to March 2016 155650327/-
Rupee Working Capital Loans From November 2014 to March 2016 312612302/-
Standard Chartered Bank Rupee Term Loans Since June 2013 85325945/-
Principal amount of Foreign Currency Convertible Bonds (FCCBs) FCCBs Since December 2011 499575000/-
Premium on redemption of FCCB’s FCCBs Since December 2011 227548097/-

The above information is in respect of defaults in repayment of principal amounts only.

ix. The Company has not raised any moneys by way of initial public offer furtherpublic offer (including debt instruments) and term loans. Accordingly the provisions ofClause 3(ix) of the Order are not applicable to the Company.

x. During the course of our examination of the books and records of the Companycarried out in accordance with the generally accepted auditing practices in India andaccording to the information and explanations given to us we have neither come across anyinstance of material fraud by the Company or on the Company by its officers or employeesnoticed or reported during the year nor have we been informed of any such case by theManagement.

xi. The Company has paid/ provided for managerial remuneration in accordance with therequisite approvals mandated by the provisions of Section 197 read with Schedule V to theAct.

xii. As the Company is not a Nidhi Company and the Nidhi Rules 2014 are not applicableto it the provisions of Clause 3(xii) of the Order are not applicable to the Company.

xiii. The Company has entered into transactions with related parties in compliance withthe provisions of Sections 177 and 188 of the Act. The details of such related partytransactions have been disclosed in the financial statements as required under AccountingStandard (AS) 18 Related Party Disclosures specified under Section 133 of the Act readwith Rule 7 of the Companies (Accounts) Rules 2014.

xiv. The Company has not made any preferential allotment or private placement of sharesor fully or partly convertible debentures during the year under review. Accordingly theprovisions of Clause 3(xiv) of the Order are not applicable to the Company.

xv. The Company has not entered into any non cash transactions with its directors orpersons connected with him. Accordingly the provisions of Clause 3(xv) of the Order arenot applicable to the Company.

xvi. The Company is not required to be registered under Section 45-IA of the ReserveBank of India Act 1934. Accordingly the provisions of Clause 3(xvi) of the Order are notapplicable to the Company.

For JAGDISH CHAND & CO.

Firm Registration Number: 000129N

Chartered Accountants

(J.C. Gupta)

Partner

Membership Number: 06107

Place of signature : New Delhi

Date : 27th May 2016