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Dish TV India Ltd.

BSE: 532839 Sector: Media
NSE: DISHTV ISIN Code: INE836F01026
BSE 00:00 | 05 Jun 5.43 0.25
(4.83%)
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5.43

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5.43

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5.43

NSE 00:00 | 05 Jun 5.30 0.25
(4.95%)
OPEN

5.30

HIGH

5.30

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5.30

OPEN 5.43
PREVIOUS CLOSE 5.18
VOLUME 197245
52-Week high 34.80
52-Week low 3.93
P/E 7.54
Mkt Cap.(Rs cr) 1,000
Buy Price 5.43
Buy Qty 15264819.00
Sell Price 5.40
Sell Qty 2000.00
OPEN 5.43
CLOSE 5.18
VOLUME 197245
52-Week high 34.80
52-Week low 3.93
P/E 7.54
Mkt Cap.(Rs cr) 1,000
Buy Price 5.43
Buy Qty 15264819.00
Sell Price 5.40
Sell Qty 2000.00

Dish TV India Ltd. (DISHTV) - Auditors Report

Company auditors report

To the Members of Dish TV India Limited

Report on the Audit of the Standalone Financial Statements Opinion

1. We have audited the accompanying standalone financial statements ofDish TV India Limited (‘the Company') which comprise the Balance Sheet as at 31March 2019 the Statement of Profit and Loss (including Other Comprehensive Income) theCash Flow Statement and the Statement of Changes in Equity for the year then ended and asummary of the significant accounting policies and other explanatory information.

2. In our opinion and to the best of our information and according tothe explanations given to us the aforesaid standalone financial statements give theinformation required by the Companies Act 2013 (‘Act') in the manner sorequired and give a true and fair view in conformity with the accounting principlesgenerally accepted in India including Indian Accounting Standards (‘Ind AS')specified under section 133 of the Act of the state of affairs (financial position) ofthe Company as at 31 March 2019 and its loss (financial performance including othercomprehensive income) its cash flows and the changes in equity for the year ended on thatdate.

Basis for Opinion

3. We conducted our audit in accordance with the Standards on Auditingspecified under section 143(10) of the Act. Our responsibilities under those standards arefurther described in the Auditor's Responsibilities for the Audit of the FinancialStatements section of our report. We are independent of the Company in accordance with theCode of Ethics issued by the Institute of Chartered Accountants of India(‘ICAI') together with the ethical requirements that are relevant to our auditof the financial statements under the provisions of the Act and the rules thereunder andwe have fulfilled our other ethical responsibilities in accordance with these requirementsand the Code of Ethics. We believe that the audit evidence we have obtained is sufficientand appropriate to provide a basis for our opinion.

Key Audit Matters

4. Key audit matters are those matters that in our professionaljudgment were of most significance in our audit of the standalone financial statements ofthe current period. These matters were addressed in the context of our audit of thefinancial statements as a whole and in forming our opinion thereon and we do not providea separate opinion on these matters.

5. We have determined the matters described below to be the key auditmatters to be communicated in our report.

Key audit matter How our audit addressed the key audit matter
A. Impairment assessment of Intangible assets including Goodwill Our audit procedures to address this key audit matter included but were not limited to the following:
As detailed in Note 7 and 8 of the financial statements the Company has intangible assets including Goodwill of Rs 236838 lakhs (net of provision for impairment of Rs 154300 lakhs) Trademark/Brand of Rs 102909 lakhs and Customer and distributor relationship of Rs 94018 lakhs arising out of business combinations. a) We obtained an understanding from the management through detailed discussions with respect to its impairment assessment process assumptions used and estimates made by management and tested the operating effectiveness of the controls implemented by management.
In terms with Indian Accounting Standard 36 Impairment of Assets the management has carried out an impairment analysis of goodwill and other intangible assets which requires significant estimations and judgement with respect to inputs used and assumptions made to prepare the forecasted financial information used to determine the fair value of such intangibles using discounted cash flow model. b) We obtained the impairment analysis carried out by the management and reviewed the valuation report obtained by management from an independent valuer.
c) We assessed the professional competence objectivity and capabilities of the third party expert considered by the management for performing the required valuations to estimate the recoverable value of the goodwill and other intangible assets
Key assumptions used in management's assessment of the carrying amount of goodwill and other intangible assets include the expected growth rates estimates of future financial performance market conditions capital expenditure and discount rates among others. d) We involved experts within the audit team to assess the appropriateness of the valuation model used by the management and reasonableness of assumptions made by the management relating to discount rate risk premium industry growth rate etc.
Key audit matter How our audit addressed the key audit matter
Considering the materiality of the amount involved and significant degree of judgement and subjectivity involved in the estimates and assumptions used in determining the cash flows used in the impairment evaluation we have determined impairment of such goodwill and other intangible assets arising from the business combination as a key audit matter. e) We evaluated the inputs used by the management with respect to revenue and cost growth trends among others for reasonableness thereof.
f) We have evaluated the sensitivity analysis performed by the management in respect of the key assumptions used such as discount and growth rates to ensure that there would be no major impact on the valuation.
g) We have evaluated the adequacy of disclosures made by the Company in the financial statements in view of the requirements as specified in the Indian Accounting Standards.
B. Impairment assessment of investment in and other amount recoverable from a wholly owned subsidiary Our audit procedures to address this key audit matter included but were not limited to the following:
As described in Note 9 and 11 to the financial statements carrying value of investment and other amount recoverable as on 31 March 2019 from the wholly owned subsidiary of the Company namely Dish Infra Services Private Limited aggregates to Rs 427023 lakhs. The subsidiary has been incurring losses in the past. In view of the above management's assessment of impairment of investment and other amounts recoverable from such subsidiary requires estimation and judgement with respect to certain inputs used and assumptions made to prepare the forecasted financial information of the subsidiary company which is used to fair value such amounts using discounted cash flow model. Key assumptions used in management's assessment of the carrying amount of investment in and other amounts recoverable from the subsidiary include expected growth rates estimates of future financial performance market conditions capital expenditure and discount rates among others as attributable to such subsidiary. a) We have performed detailed discussions with the management to understand the impairment assessment process assumptions used and estimates made by management and tested the operating effectiveness of the controls implemented by management.
Based on the management's assessment no impairment loss has been recognized on such investment b) We obtained the impairment analysis carried out by the management and reviewed the valuation report prepared by an independent valuer and examined the reasonableness of key assumptions including growth rate discount rate etc.
c) We assessed the professional competence objectivity and capabilities of the third party expert considered by the management for performing the required valuations to estimate the recoverable value of Investment and other amount recoverable.
d) We involved experts within the audit team to assess the appropriateness of the valuation model used by the management and reasonableness of assumptions made by the management relating to discount rate risk premium industry growth rate etc. to assess their recoverability.
e) We evaluated the inputs used by the management with respect to revenue and cost growth trends among others for reasonableness thereof.
Considering the materiality of the amounts involved and significant degree of judgement and subjectivity involved in the estimates and key assumptions used in determining the cash flows used in the impairment evaluation we have determined impairment of such investments and other amounts receivable as a key audit matter. f) We evaluated the sensitivity analysis performed by management in respect of the key assumptions such as discount and growth rates to ensure that there would be no major impact on the valuation.
g) We have evaluated the adequacy of disclosures made by the Company in the financial statements in view of the requirements as specified in the Indian Accounting Standards.
C. Impairment assessment of non-current loans given to Dish Lanka Private Limited - Subsidiary Company ("Dish Lanka") Our audit procedures to address this key audit matter included but were not limited to the following:
As described in Note 49 to the financial statements gross carrying value of non-current loan recoverable as on 31 March 2019 from the subsidiary of the Company namely Dish Lanka Private Limited aggregates Rs 17353 lakhs. The subsidiary has been incurring losses in the past and the net worth of the subsidiary is completely eroded resulting in possible impairment indicators. a) We have performed detailed discussions with the management throughout the year to understand the impairment assessment process assumptions used and estimates made by management to the assess the reasonableness of the recoverable amount and tested the operating effectiveness of controls implemented by management.
Key audit matter How our audit addressed the key audit matter
The management of the Company is in the process of implementing certain changes to the business strategy related to this subsidiary in Sri Lanka. However considering the uncertainty involved in successful implementation of the new business strategy and the economic and social conditions in Sri Lanka the management of the Company has recognised an impairment provision of Rs 17353 lakhs as at 31 March 2019 against such loans given to the subsidiary company. b) We further inquired from the management of the business plans for the subsidiary company and in absence of any viable business plans available with the management of the Company we ensured that the recoverable amount has been accurately provided for by the Company
c) We also ensured that the other audit procedures performed and evidences examined do not indicate any contrary position to the management's estimate to provide for such investments and loans
Considering the materiality of the amount involved and significant degree of judgement and subjectivity involved in the new business strategy of the management used for the impairment evaluation we have determined impairment of loans as a key audit matter. d) We referred to the economic conditions prevalent in the jurisdiction in which the subsidiary company operates and understood from the management about the future business plans.
e) Keeping in view the above factors we assessed the appropriateness of impairment provision recognized by the management as at 31 March 2019 and assessed the appropriateness of disclosures made in the financial statements for such impairment losses in accordance with applicable accounting standards.
D. Amounts recoverable provision for expected credit losses and related balances Our audit procedures to address this key audit matter included but were not limited to the following:
Refer note 4(i) for significant accounting policy and note 55(B) for credit risk disclosures. a) Obtained an understanding the process adopted by the Company for calculation recording and monitoring of the impairment loss recognized for expected credit loss;
Trade receivables and other amounts recoverable comprise a significant portion of the current financial assets of the Company. As at March 31 2019 trade receivables aggregate Rs 10984 lakhs (net of provision for expected credit losses of Rs 4865 lakhs) and other amounts recoverable aggregate Rs 105236 lakhs. b) We assessed and tested the design and operating effectiveness of key controls over completeness and accuracy of the key inputs and assumptions considered for calculation recording and monitoring of the impairment loss recognized. Also evaluated the controls over the modelling process validation of data and related approvals.
In accordance with Ind AS 109 the Company applies expected credit loss (ECL) model for measurement and recognition of impairment loss for financial assets. The Company has analysed the trend of trade receivables under different ageing bracket for last three years and calculated credit loss rate basis such ageing. The complexity in calculation of ECL is mainly related to calculations performed for different type of revenue streams in which the Company operates and the different recovery period for different categories of customers.
c) We discussed with the management about the conditions leading to and their assessment of recoverability of dues from the parties and also referred to the available communication if any between them.
d) We referred to the aging of trade and other receivables and discussed the key balances to establish the management's assessment of recoverability of such dues.
Additional provision is recognised for the receivables which are specifically identified as doubtful or non- recoverable. e) We analyzed the methodology used by the management and considered the credit and payment history of specific parties to determine the trend used for arriving at the expected credit loss provision.
Other than the recognition of expected credit loss provisions the management also assigned certain aggregating 95348 against certain liabilities to Rs lakhs recoverable from the vendor subject to terms and conditions of the settlement arrangement. f) We referred to the terms and conditions stipulated in the settlement arrangement with respect to amount recoverable from a vendor and also considered the opinion obtained by the management from external consultant in connection with such settlement.
Estimation of provisions and assessment of recoverability of amounts involves significant degree of judgement and evaluation basis the ongoing communications with the respective parties and is therefore considered as a key audit matter. g) We have assessed the adequacy of disclosures made by the management in the financial statements to reflect the expected credit loss provision trade and other receivables and related balances including note 67.
Key audit matter How our audit addressed the key audit matter
E. Revenue recognition in terms with Ind AS 115 "Revenue from contracts with Customers" Our audit procedures included but were not limited to the following:
We refer to summary of significant accounting policies and note 33 of the financial statements of the Company for the year ended 31 March 2019 disclosures related to first time application of Ind AS 115 and impact of transition from previous standards to the new one. a) We obtained an understanding of management's processes and internal controls around adoption of Ind AS 115. We sought explanations from the management for areas involving complex judgements or interpretations to assess their appropriateness.
The company has adopted the new Ind AS 115 ‘Revenue from contracts with Customers' with effect from 1 April 2018 replacing the existing Ind AS 18 "Revenue". Such introduction of new standard requires thorough assessment of revenue recognition in light of identification of performance obligation in a contract with customer allocation of fair value of revenue between performance obligation(s) and review of revenue recognition criteria over the term of contract with customer. Significant judgements were involved in determination of the period on which revenue from activation revenue is to be recognized. b) We tested the operating effectiveness of internal controls established by management to ensure completeness accuracy and timing of revenue (point in time or over time as applicable) recognized during the year as well as for adjustments made on transition.
c) We reviewed the underlying contractual arrangements entered into by the Company with its customers held discussions with the management and assessed its impact on the recognition of revenue from operations.
Further the Telecom Regulatory Authority of India ("TRAI") has implemented a new regulatory framework for the television broadcasting industry in India which is known as New tariff order 2017 ("NTO"). Among other things NTO mandated that the customers pay only for the channels they choose to view and it sets out the inter-play between the broadcasters and distribution platform providers. This NTO has changed the pack price of channels as per the MRP fixed and extensive management's efforts were involved in analyzing the impact of the same in the IT system for the mapping of pack price however arrangement with broadcaster is in the process of finalisation. d) We evaluated the completeness and mathematical accuracy of the cumulative adjustments on transition to Ind AS 115 by assessing whether the schedule of adjustments is complete and reflects appropriate consideration for the changes in the revenue accounting under Ind AS 115;
e) We held detailed discussion with the management to assess the impact of the new tariff order on the operations of the Company revenue recognition policy of the Company
f) In view of the NTO which is in the process of being fully implemented we have considered the prevailing arrangements with the broadcasters and analyzed the contracts entered into between the Company and the customers to ensure that revenue has been appropriately recorded in the books of accounts.
Introduction of Ind AS 115 coupled with the regulatory update on NTO required detailed analysis under the standards which is complex and involves a certain degree of judgement and estimates due to which this matter has been considered as a key audit matter. g) We have assessed the appropriateness of revenue recognition policy of the Company its measurement and adequacy of disclosures made in the financial statements in terms with Ind AS 115.

Information other than the Financial Statements and Auditor'sReport thereon

6. The Company's Board of Directors is responsible for the otherinformation. The other information comprises the information included in the AnnualReport but does not include the standalone financial statements and our auditor'sreport thereon. The Annual report is expected to be made available to us after the date ofthis auditor's report.

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 ourresponsibility is to read the other information identified above when it becomes availableand in doing so consider whether the other information is materially inconsistent withthe financial statements or our knowledge obtained in the audit or otherwise appears to bematerially misstated.

When we read the Annual Report if we conclude that there is a materialmisstatement therein we are required to communicate the matter to those charged withgovernance.

Responsibilities of Management for the Standalone Financial Statements

7. The Company's Board of Directors is responsible for the mattersstated in section 134(5) of the Act with respect to the preparation of these standalonefinancial statements that give a true and fair view of the state of affairs (financialposition) profit or loss (financial performance including other comprehensive income)changes in equity and cash flows of the Company in accordance with the accountingprinciples generally accepted in India including the Ind AS specified under section 133of the Act. This responsibility also includes maintenance of adequate accounting recordsin accordance with the provisions of the Act for safeguarding of the assets of the Companyand for preventing and detecting frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; and design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe financial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.

8. In preparing the financial statements management is responsible forassessing the Company's ability to continue as a going concern disclosing asapplicable matters related to going concern and using the going concern basis ofaccounting unless management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so.

9. Those Board of Directors are also responsible for overseeing theCompany's financial reporting process.

Auditor's Responsibilities for the Audit of the FinancialStatements

10. Our objectives are to obtain reasonable assurance about whether thefinancial 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. Reasonableassurance is a high level of assurance but is not a guarantee that an audit conducted inaccordance with Standards on Auditing will always detect a material misstatement when itexists. Misstatements can arise from fraud or error and are considered material ifindividually or in the aggregate they could reasonably be expected to influence theeconomic decisions of users taken on the basis of these financial statements.

11. As part of an audit in accordance with Standards on Auditing 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 inorder to design audit procedures that are appropriate in the circumstances. Under section143(3)(i) of the Act we are also responsible for explaining our opinion on whether thecompany has adequate internal financial controls system in place and the operatingeffectiveness of such controls.

Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures made by management.

Conclude on the appropriateness of management's use of the goingconcern basis of accounting and based on the audit evidence obtained whether a materialuncertainty exists related to events or conditions that may cast significant doubt on theCompany's ability to continue as a going concern. If we conclude that a materialuncertainty exists we are required to draw attention in our auditor's report to therelated disclosures in the financial statements or if such disclosures are inadequate tomodify our opinion. Our conclusions are based on the audit evidence obtained up to thedate of our auditor's report. However future events or conditions may cause theCompany to cease to continue as a going concern.

Evaluate the overall presentation structure and content of thefinancial statements including the disclosures and whether the financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.

12. We communicate with those charged with governance regarding amongother matters the planned scope and timing of the audit and significant audit findingsincluding any significant deficiencies in internal control that we identify during ouraudit. 13. We also provide those charged with governance with a statement that we havecomplied with relevant ethical requirements regarding independence and to communicatewith them all relationships and other matters that may reasonably be thought to bear onour independence and where applicable related safeguards.

14. From the matters communicated with those charged with governancewe determine those matters that were of most significance in the audit of the financialstatements of the current period and are therefore the key audit matters. We describethese matters in our auditor's report unless law or regulation precludes publicdisclosure about the matter or when in extremely rare circumstances we determine that amatter should not be communicated in our report because the adverse consequences of doingso would reasonably be expected to outweigh the public interest benefits of suchcommunication.

Report on Other Legal and Regulatory Requirements

15. As required by section 197(16) of the Act we report that theCompany has paid remuneration to its directors during the year in accordance with theprovisions of and limits laid down under section 197 read with Schedule V to the Act.

16. As required by the Companies (Auditor's Report) Order 2016(‘the Order') issued by the Central Government of India in terms of section143(11) of the Act we give in the Annexure I a statement on the matters specified inparagraphs 3 and 4 of the Order.

17. Further to our comments in Annexure I as required by section143(3) of the Act we report that:

a) we have sought and obtained all the information and explanationswhich to the best of our knowledge and belief were necessary for the purpose 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 financial statements dealt with by this report are inagreement with the books of account;

d) in our opinion the aforesaid standalone financial statements complywith Ind AS specified under section 133 of the Act;

e) on the basis of the written representations received from thedirectors and taken on record by the Board of Directors none of the directors isdisqualified as on 31 March 2019 from being appointed as a director in terms of section164(2) of the Act;

f) we have also audited the internal financial controls over financialreporting (IFCoFR) of the Company as on 31 March 2019 in conjunction with our audit of thestandalone financial statements of the Company for the year ended on that date and ourreport dated 24 May 2019 as per Annexure II expressed unmodified opinion;

g) with respect to the other matters to be included in theAuditor's Report in accordance with rule 11 of the Companies (Audit and Auditors)Rules 2014 (as amended) in our opinion and to the best of our information and accordingto the explanations given to us:

i. the Company as detailed in note 61 and 66 to the standalonefinancial statements has disclosed the impact of pending litigations on its financialposition as at 31 March 2019;

ii. the Company did not have any long-term contracts includingderivative contracts for which there were any material foreseeable losses as at 31 March2019;

iii. there were no amounts which were required to be transferred to theInvestor Education and Protection Fund by the Company during the year ended 31 March 2019;

iv. the disclosure requirements relating to holdings as well asdealings in specified bank notes were applicable for the period from 8 November 2016 to 30December 2016 which are not relevant to these standalone financial statements. Hencereporting under this clause is not applicable.

For Walker Chandiok & Co LLP
Chartered Accountants
Firm's Registration No.: 001076N/N500013
Sumit Mahajan
Place: Noida Partner
Date: 24 May 2019 Membership No.: 504822