The Members of ADC India Communications Limited Opinion
We have audited the accompanying financial statements of ADC India CommunicationsLimited ("the Company") which comprise the Balance Sheet as at March 31 2020and the Statement of Profit and Loss (including Other Comprehensive Income) the Statementof Cash Flows and the Statement of Changes in Equity for the year then ended and asummary of significant accounting policies and other explanatory information. In ouropinion and to the best of our information and according to the explanations given to usthe aforesaid financial statements give the information required by the Companies Act2013 ("the Act") in the manner so required and give a true and fair viewin conformity with the Indian Accounting Standards prescribed under section 133 of the Actread with the Companies (Indian Accounting Standards) Rules 2015 as amended ("IndAS") and other accounting principles generally accepted in India of the state ofaffairs of the Company as at March 31 2020 and its profit total comprehensive incomeits cash flows and the changes in equity for the year ended on that date.
Basis for Opinion
We conducted our audit of the financial statements in accordance with the Standards onAuditing specified under section 143(10) of the Act (SAs). Our responsibilities underthose Standards are further described in the Auditor's Responsibility for the Audit of theFinancial Statements section of our report. We are independent of the Company inaccordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia (ICAI) together with the ethical requirements that are relevant to our audit of thefinancial statements under the provisions of the Act and the Rules made thereunder and wehave fulfilled our other ethical responsibilities in accordance with these requirementsand the ICAI's Code of Ethics. We believe that the audit evidence obtained by us issufficient and appropriate to provide a basis for our audit opinion on the financialstatements.
Key Audit Matters
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the financial statements of the current period. These matterswere addressed in the context of our audit of the financial statements as a whole and informing our opinion thereon and we do not provide a separate opinion on these matters. Wehave determined the matters described below to be the key audit matters to be communicatedin our report.
|Sr. No. Key Audit Matter ||Auditor's Response |
|1. Uncertain tax positions in respect of direct and indirect taxes ||Principal audit procedures performed: |
|The Company is subject to periodic tax assessments by local tax authorities on a range of matters relating to direct taxes including transfer pricing and indirect taxes. ||We evaluated the design and implementation of controls in respect of identifying uncertain tax positions for the purposes of our audit. |
| ||Involving ourS tax specialists: |
|Where the amount of tax payable is uncertain the Company establishes provisions based on management's judgement of the likelihood of settlement being required. The Company has engaged independent external tax experts in evaluating the above. || we gained an understanding of the current status of tax assessments and monitored developments in ongoing disputes. |
| || we evaluated the competencies of the external tax experts engaged by the Company. |
|The matter involves significant judgements made by management in assessing the likelihood of potentially material exposures and the estimates used to determine such provisions where required. In particular it involves judgment in assessing the impact of changes in local tax regulations and ongoing hearings by local tax authorities which could materially impact the amounts recorded in the Company's financial statements. Refer note 2(l) and 33 to the financial statements. || we read recent rulings and correspondence with local tax authorities as well as external advice provided by the external tax experts involved by the Company to determine whether the tax provisions had been appropriately recorded or adjusted to reflect the latest developments. |
| || we evaluated management's key assumptions in particular on cases where there had been significant developments with tax authorities. |
| ||We assessed the appropriateness of the related disclosures in notes of the financial statements. |
|2. Provision for expected credit losses ||Principal audit procedures performed: |
|The expected credit loss (ECL) in respect of trade receivable represents management's best estimate of the loss allowance. The calculation of ECL allowance is a complex area and requires management to make significant assumptions on customer payment behaviour and other relevant risk characteristics when assessing the historical information and estimating the level and timing of expected future cash flows. Refer note 2(g) and 31 to the financial statements. || evaluation of the design and implementation of internal controls over review of valuation of trade receivables including estimation of expected credit loss. testing the operating effectiveness of the said internal controls for selected samples. |
| || scrutinising receivable accounts to confirm management's assessment about recoverability of the receivables having regards to credit worthiness of the counterparties and the intent of the counterparties to make payment based on passage of time and/or information available with management. |
| || circularization of confirmations in respect of receivable balances verification of subsequent receipts post balance sheet date. |
| || evaluation of estimates for provision of Expected Credit Loss in terms of Ind AS 109 on Financial Instruments. |
Information Other than the Financial Statements and Auditor's Report Thereon
The Company's Board of Directors is responsible for the other information. Theother information comprises the information included in the
Annual report but does not include the financial statements and our auditor's reportthereon.
Our opinion on the financial statements does not cover the other information andwe do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements our responsibility is to readthe other information and in doing so consider whether the other information ismaterially inconsistent with the financial statements or our knowledge obtained during thecourse of our audit or otherwise appears to be materially misstated.
If based on the work we have performed we conclude that there is a materialmisstatement of this other information we are required to report that fact. We havenothing to report in this regard.
Management's Responsibility for the Financial Statements
The Company's Board of Directors is responsible for the matters stated in section134(5) of the Act with respect to the preparation of these financial statements that givea true and fair view of the financial position financial performance including othercomprehensive income cash flows and changes in equity of the Company in accordance withthe Ind AS and other accounting principles generally accepted in India. Thisresponsibility also includes 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 financialstatement that give a true and fair view and are free from material misstatement whetherdue to fraud or error.
In preparing the financial statements management is responsible for assessing theCompany's ability to continue as a going concern disclosing as applicable mattersrelated to going concern and using the going concern basis of accounting unless managementeither intends to liquidate the Company or to cease operations or has no realisticalternative but to do so. Those Board of Directors are also responsible for overseeing theCompany's financial reporting process.
Auditor's Responsibility for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financialstatements as a whole are free from material misstatement whether due to fraud or errorand to issue an auditor's report that includes our opinion. Reasonable assurance is a highlevel of assurance but is not a guarantee that an audit conducted in accordance with SAswill always detect a material misstatement when it exists. Misstatements can arise fromfraud or error and are considered material if individually or in the aggregate theycould reasonably be expected to influence the economic decisions of users taken on thebasis of these financial statements. As part of an audit in accordance with SAs weexercise professional judgment and maintain professional skepticism throughout the audit.We also:
Identify and assess the risks of material misstatement of the financialstatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentional omissions misrepresentations or the override of internal control.
Obtain an understanding of internal financial control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under section 143(3)(i)of the Act we are also responsible for expressing our opinion on whether the Company hasadequate internal financial controls system in place and the operating effectiveness ofsuch controls.
Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by the management.
Conclude on the appropriateness of management's use of the going concern basisof accounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe financial statements or if such disclosures are inadequate to modify our opinion.Our conclusions are based on the audit evidence obtained up to the date of our auditor'sreport. However future events or conditions may cause the Company to cease to continue asa going concern.
Evaluate the overall presentation structure and content of the financialstatements including the disclosures and whether the financial statements represent theunderlying transactions and events in a manner that achieves fair presentation.
Materiality is the magnitude of misstatements in the financial statements thatindividually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the financial statements may be influenced. We considerquantitative materiality and qualitative factors in (i) planning the scope of our auditwork and in evaluating the results of our work; and (ii) to evaluate the effect of anyidentified misstatements in the financial statements.
We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit. We alsoprovide those charged with governance with a statement that we have complied with relevantethical requirements regarding independence and to communicate with them allrelationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.
From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the financial statements of thecurrent period and are therefore the key audit matters. We describe these matters in ourauditor's report unless law or regulation precludes public disclosure about the matter orwhen in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
1. As required by Section 143(3) of the Act based on our audit we report that: (a) Wehave sought and obtained all the information and explanations which to the best of ourknowledge and belief were necessary for the purposes of our audit. b) In our opinionproper books of account as required by law have been kept by the Company. c) The BalanceSheet the Statement of Profit and Loss including Other Comprehensive Income theStatement of Cash Flows and Statement of Changes in Equity dealt with by this Report arein agreement with the books of account. d) In our opinion the aforesaid financialstatements comply with the Ind AS specified under Section 133 of the Act. e) On the basisof the written representations received from the directors as on March 31 2020 taken onrecord by the Board of
Directors none of the directors disqualified as on March 31 2020 from beingappointed as a director in terms of Section 164(2) of the Act. f) With respect to theadequacy of the internal financial controls over financial reporting of the Company andthe operating effectiveness of such controls refer to our separate Report in"Annexure A". Our report expresses an unmodified opinion on the adequacy andoperating effectiveness of the Company's internal financial controls over financialreporting.
g) With respect to the other matters to be included in the Auditor's Report inaccordance with the requirements of section 197(16) of the Act as amended in our opinionand to the best of our information and according to the explanations given to us theremuneration paid by the Company to its directors during the year is in accordance withthe provisions of section 197 of the Act:
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 as amended inour opinion and to the best of our information and according to the explanations given tous:
i. The Company has disclosed the impact of pending litigations on its financialposition in its financial statements; " refer Note 33 to the financialstatements."
ii. The Company has made provision as required under the applicable law or accountingstandards for material foreseeable losses if any on long-term contracts includingderivative contracts;
iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.
2. As required by the Companies (Auditor's Report) Order 2016 ("the Order")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 theOrder.
(Referred to in paragraph 1(f) under Report on Other Legal and RegulatoryRequirements' of our report of even date) Report on the Internal Financial Controls OverFinancial Reporting under Clause (i) of Subsection 3 of Section 143 of the Companies Act2013 ("the Act")
We have audited the internal financial controls over financial reporting of ADCIndia Communications Limited ("the Company") as of March 31 2020 inconjunction with our audit of the financial statements of the Company for the year endedon that date.
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 Reportingissued by the Institute of Chartered Accountants of India. These responsibilities includethe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to company's policies the safeguarding of its assets the preventionand detection of frauds and errors the accuracy and completeness of the accountingrecords and the timely preparation of reliable financial information as required underthe Companies Act 2013
Our responsibility is to express an opinion on the
Company's internal financial controls over financial reporting of the Company based onour audit. We conducted our audit in accordance with the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting (the "Guidance Note")issued by the Institute of Chartered Accountants of India and the Standards on Auditingprescribed 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 auditor's 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.
In our opinion to the best of our information and according to the explanations givento us the Company has in all material respects an adequate internal financial controlssystem over financial reporting and such internal financial controls over financialreporting were operating effectively as at March 31 2020 based on the criteria forinternal financial control over financial reporting established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.
|For Deloitte Haskins & Sells |
|Chartered Accountants |
|Firm's Registration No. 008072S |
|Sathya P. Koushik |
|Membership No. 206920 |
|UDIN: 20206920AAAADZ5170 |
|Place: Bangalore |
|Date: May 20 2020 |
ANNEXURE "B" TO THE INDEPENDENT AUDITORS' REPORT
(Referred to in paragraph 2 under Report on Other Legal and RegulatoryRequirements' section of our report of even date)
(i) In respect of its fixed assets:
(a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets. (b) The fixed assets were physicallyverified during the year by the Management in accordance with a regular programme ofverification which in our opinion provides for physical verification of all the fixedassets at reasonable intervals.
According to the information and explanation given to us no material discrepancieswere noticed on such verification.
(c) According to the information and explanations given to us and the records examinedby us and based on the examination of the registered sale deed and BBMP Khata certificateprovided to us we report that the title deeds comprising all the immovable propertiesof land and buildings which are freehold are held in the name of the Company as at thebalance sheet date.
(ii) As explained to us the inventories were physically verified during the year bythe Management at reasonable intervals and no material discrepancies were noticed onphysical verification.
(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 Companies Act 2013.
(iv) The Company has not granted any loans made investments or provided guarantees andhence reporting under clause (iv) of the Order is not applicable.
(v) According to the information and explanations given to us the Company has notaccepted any deposit during the year.
(vi) Having regard to the nature of the Company's business / activities reportingunder clause (vi) of the Order is not applicable.
(vii) According to the information and explanations given to us in respect ofstatutory dues:
(a) The Company has generally been regular in depositing undisputed statutory duesincluding Provident Fund Employees' State
Insurance Income-tax Goods and Service Tax Customs Duty cess and other materialstatutory dues applicable to it to the appropriate authorities. (b) There were noundisputed amounts payable in respect of Provident Fund Employees' State InsuranceIncome-tax Goods and Service Tax Customs Duty cess and other material statutory dues inarrears as at March 31 2020 for a period of more than six months from the date theybecame payable.
(c) Details of dues of Income-tax Goods and Service Tax Sales Tax Service TaxCustoms Duty Excise Duty and Value Added Tax which have not been deposited as on March31 2020 on account of disputes are given below:
|Name of Statute ||Nature of Dues ||Forum where Dispute is Pending ||Period to which the Amount Relates ||Amount involved (Rs.Lakhs) |
|Income Tax ||Income ||Income Tax ||AY 2010-11 ||40.85 |
|Act 1961 ||Tax ||Appellate Tribunal ||AY 2011-12 ||118.89 |
| || ||Assistant ||AY 2008-09 ||18.37 |
| || ||Commissioner of ||AY 2015-16 ||11.49 |
| || ||Income Tax ||AY 2019-20 ||36.30 |
|Central Sales Tax Act' 1956 ||Sales Tax (including) interest till date of assessment) ||Joint Commissioner of Commercial Taxes ||FY 2012-13 ||125.27 |
|Finance Act 1994 ||Sales Tax (including interest till date of assessment) ||Commissioner (Appeals) ||October 2013 to March 2017 ||193.26 |
(viii) The Company has not taken any loans or borrowings from financial institutionsbanks and government or has not issued any debentures. Hence reporting under clause (viii)of the Order is not applicable to the Company. (ix) The Company has not raised moneys byway of initial public offer or further public offer
(including debt instruments) or term loans and hence reporting under clause (ix) of theOrder is not applicable.
(x) To the best of our knowledge and according to the information and explanationsgiven to us no fraud by the Company and no material fraud on the Company by its officersor employees has been noticed or reported during the year.
(xi) In our opinion and according to the information and explanations given to us theCompany has paid / provided managerial remuneration in accordance with the requisiteapprovals mandated by the provisions of section 197 read with Schedule V to the CompaniesAct 2013.
(xii) The Company is not a Nidhi Company and hence reporting under clause (xii) of theOrder is not applicable.
(xiii) In our opinion and according to the information and explanations given to us theCompany is in compliance with Section 177 and 188 of the Companies Act 2013 whereapplicable for all transactions with the related parties and the details of related partytransactions have been disclosed in the financial statements etc. as required by theapplicable accounting standards.
(xiv) During the year the Company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures and hence reporting underclause (xiv) of the Order is not applicable to the Company. (xv) In our opinion andaccording to the information and explanations given to us during the year the Company hasnot entered into any non-cash transactions with its directors or directors of its holdingcompany or persons connected with them and hence provisions of section 192 of theCompanies Act 2013 are not applicable.
(xvi) The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934.
|For Deloitte Haskins & Sells |
|Chartered Accountants |
|Firm's Registration No. 008072S |
|Sathya P. Koushik |
|Membership No. 206920 |
|UDIN: 20206920AAAADZ5170 |
|Place: Bangalore |
|Date: May 20 2020 |