The Members of
DILIGENT MEDIA CORPORATION LIMITED
We have audited the accompanying financial statements of DILIGENT MEDIA CORPORATIONLIMITED ("the Company") which comprise the Balance Sheet as at March 31 2019the Statement of Profit and Loss (including other comprehensive income) the Statement ofChanges in Equity the statement of cash flows for the year ended on that date and notesto the financial statements including a summary of significant accounting policies andother explanatory information (hereinafter referred to as "the financialstatements"). In our opinion and to the best of our information and according to theexplanations given to us the aforesaid financial statements give the information requiredby the Companies Act 2013 ("the Act") in the manner so required and give a trueand fair view in conformity with the Indian Accounting Standards (Ind AS) prescribed underSection 133 of the Act read with the Companies (Indian Accounting Standards) Rules 2015as amended and other accounting principles generally accepted in India of the state ofaffairs of the Company as at March 31 2019 its loss and total comprehensive losschanges in equity and its cash flows for the year ended on that date.
2. Basis for Opinion
We conducted our audit of the financial statements in accordance with the Standards onAuditing (SAs) specified under section 143(10) of the Companies Act 2013. Ourresponsibilities under those Standards are further described in the Auditor'sResponsibilities for the Audit of the financial statements section of our report. We areindependent of the Company in accordance with the Code of Ethics issued by the Instituteof Chartered Accountants of India (ICAI) together with the independence requirements thatare relevant to our audit of the financial statements under the provisions of theCompanies Act 2013 and the Rules thereunder and we have fulfilled our other ethicalresponsibilities in accordance with these requirements and the ICAI's Code of Ethics. Webelieve that the audit evidence we have obtained is sufficient and appropriate to providea basis for our opinion on the financial statements.
3. Emphasis of Matters:
We draw attention to Note No 53 to the Notes to the financial statement which statesthat the Company has incurred a net loss of ? 6890.06 Lakhs for the year ended 31stMarch 2019 and the accumulated negative net owned funds stands at ? 46891.65 Lakhs as atthat date resulting in erosion and negative net worth of the Company.
Considering the future business plan with the expectation of substantial growth inrevenue with cost controls and the continued financial support from promoters the Companyis confident of its ability to meet funds requirements and will continue its business as agoing concern. Accordingly the financial statements have been prepared on going concernbasis.
Our opinion on the financial statements is not modified in respect of the above matter.
4. Key Audit Matters
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the financial statements for the year ended 31st March 2019.These matters were addressed in the context of our audit of standalone financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters. Contingent liabilities (Refer note no. 32 of thefinancial statements): Claims against the Company not acknowledge as debt amounting to ?5330.93 Lakhs as at 31st March 2019 of which ? 5289.53 Lakhs is pending rectificationunder Section 154 of the Income tax Act 1961 for adjustment of unabsorbed loss. Furtherthe Company has received legal notices of claims law suits filed against it relating todefamation etc. in relation to the news published in DNA newspaper of which no liabilityis ascertained as in the opinion of the management no liability is likely to arise inconnection with such claims. The existence and probability of payment against these claimsrequires management judgment to ensure disclosure of most appropriate values of contingentliabilities. Due to level of judgment required relating to estimation and presentation ofcontingent liability this is considered to be a key audit matter.
Our audit procedures included among others assessing the appropriateness of themanagement's judgment in estimating the contingent liabilities.
We have obtained details of pending legal cases and demand/claims as at 31 March 2019from the management. We assessed the completeness of the details of these claims throughdiscussions with senior management personnel. We have also reviewed the outcome of thedisputed cases pending at various forums. We have also assessed the appropriateness ofpresentation of the contingent liabilities in the financial statements.
5. Principal Audit Procedures
We have evaluated the appropriateness of the management's judgment on uncertainty ornon-availability of convincing other evidence that sufficient taxable profits will beavailable in future. We have involved our internal experts to review the managementestimation of the future taxable profits of the company. Further we have also consideredthe matters which may cast significant doubt on the Company's ability to continue as agoing concern as reported above.
6. Information Other than the Financial Statements and Auditor's Report thereon
The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Management Discussion and AnalysisBoard's Report including Annexure to Board's Report Corporate Governance andShareholder's Information but does not include the financial statements and our auditor'sreport thereon. Our opinion on the financial statements does not cover the otherinformation and we will 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 in theaudit or otherwise appears to be materially misstated. If based on work we haveperformed we conclude that there is a material misstatement of this other information wewill communicate that matter to those charged with governance. We have nothing to reportin this regard.
7. Responsibility of Management 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 total comprehensive income changes in equity and cash flows of theCompany in accordance with accounting principles generally accepted in India includingthe IND AS prescribed under Section 133 of the Act read with the Companies (IndianAccounting Standard) Rules 2015 as amended. This responsibility also includesmaintenance of adequate accounting records in accordance with the provisions of the Actfor safeguarding of the assets of the Company and for preventing and detecting frauds andother irregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the standalone financial statement that give a true andfair view and are free from material misstatement whether due to fraud or error. Inpreparing the financial statements management is responsible for assessing the Company'sability to continue as a going concern disclosing as applicable matters related togoing concern and using the going concern basis of accounting unless management eitherintends to liquidate the Company or to cease operations or has no realistic alternativebut to do so. The Board of Director's are responsible for overseeing the company'sfinancial reporting process.
8. 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 control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under section 143(3)(i)of the Companies Act 2013 we are also responsible for expressing our opinion on whetherthe company has adequate internal financial controls system in place and the operatingeffectiveness of such controls.
Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by 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.
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 withthose charged with governance we determine those matters that were of most significancein the audit of the financial statements of the current period and are therefore the keyaudit matters.
We describe these matters in our auditor's report unless law or regulation precludespublic disclosure about the matter or when in extremely rare circumstances we determinethat a matter should not be communicated in our report because the adverse consequences ofdoing so would reasonably be expected to outweigh the public interest benefits of suchcommunication.
9. Report on Other Legal and Regulatory Requirements
A) As required by the Companies (Auditor's Report) Order 2016 issued by the CentralGovernment of India in terms of sub-section (11) of section 143 of the Act ("theOrder") and on the basis of such checks of the books and records of the Company aswe consider appropriate and according to the information and explanations given to us wegive in the "Annexure A" a statement on the matters specified in paragraphs 3and 4 of the Order to the extent applicable.
B) As required by Section 143(3) of the Act based on our audit we report that:
a) We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit;
b) In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books;
c) The Balance Sheet the Statement of Profit and Loss (including Other ComprehensiveIncome) Statement of Changes in Equity and the Statement of Cash Flow dealt with by thisReport are in agreement with the books of account;
d) In our opinion the aforesaid financial statements comply with the IND AS specifiedunder Section 133 of the Act read with the Companies (Indian Accounting Standards) Rules2015 as amended;
e) On the basis of the written representations received from the Directors as at 31stMarch 2019 taken on record by the Board of Directors none of the Directors isdisqualified as on 31st March 2019 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 over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate Reportin"Annexure B". Our report expresses an unmodified opinion on theadequacy and operating effectiveness of the Company's internal financial controls overfinancial reporting;
g) With respect to the other matters to be included in the Auditor's Report inaccordance with the requirements of the Section 197(16) of the Act as amended: In ouropinion and to the best of our information and according to the explanations given to usthe remuneration paid by the Company to its Directors including Executive Director duringthe year is in accordance with the provisions of Section 197 of the Act. h) With respectto the other matters to be included in the Auditor's report in accordance with Rule 11 ofthe Companies (Audit and Auditors) Rules 2014 in our opinion and to the best of ourinformation and explanations given to us:
i. The Company has disclosed the impact of pending litigations on its financialposition in its financial statements Refer Note 32 to the IND AS financialstatements;
ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses; and iii. There are no amounts requiredto be transferred to the Investor Education and Protection Fund by the Company during theyear.
For B S SHARMA & CO.
Chartered Accountants FR No. 128249W
CA B S SHARMA
Membership No.031578 Place: Mumbai Dated: 29 May 2019
Annexure "A" to the Independent Auditor's Report
Referred to in Paragraph 9(A) under the heading of "REPORT ON OTHER LEGAL ANDREGULATORY REQUIREMENTS" of our report of even date to the members of Diligent MediaCorporation Limited on the Ind AS financial statements for the year ended 31 March 2019:Report on Companies (Auditor's Report) Order 2016 (the Order') issued by theCentral Government in terms of Section 143(11) of the Companies Act 2013 (the Act')to the members of Diligent Media Corporation Limited ("the Company")
(i) In respect of its fixed assets:
a) The company has maintained proper records showing full particulars includingQuantitative details and situation of its fixed assets.
b) According to the information and explanation given to us by the management of thecompany majority of the fixed assets of the company have been physically verified inphased manner by the management during the year and the intervals of such verificationhad also been reasonable. As informed no discrepancies were noticed on such verification.
c) According to the information and explanation given to us and on the basis of ourexamination of the records of the Company the title deeds of leasehold land includingimprovement thereon and buildings are held in the name of the Company.
ii) a) The inventories have been physically verified by the Management at reasonableintervals during the year.
b) In our opinion the procedure of such physical verification of inventories followedby the management is reasonable and adequate in relation to the size of the company andnature of its business.
c) In our opinion the Company has maintained proper records of inventory and nomaterial discrepancies were noticed on such verification of stock as compared to bookrecords.
(iii) Based on our verification of the books and records and as per information andexplanations given and documents produced before us by the management the company has notgranted any secured or unsecured loans to companies firms limited liabilitiespartnership firms or others parties covered in the Registers maintained under Section 189of the Companies Act 2013 (the Act).
(iv) In our opinion according to the information and explanations given to us theCompany has neither given any loans to director/s nor has given any guarantee/s or has notprovided any security/ies during the year. The company has not made any investments. Henceprovisions of Section 185 and Section 186 of the Act are not applicable.
(v) In our opinion and according to the information and explanations given to us thecompany has not accepted deposits from public as covered under the provisions of Sections73 to 76 or any other relevant provisions of the Act and the rules framed there underhence clause (v) of the Order is not applicable.
(vi) We have been informed by the management that the maintenance of cost records hasnot been prescribed by the Central Government under section (1) of section 148 of the Act.(vii) a) According to the books records as produced and examined by us in accordance withGenerally Accepted Auditing Practices in India and also based on managementrepresentations statutory dues in respect of provident fund employee state insuranceincome tax wealth tax service tax sales tax value added tax excise duty cess andother material statutory dues have generally been regularly deposited by the company. b)According to information and explanations given to us there are disputed amounts payablein respect of income tax outstanding as on 31st March 2019:
|Name of Statute ||Nature of Dues Dispute is Pending ||Forum where the Amount Relates ||Period to which the Amount Unpaid ||? in Lakhs |
|a. Fringe Benefit Tax Act 1986 ||Tax on employees benefits ||CIT (A)-12 Mumbai ||A Y 2006-07 ||3.63 |
|b. Income Tax Act 1961 ||Income tax ||-do- ||A Y 2010-11 ||33.37 |
|c. -do- ||-do- ||-do- ||A Y 2011-12 ||** |
|d. -do- ||-do- Penalty ||-do- ||A Y 2008-09 ||4.40 |
** pending rectification under Section 154 of the Act for adjustment of loss for theyear and brought forward Losses against the addition which will make demand of ? 5289.53lakhs to NIL
Income Tax assessments have been completed till Assessment Year 2016-17. c) Accordingto the information and explanations given to us no undisputed amounts payable in respectof provident fund income tax sales tax value added tax duty of customs service taxGST cess and other material statutory dues were in arrears as at 31 March 2019 for aperiod of more than six months from the date they became payable.
(viii) As observed by us and as per the information and explanations given by themanagement on the basis of the records verified there are no loans taken from financialinstitutions or banks during the year under audit hence the clause
(viii) of the Order is not applicable.
(ix) The Company has not raised any money/s by way of initial public o3er or furtherpublic o3er (including debt instruments) or term loans hence reporting under the clause
(ix) of the Order is not applicable.
(x) During the course of our examination of the books and records of the Companycarried out in accordance with generally accepted auditing practices in India andaccording to the information and explanations given to us we have neither come across anyinstance of material fraud by the Company or on the Company by its o3cers or employeesnoticed or reported during the year nor have been informed of any such case by theManagement.
(xi) In our opinion and according to the information and explanations given to us theCompany has paid/provided managerial remuneration in accordance with the provisions ofSection 197 read with Schedule V to the Act. (xii) The Company is not a Nidhi Companyhence reporting under clause 3(xii) of the Order is not applicable.
(xiii) In our opinion and according to the information and explanations given to usthe Company is in compliance with Section 177 and Section 188 of the Act whereapplicable for all transactions with the related parties and the details of related partytransactions have been disclosed in the financial statements as required by the applicableaccounting standards.
(xiv) During the year company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures during the year under reviewhence the clause (xiv) of the Order is not applicable to the Company. (xv) In our opinionand according to the information and explanations given to us during the year the Companyhas not entered into any non-cash transactions with its Directors or persons connected toits directors and hence provisions of Section 192 of the Act are not applicable. (xvi) Inour opinion and according to the information given the company is not required to beregistered under Section 45-I of the Reserve Bank of India Act 1934.
For B S SHARMA & CO.
Chartered Accountants FR No. 128249W
CA B S SHARMA
Membership No.031578 Place: Mumbai Dated: 29 May 2019
Annexure "B" to the Independent Auditor's Report
Report on the Internal Financial Controls Over Financial Reporting (IFCOFR) underClause (i) of Subsection 3 of Section 143 of the Companies Act 2013 ("theAct") as referred to in paragraph 9(B)(f) under Report on Other Legal andRegulatory Requirements' of our report of even date to the Members of Diligent MediaCorporation Limited on the financial statements for the year ended 31 March 2019.
We have audited the internal financial controls over financial reporting of DiligentMedia Corporation Limited ("the Company") as of March 31 2019 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 Reporting (the"Guidance Note") issued by the Institute of Chartered Accountants of India(ICAI). These responsibilities include the design implementation and maintenance ofadequate internal financial controls that were operating effectively for ensuring theorderly and efficient conduct of its business including adherence to company's policiesthe safeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information as required 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 FinancialReporting" (the "Guidance Note") issued by the Institute of CharteredAccountants of India and the Standards on Auditing prescribed under Section 143(10) of theAct to the extent applicable to an audit of internal financial controls. Those Standardsand the Guidance Note require that we comply with ethical requirements and plan andperform the audit to obtain reasonable assurance about whether adequate internal financialcontrols over financial reporting was established and maintained and if such controlsoperated effectively in all material respects.
Our audit involves performing procedures on test basis to obtain audit evidence aboutthe adequacy of the internal financial controls system over financial reporting and theiroperating effectiveness. Our audit of internal financial controls over financial reportingincluded obtaining an understanding of internal financial controls over financialreporting assessing the risk that a material weakness exists and testing and evaluatingthe design and operating effectiveness of internal control based on the assessed risk. Theprocedures selected depend on the auditor's judgment including the assessment of therisks of material 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 authorizations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorized acquisition use or disposition of thecompany's assets that could have a material effect on the financial statements.
Inherent Limitations of Internal Financial Controls Over Financial Reporting:
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 checked on test basis considering the nature and size of business andoperations with internal checks and controls were operating effectively as at March 312019 based on the internal control over financial reporting criteria established by theCompany considering the essential components of internal control stated in the GuidanceNote issued by the Institute of Chartered Accountants of India.
For B S SHARMA & CO.
Chartered Accountants FR No. 128249W
CA B S SHARMA
Dated: 29 May 2019