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 2017 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.
Management's Responsibility for the 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 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 auditor's 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 Company's preparation ofthe financial statements that give a true and fair view in order to design auditprocedures that are appropriate in the circumstances but not for the purpose ofexpressing an opinion on whether the Company has in place an adequate internal financialcontrols system over financial reporting and the operating effectiveness of such controls.An audit also includes evaluating the appropriateness of the accounting policies used andthe reasonableness of the accounting estimates made by the Company's Directors as well asevaluating the overall presentation of the financial 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 700672166/- is outstanding as recoverable from debtors andcontinuing 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 136889361/- is outstanding which comprises of advances towardspurchase/production of films. The management has explained that such advances have beengiven in the normal course of business and are fully recoverable. However in our opinionamount is doubtful of recovery as these are outstanding/remained unadjusted for longperiod of time. Further balance confirmations from these parties have also not beenprovided to us.
3. Reference is invited to Note 30 to the financial statements regarding deposit ofRupees. 694027883/- to Sahara-SEBI Refund account in the matter of dispute in respectof repayment of Optionally Fully Convertible Debentures (OFCDs) by two group companiesnamely M/s Sahara India Real Corporation Limited & Sahara Housing InvestmentCorporation Limited the Hon'ble Supreme Court of India vide its order dated 21-11-2013had directed that Sahara Group of Companies shall not part with movable and immovableproperties and accordingly Security and Exchange Board of India (SEBI) has seized thecompany's Fixed Deposit and Non Current Investment. Subsequent to this Hon'ble SupremeCourt vide it's order dated 4th June 2014 has directed to defreeze the Fixed Depositaccount of the company subject to condition that total proceeds would be transferred tospecial account opened by the SEBI. However we are unable to ascertain whether thisamount is fully recoverable or not and its further impact if any that may arise in caseif this amount is subsequently determined to be doubtful of recovery.
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 of theBasis 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 2017 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 and statutory dues and revenue from operationhas reached to negligible level. These events cast significant doubt on the ability of theCompany to continue as a going concern. The appropriateness of the said basis is interalia dependent on the Company's ability to make new customers infuse requisite funds formeeting its obligations and resuming normal operations. Our opinion is not qualified inrespect 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.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government of India in terms of sub-section (11) of section 143 ofthe Act we give in the 'Annexure-A' a statement on the matters specified in the paragraph3 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 ouraudit.
b. In our o pinion 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 ouropinion 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 2017 taken on record by the Board of Directors none of the directors isdisqualified as on 31 March 2017 from being appointed as a director in terms of Section164(2) of the Act.
f. With respect to the adequacy of internal financial controls overfinancial reportingof the company and the operating effectiveness of such controls referto ourseparatereport in 'Annexure-B'; and
g. 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 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 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.
iv. The company has provided requisite disclosure in its financial statement as toholding as well as dealing in Specified Bank Notes during the period from 08 November2016 to 30 December 2016 and these are in accordance with the books of accountsmaintained by the company. Referto note 33 to the financial statement.
For D. S. Shukla & Co.
(Firm's Registration No. 000773C)
Mumbai 23 May 2017
Membership No. 078297
Mumbai 23 May 2017
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 2017 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 theyearand no material discrepancies were noticed on such verification.
(iii) According to the information and explanations given to us the Company hasgranted short term unsecured loan to one company covered in the register maintained undersection 189 of the Companies Act 2013.
a) Terms and conditions of the grant of such loans are not prejudicial to the interestof the company.
b) Schedule of repayment of principal and payment of interest has been stipulated.
c) There is no overdue amount.
(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 theloans investments guarantees and securities wherever applicable.
(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 wherever applicable have generally been regularly deposited with theappropriate authorities except the cases given below though there has been delay in afew cases. The provisions relating to excise duty are not applicable to the Company.
According to information given to us the following undisputed statutory dues payable inrespect of income tax which were in arrear as at 31 st March 2017 for a period of morethan six months from the date they became payable:
|Name of the Statue ||Nature of Dues ||Amount (Rs.) |
|Income tax Department ||Tax deducted at source ||901528 |
(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 (Rs.) ||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 ||339503515 ||FY 2002-2003 2004-05 to 2009-20102011-12 and 2013-14 ||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 |
|I ncome 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 bythe 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)ofthe 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)ofthe 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.
Chartered Accountants (Firm Registration No. 000773C)
(A. K. Dwivedi)
Membership No. 078297 Mumbai 23 May 2017
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 March 2017 inconjunction of our audit of the financial statement of the company for the year ended onthat date.
Management's Responsibility for Internal Financial Controls
The company's management is responsible for establishing and maintaining internalfinancial control based on the internal control over financial reporting criteriaestablished bythe 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'). Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for insuring the orderly and efficientconduct of business including adherence to the Company's policies the safeguards of itsassets the prevention and detection of fraud and errors the accuracy and completeness ofaccounting records and the timely preparation of reliable financial information asrequired under the Act.
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 Standard on Auditing issued by ICAI and deemed to beprescribed 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 overfinancial 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 Company's financial controls systemoverfinancial reporting.
Meaning of Internal Financial Controls over Financial Reporting
Acompany's internal financial control overfinancial reporting is a process designed toprovide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statement for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting 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 company's assets that could have amaterial 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 occurand not be detected. Alsoprojections of any evaluation of the internal financial controls over internal 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 that ofdegree 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 31 st March 2017 based on theinternal control over financial reporting criteria established by the company consideringthe essential components of the internal control stated in the Guidance Note on Audit ofInternal Financial Controls over Financial Reporting issued by the ICAI.
For D. S. Shukla & Co.
Chartered Accountants (Firm Registration No. 000773C)
(A. K. Dwivedi)
Membership No. 078297 Mumbai 23 May 2017