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DQ Entertainment International Ltd.

BSE: 533176 Sector: Media
NSE: DQE ISIN Code: INE656K01010
BSE 00:00 | 13 Jul 9.90 0.21
(2.17%)
OPEN

9.70

HIGH

10.10

LOW

9.70

NSE 00:00 | 13 Jul 10.05 0.40
(4.15%)
OPEN

9.70

HIGH

10.10

LOW

9.70

OPEN 9.70
PREVIOUS CLOSE 9.69
VOLUME 2060
52-Week high 23.80
52-Week low 8.41
P/E
Mkt Cap.(Rs cr) 78
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 9.70
CLOSE 9.69
VOLUME 2060
52-Week high 23.80
52-Week low 8.41
P/E
Mkt Cap.(Rs cr) 78
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

DQ Entertainment International Ltd. (DQE) - Auditors Report

Company auditors report

To

The Members of DQ Entertainment (International) Limited

REPORT ON THE STANDALONE FINANCIAL STATEMENTS

We have audited the accompanying standalone financial statements of DQ Entertainment(International) Limited ("the Company") which comprise the Balance Sheet as at31st March 2017 the Statement of Profit and Loss and the Cash Flow Statement for theyear then ended and a summary of significant accounting policies and other explanatoryinformation.

Management's Responsibility for the Standalone 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 standalone financial statements that give a true and fair view of the financialposition financial performance and cash flows of the Company in accordance withaccounting principles generally accepted in India including the Accounting Standardsspecified under Section 133 of the Act read with Rule 7 of the Companies (Accounts)Rules 2014. 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 standalone financial statements that give a true and fair view and are free frommaterial misstatement whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on these standalone financial statementsbased on our audit.

We have taken into account the provisions of the Act the accounting and auditingstandards and matters which are required to be included in the audit report under theprovisions of the Act and the Rules made there under.

We conducted our audit in accordance with the Standards on Auditing specified underSection 143(10) of the Act. Those Standards require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetherthe standalone financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the standalone financial statements. The procedures selected depend onthe auditor's judgment including the assessment of the risks of material misstatement ofthe standalone financial statements whether due to fraud or error. In making those riskassessments the auditor considers internal financial control relevant to the Company'spreparation of the standalone financial statements that give a true and fair view in orderto design audit procedures that are appropriate in the circumstances. An audit alsoincludes evaluating the appropriateness of the accounting policies used and thereasonableness of the accounting estimates made by the Company's Directors as well asevaluating the overall presentation of the standalone financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the standalone financial statements.

OPINION

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 Act in the manner so required and give a true and fair view in conformity with theaccounting principles generally accepted in India of the state of affairs of the Companyas at 31st March 2017 and its loss and its cash flows for the year ended on that date.

EMPHASIS OF MATTERS

We draw attention to note 15 to the Standalone Financial Statements in relation toprovision for doubtful debts against trade receivables outstanding for more than one yearamounting to Rs. 1992.93 Million. Our opinion is not modified in respect of this matter.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

1. As required by Section 143(3) of the Act we report that:

(a) We have sought and obtained all the information and explanations which to thebest of 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 bythe Company so far as it appears from our examination of those books.

(c) The Balance Sheet the Statement of Profit and Loss and the Cash FlowStatement dealt with by this Report are in agreement with the books of account.

(d) In our opinion the aforesaid standalone financial statements comply with theAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014.

(e) The matter described in sub-paragraph (a) under the Emphasis of Mattersparagraph above in our opinion may have an adverse effect on the functioning of theCompany.

(f) On the basis of the written representations received from the directors as on31st March 2017 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2017 from being appointed as a director in terms of Section164 (2) of the Act.

(g) The emphasis of matter relating to the maintenance of accounts and othermatters connected therewith are as stated in the paragraph above.

(h) 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 report in ‘Annexure A'

(i) With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations on its financialposition in its standalone financial statements – Refer Note 25(c) to the standalonefinancial statements.

ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses.

iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.

iv. The Company has provided requisite disclosures in the financial statements as toholdings as well as dealings in Specified Bank Notes during the period from 8th November2016 to 30th December 2016. Based on audit procedures and relying on the managementrepresentation we report that the disclosures are in accordance with books of accountmaintained by the Company and as produced to us by the Management – Refer Note 16.

2. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government in terms of sub-section 11 of section 143 of the Act wegive in the ‘Annexure B' a statement on the matters specified in paragraphs 3 and 4of the Order.

For MZSK & Associates

Chartered Accountants

Firm Registration No.105047W

Ananthakrishnan G

Partner

Membership No.205226

Place : Hyderabad

Date : 06th June 2017

ANNEXURE A TO THE INDEPENDENT AUDITOR'S REPORT OF EVEN DATE ON THE STANDALONE FINANCIALSTATEMENTS OF DQ ENTERTAINMENT (INTERNATIONAL) LIMITED ("the Company")

REPORT ON THE INTERNAL FINANCIAL CONTROLS UNDER CLAUSE (I) OF SUB-SECTION 3 OF SECTION143 OF THE COMPANIES ACT 2013 ("THE ACT")

To the Members of DQ Entertainment (International) Limited ("the Company")

We have audited the internal financial controls over financial reporting of DQEntertainment (International) Limited ("the Company") as of March 31 2017 inconjunction with our audit of the standalone financial statements of the Company for theyear ended on 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 Act.

Auditors' Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting(the "Guidance Note") and the Standards on Auditing issued by ICAI and deemedto be prescribed under section 143(10) of the Act to the extent applicable to an audit ofinternal financial controls both applicable to an audit of Internal Financial Controlsand both issued by the Institute of Chartered Accountants of India. Those Standards andthe Guidance Note require that we comply with ethical requirements and plan and performthe 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 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 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.

OPINION

In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at March 31 2017 based on theinternal control over financial reporting criteria 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.

EXPLANATORY PARAGRAPH

We also have audited in accordance with the Standards on Auditing issued by theInstitute of Chartered Accountants of India as specified under section 143(10) of theAct the standalone financial statements of the Company which comprise the Balance Sheetas at March 31 2017 and the related Statement of Profit and Loss and Cash Flow Statementfor the year then ended and a summary of significant accounting policies and otherexplanatory information and our report dated 06th June 2017 expressed an unqualifiedopinion.

For MZSK & Associates

Chartered Accountants

Firm Registration No.105047W

Ananthakrishnan G

Partner

Membership No.205226

Place : Hyderabad

Date : 06th June 2017

ANNEXURE B TO INDEPENDENT AUDITORS' REPORT

[Referred to in paragraph 2 under ‘Report on Other Legal and RegulatoryRequirements' in the Independent Auditors' Report of even date to the members of DQEntertainment (International) Limited on the financial statements for the year ended March31st 2017]

i. (a) The company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.

(b) All the fixed assets have been physically verified by the management during theyear and no material discrepancies were identified on such verification.

(c) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the title deeds of immovable properties areheld in the name of the Company.

ii. The Company is involved in the business of rendering services. Accordingly therequirements of paragraph 3(ii) of the Order are not applicable to the Company.

iii. The Company has not granted any loans secured or unsecured to Companies firmsLimited Liability Partnerships (LLP) or other parties covered in the register maintainedunder section 189 of the Companies Act 2013. Accordingly the provisions stated inparagraph 3 (iii) (a) to (c) of the order are not applicable to the Company.

iv. In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of section 185 and 186 of the Act in respect ofloans investments guarantees and security made.

v. In our opinion and according to the information and explanations given to us thereare no amounts outstanding which are in the nature of deposits as on 31st March 2017 andthe Company has not accepted any deposits during the year.

vi. The provisions of sub-section (1) of section 148 of the Act are not applicable tothe Company. Accordingly the provisions stated in paragraph 3 (vi) of the order are notapplicable to the Company.

vii. (a) Undisputed statutory dues including provident fund employees' stateinsurance income-tax sales-tax wealth tax service tax duty of customs duty ofexcise value added tax cess and any other statutory dues have not been regularlydeposited with the appropriate authorities and there has been a delay in few cases.

According to the information and explanations given to us undisputed dues in respectof provident fund employees' state insurance income-tax sales-tax wealth tax servicetax duty of customs duty of excise value added tax cess and any other statutory dueswhich were outstanding as at 31st March 2017 for a period of more than six months fromthe date they became payable are as follows:

Name of the statute Nature of the dues Amount (`) Period to which the amount relates Due Date Date of Payment
Income Tax Act 1961 Income Tax 78308540 AY 2015-16 March 2015 Not yet paid
Income Tax Act 1961 Income Tax 133442131 AY 2016-17 March 2016 Not yet paid
Jul-16Aug- Paid in Apr-
Income Tax Act 1961 TDS U/S 92B 4149496 AY 2017-18
16Sep-16 2017
Jul-16Aug- Paid in Apr-
Provident fund Act Provident fund 12192834 FY 2016-17
16Sep-16 2017
TOTAL 228093001

(b) According to the records of the Company the dues outstanding of income-taxsales-tax wealth-tax service tax customs duty excise duty value added tax cess andany other statutory dues on account of any dispute are as follows:

Period to which the Forum where dispute
Name of the statute Nature of the dues Amount (`)
amount relates is pending
Income Tax Act 1961 Transfer Pricing 10511254 AY 2008-09 Hon'ble High Court
Income Tax Act 1961 Withholding tax on International Transactions 9642147 AY 2005-06 Hon'ble High Court
Income Tax Act 1961 Transfer Pricing 8395971 2006-07 & 2007-08 AY 2010-11 ITAT
Income Tax Act 1961 Transfer Pricing 35523316 AY 2013-14 Filed before DRP
Service Tax Service tax on import of services & Disallowance of ITC 14277431 FY 2009-10 to 2010-11 Commissioner Service tax
Service Tax Service tax on import of services 80554815 FY 2012-13 commissioner ate office of the Commissioner (Audit)
2013-14 & 2014-15 Central excise & Service tax
Provident fund Default in payment of contributions 34928878 FY 2013-14 to 2016-17 Assistant regional provident fund commissioner
Total 193833812

viii. In our opinion and according to the information and explanations given to usthe Company has defaulted in repayment of dues to the financial institution bank ordebenture holders. The details of such default are as follows:

Amount of default as at
Particulars Period of default Remarks if any
31st March 2017
i) Name of the lenders in case of:
Bank:
1. Andhra Bank FITL 7253333 April 2016 to January 2017 Default of Principal repayment
3104092 April 2016 to March 2017 Default of Interest repayment
2. Andhra Bank TL 109500000 March 2016 to March 2017 Default of Principal repayment
35694964 April 2016 to March 2017 Default of Interest repayment
3.Exim Bank SBLC 165257827 March 2017 Default of Principal repayment
871304 March 2017 Default of Interest repayment
TOTAL 321681520

Also the company had overdrawn cash credit limits in case of Indian Overseas Bank andAndhra Bank ix. The Company did not raise any money by way of initial public offer orfurther public offer (including debt instruments) and term loans during the year.Accordingly paragraph 3 (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 the 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 officers or employeesduring the course of our audit.

xi. According to the information and explanations give to us and based on ourexamination of the records of the Company the Company has paid/ provided for managerialremuneration in accordance with the requisite approvals mandated by the provisions ofsection 197 read with Schedule V to the Act.

xii. In our opinion and according to the information and explanations given to us theCompany is not a nidhi company. Accordingly paragraph 3(xii) of the Order is notapplicable.

xiii. According to the information and explanations given to us and based on ourexamination of the records of the Company transactions with the related parties are incompliance with sections 177 and 188 of the Act where applicable and details of suchtransactions have been disclosed in the financial statements as required by the applicableaccounting standards.

xiv. According to the information and explanations give to us and based on ourexamination of the records of the Company the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year. Accordingly the provisions of clause 3 (xiv) of the Order are not applicable tothe Company.

xv. According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not entered into non-cashtransactions with directors or persons connected with him. Accordingly paragraph 3(xv) ofthe Order is not applicable.

xvi. In our opinion the Company is not required to be registered under section 45 IAof the Reserve Bank of India Act 1934 and accordingly the provisions of clause 3 (xvi)of the Order are not applicable to the Company.

For MZSK & Associates

Chartered Accountants

Firm Registration No.105047W

Ananthakrishnan G

Partner

Membership No.205226

Place : Hyderabad

Date : Date : 06th June 2017