TO THE MEMBERS OF SAHARA ONE MEDIA AND ENTERTAINMENT LIMITED
We have audited the accompanying financial statements of SAHARA ONE MEDIA ANDENTERTAINMENT LIMITED ("the Company") which comprise the Balance Sheet as at 31March 2016 the Statement of Profit and Loss the Cash Flow Statement for the year thenended and a summary of the significant accounting policies and other explanatoryinformation.
Managements 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 preparation ofthese financial statements that give a true and fair view of the financial positionfinancial performance and cash flows of the Company in accordance with the accountingprinciples generally accepted in India including the Accounting Standards specified underSection 133 of the Act read with Rule 7 of the Companies (Accounts) Rules 2014. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; anddesign implementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the financial statements thatgive a true and fair view and are free from material misstatement whether due to fraud orerror.
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 thereunder. We conducted our audit in accordancewith the Standards on Auditing specified under Section 143(10) of the Act. Those Standardsrequire that we comply with ethical 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 theamounts and the disclosures in the financial statements. The procedures selected depend onthe auditors judgment including the assessment of the risks of materialmisstatement of the financial statements whether due to fraud or error. In making thoserisk assessments the auditor considers internal financial control relevant to theCompanys preparation of the financial statements that give a true and fair view inorder to design audit procedures that are appropriate in the circumstances but not forthe purpose of expressing an opinion on whether the Company has in place an adequateinternal financial controls system over financial reporting and the operatingeffectiveness of such controls. An audit also includes evaluating the appropriateness ofthe accounting policies used and the reasonableness of the accounting estimates made bythe Companys Directors as well as evaluating the overall presentation of thefinancial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our qualified audit opinion on the financial statements.
Basis for Qualified Opinion
1. An Amount of Rupees 704272243/- is outstanding as recoverable from debtorsand continuing beyond stipulated period of recovery. The management based on internalassessments and evaluations have represented that these debtors amount are fullyrecoverable and no provision is necessary as at balance sheet date. However in absence ofany convincing evidence we are of the opinion that this amount should be considered asdoubtful and requires appropriate provisioning.
2. Amount of Rupees 578882469/- is outstanding which comprises of advancestowards purchase/ production of films. The management has explained that such advanceshave been given in the normal course of business and are fully recoverable. However inour opinion amount is doubtful of recovery as these are outstanding/remained unadjustedfor long period of time. Further balance confirmations from these parties have also notbeen provided to us.
3. Reference is invited to Note 30 to the financial statements regarding depositof Rupees. 694027883/- to Sahara-SEBI Refund account in the matter of dispute inrespect of repayment of Optionally Fully Convertible Debentures (OFCDs) by two groupcompanies namely M/s Sahara India Real Corporation Limited & Sahara HousingInvestment Corporation Limited the Honble Supreme Court of India vide its orderdated 21-11-2013 had directed that Sahara Group of Companies shall not part with movableand immovable properties and accordingly Security and Exchange Board of India (SEBI) hasseized the companys Fixed Deposit and Non Current Investment. Subsequent to thisHonble Supreme Court vide its order dated 4th June 2014 has directed todefreeze the Fixed Deposit account of the company subject to condition that total proceedswould be transferred to special account opened by the SEBI. However we are unable toascertain whether this amount is fully recoverable or not and its further impact if anythat may arise in case if this amount is subsequently determined to be doubtful ofrecovery.
In our opinion and to the best of our information and according to the explanationsgiven to us except for the effects of the matters described in paragraphs 1 to 3 ofthe Basis for Qualified Opinion paragraph 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 31 March 2016 and its profit and its cash flows for theyear ended on that date.
Emphasis of Matter
1. The company has prepared financial statements on a going concern basisnotwithstanding the fact that the major customer of the company has terminated the programpurchase agreement which was main source of income of the Company the company does nothave sufficient fund to pay its creditors salary to employees and statutory dues revenuefrom operation has reduced by 81% as compared to previous year. These events castsignificant doubt on the ability of the Company to continue as a going concern. Theappropriateness of the said basis is inter alia dependent on the Companys ability tomake new customers infuse requisite funds for meeting its obligations and resuming normaloperations. Our opinion is not qualified in respect of this matter.
2. The Gratuity Trust in which company was making gratuity contribution was dissolvedand Trust has refunded the amount pertains to the company but company has neither createdany recognized gratuity fund Trust nor made any other arrangement to deposit this amountto any other recognized Gratuity Fund Trust. Our opinion is not qualified in respect ofthis matter.
3. During the year the company has assigned several Movies rights against very lowconsideration compared to their purchase cost. However in absence of any comparableprices and valuation report we are unable to comment whether the transaction was made atprevailing market prices or not. Our opinion is not qualified in respect of this matter.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditors Report) Order 2016 ("theOrder") issued by the Central Government of India in terms of sub-section (11) ofsection 143 of the Act we give in the Annexure- A a statement on the mattersspecified in the paragraph 3 and 4 of the Order to the extent applicable.
2. As required by Section 143(3) of the Act subject to the effects of the mattersdescribed in paragraphs 1 to 3 of the Basis for Qualified Opinion paragraph we reportthat:
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 financial statements comply with the AccountingStandards specified under Section 133 of the Act read with Rule 7 of the Companies(Accounts) Rules 2014.
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 internal financial controls over financial reportingof the company and the operating effectiveness of such controls refer to our separatereport 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. The Company has disclosed the impact of pending litigations on its financialposition in its financial statements- Refer note 28 to the financial statement.
ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses.
iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.
For D. S. Shukla & Co.
(Firms Registration No. 000773C)
Delhi/NCR 24 May 2016
Membership No. 078297
ANNEXURE A TO AUDITORS REPORT
The Annexure referred to in our Independent Auditors Report to the members of theCompany on the financial statements for the year ended 31 March 2016 we report that:
(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
(b) Fixed assets have been physically verified by the management during the year and nomaterial discrepancies were identified on such verification.
(c) According to the information and explanations given to us and on the basis of ourexamination of records of the company the title deeds of immovable properties are held inthe name of the company
(ii) The management has conducted physical verification of inventory at reasonableintervals during the year and no material discrepancies were noticed on such verification.
(iii) According to the information and explanations given to us the Company has notgranted any loans secured or unsecured to companies firms limited liabilityPartnerships or other parties covered in the register maintained under section 189 of theCompanies Act 2013.
(iv) In our opinion and according to the information and explanations given to us thecompany has complied with the provisions of section 186 of the Act with respect to theinvestment made. However no comment required on compliance of section 185 as company hasnot granted any loan.
(v) The Company has not accepted any deposits from the public.
(vi) To the best of our knowledge and as explained the Central Government has notprescribed maintenance of cost records under sub-section (1) of section 148 of theCompanies Act 2013 for the products of the Company.
(vii) (a) Undisputed statutory dues including provident fund employees stateinsurance income tax sales tax wealth-tax service tax customs duty Cess and otherstatutory dues have generally been regularly deposited with the appropriate authoritiesexcept the cases given below though there has been delay in a few cases. The provisionsrelating to excise duty are not applicable to the Company. According to information givento us the following undisputed statutory dues payable in respect of income tax which werein arrear as at 31st March 2016 for a period of more than six months from thedate they became payable:
|Name of the Statue ||Nature of Dues ||Amount |
|Income tax Department ||Tax deducted at source ||1709928 |
(b) According to the records of the Company the dues outstanding of income-taxcustoms duty and cess on account of any dispute are as follows:
|Name of the Statue ||Nature of Dues ||Amount ||Period to which the amount relates ||Forum where dispute is pending |
|Income tax Act 1961 ||Income tax ||6598511 ||1999-2000 2010-2011 and 2012-13 ||Commissioner of Income-tax (Appeals) |
|Income tax Act 1961 ||Income tax ||339427410 ||2002-2003 2004-05 to 2009-2010 and 2011-12 ||Income Tax Appellate Tribunal |
|Income tax Act 1961 ||Tax deducted at source ||61254854 ||2006-2007 2008-09 to 2010-2011 ||High Court |
|Income-tax Act 1961 ||Tax Deducted at Source ||59432390 ||2011-12 ||Income tax Appellate Tribunal |
|Income tax Act 1961 ||Income tax ||13025366 ||2000-2001 ||High Court |
|Customs Act 1962 ||Customs Duty ||445000 ||2008-2009 ||Custom Appellate Authority |
(viii) The Company does not have any loan or borrowings from any financial institutionbanks government or debenture holders during the year. Accordingly paragraph 3(viii) ofthe Order is not applicable.
(ix) The company did not raise any money by way of initial public offer or furtherpublic offer (including debt instruments) and terms loans during the year. Accordinglyparagraph 3(ix) of the Order is not applicable.
(x) According to information and explanations given to us by the management no fraudby the Company or on the company by its officers or employees has been noticed or reportedduring the course of our audit.
(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 managerial remunerationin accordance with the requisite approvals mandated by the provisions of section 197 readwith schedule V of the Act.
(xii) In our opinion and According to information and explanations given to us theCompany is not a nidhi company. Accordingly paragraph 3(xii) of the Order is notapplicable.
(xiii) According to information and explanations given to us and based on ourexamination of the records of the Company transactions with related parties are incompliance with section 177 and 188 of the Act where applicable and details of suchtransactions have been disclosed in the financial statements as required by the applicableaccounting standards.
(xiv) According to information and explanations given 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.
(xv) According to information and explanations given to us and based on our examinationof the records of the Company the company has not entered into non-cash transactions withdirectors or persons connected with him. Accordingly paragraph 3(xv) of the Order is notapplicable.
(xvi) The company is not required to be registered under Section 45-IA of the ReserveBank of India Act 1934.
For D. S. Shukla & Co.
(Firms Registration No. 000773C)
Delhi/NCR 24 May 2016
Membership No. 078297
ANNEXURE B TO AUDITORS REPORT
Report on Internal Financial Control under clause (i) of sub-section 3 of section 143of the Companies Act 2013 (the Act)
We have audited the internal financial controls over financial reporting of Sahara OneMedia And Entertainment Limited ("the Company") as of 31st March2016 in conjunction of our audit of the financial statement of the company for the yearended on that date.
Managements Responsibility for Internal Financial Controls
The companys management is responsible for establishing and maintaining internalfinancial control based on the internal control over financial reporting criteriaestablished by the company considering the essential components of the internal controlstated in the Guidance Note on Audit of Internal Financial Controls over FinancialReporting 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 insuring the orderly andefficient conduct of business including adherence to the Companys policies thesafeguards of its assets the prevention and detection of fraud and errors the accuracyand completeness of accounting records and the timely preparation of reliable financialinformation as required under the Act.
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 Standard on Auditing issued by ICAI and deemed tobe prescribed under Section 143(10) of the Act to the extent applicable to an audit ofinternal financial controls both applicable to an audit of Internal Financial Controlsand both issued by the ICAI. Those Standards and Guidance Note require that we complywith ethical requirements and plan and perform the audit to obtain reasonable assuranceabout whether the internal financial controls over financial reporting were establishedand maintained 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 control 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 evaluating the design andoperating effectiveness of internal control based on assessed risk. The proceduresselected depend on the auditors judgement including the assessment of the risk 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 financial controls system overfinancial 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 statement for external purposes in accordance withgenerally accepted accounting principles. A companys internal financial control overfinancial reporting includes those policies and procedures that:
a) Pertains to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and depositions of the assets of the company;
b) Provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accountingprinciples and the receipts and expenditures of the company are being made only inaccordance with the authorization of the management and directors of the company; and
c) Provide reasonable assurance regarding prevention or timely detection ofunauthorized acquisition use or disposition of the companys assets that could havea 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 internalfinancial reporting to future periods are subject to the risk that the internal financialcontrol over financial reporting may become inadequate because of changes in conditions orthat of degree of compliance with the policies or procedures may deteriorate.
In our opinion the company has in all material respects an adequate internalfinancial control 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 the internal control stated in the Guidance Noteon Audit of Internal Financial Controls over Financial Reporting issued by the ICAI.
For D. S. Shukla & Co.
(Firms Registration No. 000773C)
Delhi/NCR 24 May 2016
Membership No. 078297