To the Members of
Report on the Audit of the Standalone Financial Statements
We have audited the standalone financial statements of Digicontent Limited ("theCompany") which comprise the standalone balance sheet as at 31 March 2020 and thestandalone statement of profit and loss (including other comprehensive income) standalonestatement of changes in equity and standalone statement of cash flows for the year thenended and notes to the standalone financial statements including a summary of thesignificant accounting policies and other explanatory information.
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 Companies Act 2013 ("Act") in the manner so required and in the contextof overriding effect of the provision in the scheme of arrangement as detailed in Emphasisof Matter paragraph below give a true and fair view in conformity with the accountingprinciples generally accepted in India of the state of affairs of the Company as at 31March 2020 and loss and other comprehensive income changes in equity and its cash flowsfor the year ended on that date.
Basis for Opinion
We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder section 143(10) of the Act. Our responsibilities under those SAs are furtherdescribed in the Auditor's Responsibilities for the Audit of the Standalone FinancialStatements section of our report. We are independent of the Company in accordance withthe Code of Ethics issued by the Institute of Chartered Accountants of India together withthe ethical requirements that are relevant to our audit of the standalone financialstatements under the provisions of the Act and the Rules thereunder and we have fulfilledour other ethical responsibilities in accordance with these requirements and the Code ofEthics. We believe that the audit evidence we have obtained is sufficient and appropriateto provide a basis for our opinion on the Standalone financial statements.
Emphasis of matter
We draw attention to Note 29 to the standalone financial statements in respect to aScheme of Arrangement (Demerger) between the Digicontent Limited and HT Media Limited(HTML) and their respective creditors and shareholders as sanctioned by the Hon'bleNational Company Law Tribunal. The Scheme inter-alia prescribed demerger ofEntertainment and Digital Innovation business of HT Media Limited (Demerged Company)including strategic investment and vesting thereof into Digicontent Limited w.e.f. closingbusiness hours of 31 March 2018 (the Appointed Date) as compared to acquisition date undercommon control business combination as per the applicable Indian Accounting Standards(Ind-AS) prescribed under Section 133 of the Companies Act 2013.
Our opinion is not modified in respect of this matter.
Key Audit Matter
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone financial statements of the current period.These matters were addressed in the context of our audit of the standalone financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters.
Description of Key Audit Matter Investment in subsidiary
See note 5 to the standalone financial statements
|The key audit matter ||How the matter was addressed in our audit |
|The Company has identified investment in its wholly owned subsidiary company ('HTDS') of H 17580 lacs as a separate cash generating unit ('CGU'). The Company has performed an impairment assessment on its investment in subsidiary as at 31 March 2020. ||How the matter was addressed in the audit |
|The annual impairment testing of the above investment is considered as a key audit matter as it involves significant judgements and estimates in assessing the recoverable value. The recoverable value is considered to be the higher of the Company's assessment of the value in use (VIU) and fair value less cost of disposal (FVLCD). The economic slowdown owing to the Covid-19 pandemic may impact the future cash flows of HTDS and the key assumptions taken while computing VIU. ||- The Company's assessment included use of computation of value in use (VIU) to check the impairment assessment. In this regard we obtained and assessed the recoverable amount as determined by the Company as under: |
| ||- Assessed the method of determining recoverable amount and key assumptions used therein through historical information budgets / projections market data and other relevant information. Challenged the key assumptions and judgements within the build up and methodologies used by the Company and its experts. |
| ||- Assessed the sensitivity of the outcome of impairment assessment to changes in key assumptions. |
| ||- Compared the implied multiple arising from the VIU to the market multiples |
| ||- Involved internal specialists to assist us in performing above mentioned procedures. |
The Company's management and Board of Directors are responsible for the otherinformation. The other information comprises the information included in the Company'sannual report but does not include the financial statements and our auditor's reportthereon.
Our opinion on the standalone financial statements does not cover the other informationand we do not express any form of assurance conclusion thereon.
In connection with our audit of the standalone financial statements our responsibilityis to read the other information and in doing so consider whether the other informationis materially inconsistent with the standalone financial statements or our knowledgeobtained in the audit or otherwise appears to be materially misstated. If based on thework we have performed we conclude that there is a material misstatement of this otherinformation we are required to report that fact. We have nothing to report in thisregard.
Management's and Board of Directors' Responsibility for the Standalone FinancialStatements
The Company's Management and Board of Directors are responsible for the matters statedin section 134(5) of the Act with respect to the preparation of these standalone financialstatements that give a true and fair view of the state of affairs profit/loss and othercomprehensive income changes in equity and cash flows of the Company in accordance withthe accounting principles generally accepted in India including the Indian AccountingStandards (Ind AS) specified under section 133 of the Act. This responsibility alsoincludes maintenance of adequate accounting records in accordance with the provisions ofthe Act for safeguarding of the assets of the Company and for preventing and detectingfrauds and other irregularities; selection and application of appropriate accountingpolicies; making judgments and estimates that are reasonable and prudent; and designimplementation and maintenance of adequate internal financial controls that were operatingeffectively for ensuring accuracy and completeness of the accounting records relevant tothe preparation and presentation of the standalone financial statements that give a trueand fair view and are free from material misstatement whether due to fraud or error.
In preparing the standalone financial statements the Management and Board of Directorsare responsible for assessing the Company's ability to continue as a going concerndisclosing as applicable matters related to going concern and using the going concernbasis of accounting unless the Board of Directors either intends to liquidate the Companyor to cease operations or has no realistic alternative but to do so.
The Board of Directors is also responsible for overseeing the Company's financialreporting process.
Auditor's Responsibilities for the Audit of the Standalone Financial Statements
Our objectives are to obtain reasonable assurance about whether the standalonefinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these standalone financial statements.
As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the standalonefinancial statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrol.
Obtain an understanding of internal 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 thecompany has adequate internal financial controls with reference to financial statements inplace and the operating effectiveness of such controls.
Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures in the standalone financial statementsmade by the Management and Board of Directors.
Conclude on the appropriateness of the Management and Board of Directors use ofthe going concern basis of accounting and based on the audit evidence obtained whether amaterial uncertainty exists related to events or conditions that may cast significantdoubt on the Company's ability to continue as a going concern. If we conclude that amaterial uncertainty exists we are required to draw attention in our auditor's report tothe related disclosures in the standalone financial statements or if such disclosures areinadequate to modify our opinion. Our conclusions are based on the audit evidenceobtained up to the date of our auditor's report. However future events or conditions maycause the Company to cease to continue as a going concern.
Evaluate the overall presentation structure and content of the standalonefinancial statements including the disclosures and whether the standalone financialstatements represent the underlying transactions and events in a manner that achieves fairpresentation.
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 also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships 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 standalone financial statementsof the current period and are therefore the key audit matters. We describe these mattersin our auditor's report unless law or regulation precludes public disclosure about thematter or when 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.
We draw your attention to the fact that corresponding figures for the year ended 31March 2019 included in the standalone annual financial statements have been extracted fromthe audited special purpose standalone financial statements which were audited bypredecessor auditor who expressed an unmodified opinion dated 16 April 2019. The saidfinancial statements were considered as special purpose standalone financial statements asthey were prepared for filing information memorandum for listing purpose and are not thestatutory standalone financial statements
Our opinion on the standalone financial statements and our report on Other Legal andRegulatory Requirements below is not modified in respect of the above matter.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor's Report) Order 2016 ("the Ordeh')issued by the Central Government in terms of section 143 (11) of the Act we give in the"Annexure A' a statement on the matters specified in paragraphs 3 and 4 of the Orderto the extent applicable.
2. (A) As required by Section 143(3) of the Act we report
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 standalone balance sheet the standalone statement of profit and loss (includingother comprehensive income) the standalone statement of changes in equity and thestandalone statement of cash flows dealt with by this Report are in agreement with thebooks of account.
d) In our opinion the aforesaid standalone financial statements comply with the Ind ASspecified under section 133 of the Act.
e) On the basis of the written representations received from the directors as on 31March 2020 taken on record by the Board of Directors none of the directors isdisqualified as on 31 March 2020 from being appointed as a director in terms of Section164(2) of the Act.
f) With respect to the adequacy of the internal financial controls with reference tofinancial statements of the Company and the operating effectiveness of such controlsrefer to our separate Report in "Annexure B".
(B) 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 does not have any pending litigations which would impact its financialposition.
ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses.
iii. There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company.
iv. The disclosures in the standalone financial statements regarding holdings as wellas dealings in specified bank notes during the period from 8 November 2016 to 30 December2016 have not been made in these financial statements since they do not pertain to thefinancial year ended 31 March 2020.
(C) With respect to the matter to be included in the Auditor's Report under section197(16):
In our opinion and according to the information and explanations given to us theremuneration paid during the current year by the Company to its directors is in accordancewith the provisions of Section 197 of the Act. The remuneration paid to any director bythe Company is not in excess of the limit laid down under Section 197 of the Act. TheMinistry of Corporate Affairs has not prescribed other details under Section 197(16) whichare required to be commented upon by us.
| ||For B S R and Associates Chartered Accountants Firm's Registration No.: 128901W |
| ||Rajesh Arora |
|Place: Gurugram ||Partner |
|Date: 06 May 2020 ||Membership No. : 076124 UDIN: 20076124AAAAAR4336 |
Referred to in our Independent Auditor's Report to the members of Digicontent Limitedon the standalone financial statements for the year ended 31 March 2020
(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
(b) The Company has a regular programme of physical verification of its fixed assets bywhich all fixed assets are verified in a phased manner over a period of three years. Inour opinion this periodicity of physical verification by management is reasonable havingregard to the size of the Company and the nature of its assets. In accordance with thisprogramme certain fixed assets were physically verified during the year. As informed tous no material discrepancies were noticed on such verification.
(c) According to the information and explanations given to us the Company does nothave any immovable properties. Accordingly paragraph 3(i)(c) of the Order is notapplicable.
(ii) The Company is in the business of providing advertisement services and does nothold inventories. Accordingly paragraph 3(ii) of the Order is not applicable to theCompany.
(iii) According to the information and explanations given to us the Company hasgranted loan to a company covered in the register maintained under Section 189 of theCompanies Act 2013 in respect of which:
a) The terms and conditions of the grant of such loan are not prejudicial to theCompany's interest;
b) The schedule of repayment of principal and payment of interest has been stipulated.There has been no repayment of principal and payment of interest in the financial yearended 31 March 2020; and
c) There is no amount overdue for more than 90 days in respect of the above mentionedloan.
(iv) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company there are no loans given or investments made bythe Company which are not in compliance with Section 185 and 186 of the Companies Act2013. There are no guarantees given or securities provided by the Company as specifiedunder Section 185 and 186 of the Companies Act 2013.
(v) As per the information and explanations given to us the Company has not acceptedany deposits as mentioned in the directives issued by the Reserve Bank of India and theprovisions of Section 73 to 76 or any other relevant provisions of the Companies Act 2013and the rules framed there under. Accordingly paragraph 3(v) of the Order is notapplicable.
(vi) According to the information and explanations given to us the Central Governmenthas not prescribed the maintenance of cost records under sub-section (1) of Section 148 ofthe Companies Act 2013 for any of the services rendered by the Company. Accordinglyparagraph 3(vi) of the Order is not applicable.
(vii) (a) According to the information and explanations given to us and on the basis ofour examination of the records of the Company amounts deducted/ accrued in the books ofaccount in respect of undisputed statutory dues including provident fund employees' stateinsurance income tax goods and services tax duty of customs cess professional tax andother statutory dues have been regularly deposited during the year by the Company with theappropriate authorities. As explained to us the Company did not have any dues on accountof sales tax service tax duty of excise and value added taxes.
According to the information and explanations given to us no undisputed amountspayable in respect of provident fund employees' state insurance income tax goods andservices tax duty of customs cess professional tax and other statutory dues were inarrears as at 31 March 2020 for a period of more than six months from the date they becamepayable.
(b) According to the information and explanations given to us there are no dues ofincome tax service tax goods and services tax sales tax value added tax and duty ofcustoms which have not been deposited by the Company with the appropriate authorities onaccount of any dispute as at 31 March 2020.
(viii) According to the information and explanations given to us and on the basis ofour examination of the records of the Company the Company has not taken any loans orborrowings from financial institutions banks and government and has not issued anydebentures. Accordingly paragraph 3 (viii) of the Order is not applicable to the Company.
(ix) The Company has not raised 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 to the Company.
(x) According to the information and explanations given to us no material fraud by theCompany or on the Company by its officers or employees has been noticed or reported duringthe course of our audit.
(xi) According to information and explanations given to us the remuneration paidduring the current year by the Company to its directors is in accordance with theprovisions of Section 197 of the Act.
(xii) According to the information and explanations given to us the Company is not anidhi company. Accordingly paragraph 3(xii) of the Order is not applicable.
(xiii) In our opinion and according to the information and explanations given to us andon the basis of our examination of the records of the Company the transactions with therelated parties are in compliance with Sections 177 and 188 of the Companies Act 2013where applicable and the details have been disclosed in the standalone financialstatements as required by the applicable accounting standards.
(xiv) According to the information and explanations given to us and on the basis of 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 current year. Accordingly paragraph 3(xiv) of the Order is not applicable.
(xv) According to information and explanations given to us the Company has not enteredinto any non-cash transactions with directors or persons connected with them. Accordinglyparagraph 3(xv) of the Order is not applicable.
(xvi) According to the information and explanations given to us the Company is notrequired to be registered under Section 45-1A of the Reserve Bank of India Act 1934.Accordingly paragraph 3(xvi) of the Order is not applicable.
| ||For B S R and Associates |
| ||Chartered Accountants Firm's Registration No.: 128901W |
| ||Rajesh Arora |
| ||Partner |
|Place: Gurugram ||Membership No. : 076124 |
|Date: 06 May 2020 ||UDIN: 20076124AAAAAR4336 |
To the Independent Auditor's report on the standalone financial statements ofDigicontent Limited for the year ended 31 March 2020.
Report on the internal financial controls with reference to the aforesaid standalonefinancial statements under Clause (i) of Sub-section 3 of Section 143 of the CompaniesAct 2013
(Referred to in paragraph 1(AXf) under 'Report on Other Legal and RegulatoryRequirements' section of our report of even date)
We have audited the internal financial controls with reference to standalone financialstatements of Digicontent Limited ("the Company") as of 31 March 2020 inconjunction with our audit of the standalone financial statements of the Company for theyear ended on that date.
In our opinion the Company has in all material respects adequate internal financialcontrols with reference to standalone financial statements and such internal financialcontrols were operating effectively as at 31 March 2020 based on the internal financialcontrols with reference to standalone financial statements criteria established by theCompany considering the essential components of internal control stated in the GuidanceNote on Audit of Internal Financial Controls Over Financial Reporting issued by theInstitute of Chartered Accountants of India (the "Guidance Note").
Management's Responsibility for Internal Financial Controls
The Company's management and the Board of Directors are responsible for establishingand maintaining internal financial controls based on the internal financial controls withreference to financial statements criteria established by the Company considering theessential components of internal control stated in the Guidance Note. 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 Companies Act 2013 (hereinafter referred to as"the Act").
Our responsibility is to express an opinion on the Company's internal financialcontrols with reference to financial statements based on our audit. We conducted our auditin accordance with the Guidance Note and the Standards on Auditing prescribed undersection 143(10) of the Act to the extent applicable to an audit of internal financialcontrols with reference to financial statements. Those Standards and the Guidance Noterequire that we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether adequate internal financial controls with reference tofinancial statements were established and maintained and whether such controls operatedeffectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls with reference to financial statements and their operatingeffectiveness. Our audit of internal financial controls with reference to financialstatements included obtaining an understanding of such internal financial controlsassessing 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 standalone financial statements whether due to fraud orerror.
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 withreference to standalone financial statements.
Meaning of Internal Financial controls with Reference to Financial Statements
A company's internal financial controls with reference to financial statements is aprocess designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles. A company's internal financial controlswith reference to financial statements include those policies and procedures that (1)pertain to the maintenance of records that in reasonable detail accurately and fairlyreflect the transactions and dispositions of the assets of the company; (2) providereasonable assurance that transactions are recorded as necessary to permit preparation offinancial statements in accordance with generally accepted accounting principles and thatreceipts and expenditures of the company are being made only in accordance withauthorisations of management and directors of the company; and (3) provide reasonableassurance regarding prevention or timely detection of unauthorised acquisition use ordisposition of the company's assets that could have a material effect on the financialstatements.
Inherent Limitations of Internal Financial controls with Reference to FinancialStatements
Because of the inherent limitations of internal financial controls with reference tofinancial statements including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected. Also projections of any evaluation of the internal financial controls withreference to financial statements to future periods are subject to the risk that theinternal financial controls with reference to financial statements may become inadequatebecause of changes in conditions or that the degree of compliance with the policies orprocedures may deteriorate.
| ||For B S R and Associates |
| ||Chartered Accountants Firm's Registration No.: 128901W |
| ||Rajesh Arora |
| ||Partner |
|Place: Gurugram ||Membership No. : 076124 |
|Date: 06 May 2020 ||UDIN: 20076124AAAAAR4336 |