The Members of
GEMINI COMMUNICATION LIMITED
Report on the Financial Statements
We have audited the accompanying financial statements of GEMINI COMMUNICATIONS LIMITEDwhich comprise the Balance Sheet as at March 31 2017 the Statement of Profit and Lossthe Cash Flow Statement for the year then ended and a summary of significant accountingpolicies and other explanatory information.
Management's Responsibility for the (Standalone) Financial Statements
The Company's Board of Directors is responsible for the matters in section 134(5) ofthe Companies Act 2013 ("the Act") with respect to the preparation of thesefinancial statements that give a true and fair view of the financial position financialperformance and cash flows of the Company in accordance with the accounting principlesgenerally accepted in India including the Accounting Standards specified under Section133 of the Act read with Rule 7 of the Companies (Accounts) Rules 2016. Thisresponsibility also includes the maintenance of adequate accounting records in accordancewith the provision of the Act for safeguarding of the assets of the Company and forpreventing and detecting the frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; and design implementation and maintenance of internal financial control thatwere operating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the financial statements thatgive a true and fair view and are free from material misstatement whether due to fraud orerror.
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 accountingand auditing standards and matters which are required to be included in the audit reportunder the provisions 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 financial statements are free from material misstatement. An audit involves performingprocedures to obtain audit evidence about the amounts and disclosures in the financialstatements.
The procedures selected depend on the auditor's judgment including the assessment ofthe risks of material misstatement of the financial statements whether due to fraud orerror. In making those risk assessments the auditor considers internal financial controlrelevant to the Company's preparation of the financial statements that give true and fairview in order to design audit procedures that are appropriate in the circumstances. Anaudit also includes evaluating the appropriateness of accounting policies used and thereasonableness of the accounting estimates made by Company's Directors as well asevaluating the overall presentation of the financial statements. We believe that the auditevidence we have obtained is sufficient and appropriate to provide a basis for our auditopinion on the financial statements
Basis for Qualified Opinion
We draw attention to the following matters in the Notes to the financial statements:
a) Note 23 in the financial statement which indicates that the Company has accumulatedlosses and its Net worth has been fully/substantially eroded the Company has incurred anet cash loss during the current year and previous year(s) and the Company currentliabilities exceeded its current assets as at the balance sheet date. These conditionsalong with other matters set forth in Note 23 indicate the existence of a materialuncertainty that cast significant doubt about the Company's ability to continue as a goingconcern. However the financial statements of the Company have been prepared on a goingconcern basis for the reasons stated in the said
b) Note 24 to the financial statements which describes the uncertainty related to theoutcome of the lawsuit filed against the Company the impact on the financial statementcould not be ascertained.
c) Note 25 in the financial statements which indicates a un favorable decree in thecase against Merrill Lynch Limited for conversion on FCCB into unlisted equity sharecapital the financial statements do not include any adjustments that might result fromthe outcome of this decree as the decree was after the Balance Sheet date. As requiredUnder IND AS 10 "Contingencies and Events Occurring after the Balance SheetDate" assets and liabilities should be adjusted for events occurring after balancesheet date that provides additional evidence to assist the estimation of amounts relatingto conditions existing at the balance sheet date.
In our opinion and to the best of our information and according to the explanationsgiven to us except for the effects of the matter described in the Basis for QualifiedOpinion paragraph above the aforesaid Standalone financial statements give theinformation required by the Act in the manner so required and give a true and fair view inconformity with the accounting principles generally accepted in India of the state ofaffairs of the Company as at 31st March 2017 and its profit/loss and its cash flows forthe year ended on that date.
a) In the case of the Balance Sheet of the state of affairs of the Company as at March31 2017;
b) In the case of the Statement of Profit and Loss of the profit for the year ended onthat date; and
c) In the case of the Cash Flow Statement of the cash flows for the year ended on thatdate.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor's Report) Order 2016 ("the Order")as amended issued by the Central Government of India in terms of sub-section (11) ofsection 143 of the Act we give in the "Annexure A" a statement on the mattersspecified in paragraphs 3 and 4 of the Order.
2. As required by section 143 (3) of the Act we report that
3. we have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purpose of our audit;
4. 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 and the Cash Flow Statementdealt 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 2016.
e. On the basis of written representations received from the directors as on March 312017 taken on record by the Board of Directors none of the directors is disqualified ason March 31 2017 from being appointed as a director in terms of Section 164 (2) of theAct.
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 Report in "Annexure B".
g. 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 2016 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 financial statements Refer Note 22 to the financial statements;
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.
| ||For V VISWANATHAN & ASSOCIATES |
| ||Chartered Accountants |
|Place Chennai ||Firm Registration No-013713S |
|Date 15/04/2017 ||V VISWANATHAN |
| ||Membership No. 228990 |
Report on other Legal and Regulatory Requirements
As required by the Companies (Auditors Report) order 2016 ("the Order")issued by the central Government of India in terms of sub-section (11) of section 143 ofCompanies Act 2013 we give in the Annexure a statement on the matters specified inparagraphs 3 an d4 of the order to the extent applicable. As required by Section 143(3)of the Act we report that:
i. a) The Company has generally maintained proper records showing full particularsincluding quantitative details and situation of fixed assets. The Fixed Assets have beenphysically verified by the management in a phased manner designed to cover all the itemsover a period of three years which in our opinion is reasonable having regard to thesize of the company and nature of its business. Pursuant to the program a portion of thefixed asset has been physically verified by the management during the year and no materialdiscrepancies between the books records and the physical fixed assets have been noticed.
b) The title deeds of immovable properties are held in the name of the company. Exceptthe cases where SARFASI Act action has been taken by Bank we are unable to verify allthe title deeds.
c) The Company has physically verified the fixed assets during the year which in ouropinion is reasonable having regard to the size of the Company and nature of its assets.No material discrepancies were noticed on such verification.
ii.The procedures of physical verification of inventories followed by the company arereasonable and adequate in relation to the size of the company and the nature of itsbusiness. The Company maintaining proper records of inventory. The discrepancies noticedon verification between the physical stock and the book records are not material.
iii. The company has granted interest free unsecured loans to subsidiary companiescovered in the register maintained under section 189 of the Companies Act 2013. TheOutstanding balance is Rs.6094.60 Lakhs. The other clauses are not applicable. In ouropinion and according to the information and explanations given to us the company hascomplied with the provisions of section 185 and 186 of the Companies Act 2013 In respectof loans investments guarantees and security.
iv. In my opinion and according to the information and explanations given to me thereis adequate internal control system commensurate with the size of the company and thenature of its business with regard to purchase of fixed assets Inventories and the saleof services. The activities of the company do not involve purchase of inventory and thesale of goods. During the course of my audit I have not observed any continuing failureto correct major weaknesses in the internal control system.
v. In my opinion and according to the information and explanations given to us theCompany has not accepted any deposits from the public during the year. Therefore theprovisions of sections 73 to 76 or any other relevant provisions of the Act and the rulesframed there under are not applicable to the Company. vi. According to the information andexplanations given to us Rules made by the Central Government for the maintenance of costrecords under Section 148 of the Act are Not Applicable.
vii. a) The Company is not generally regular in depositing undisputed statutory duesrelating to provident fund income tax deducted at source service tax and value addedtax. We are informed that the provisions of employees' state insurance wealth tax dutyof customs duty of excise cess is not applicable to the company. As per the recordsproduced before us there were undisputed statutory dues which were outstanding as on 31stMarch 2017 for a period over six months from the date of same becoming payable expect forProvident Fund Service Tax Tax Deducted at Source. The entire list of undisputedstatutory dues could not be ascertained from the company as SARFASI Act action has beentaken.
b) According to the information and explanations given to us there are no statutorydues pending in respect of income tax sales tax value added tax service tax duty ofcustoms wealth tax duty of excise cess on account of any dispute.
c) According to the information and explanations given to us no amount is required tobe transferred to investor education and protection fund in accordance with the relevantprovisions of the Companies Act 2013 and rules made there under. viii. The company'saccumulated losses at the end of the financial year are more than fifty per cent of itsnet worth and it has incurred cash losses in this financial year
ix. The Company has not repaid principle amount of Rs. 17037.30 lakhs securedborrowings from banks and has also not paid interest for the period ranging from more than3 years Consequently Banks have declared the Assets as NPA. (Non-Performing Assets) andSARFASI Act action has been taken into action.
x. In my opinion and according to the information and explanations given to us theCompany has not given any guarantee for loans taken by others from banks or financialinstitutions.
xi. In my opinion the term/project loans were applied for the purpose for which theywere raised. xii. According to information and explanations given to us by the managementwhich has been relied by us no fraud on or by the Company has been noticed or reportedduring the year.
Xiii. Based upon the audit procedures performed and the information and explanationsgiven by the management the company has not raised moneys by way of initial public offeror further public offer including debt instruments and term Loans. Accordingly theprovisions of clause 3 (ix) of the Order are not applicable to the Company and hence notcommented upon.
Xiv. Based upon the audit procedures performed and the information and explanationsgiven by the management the company has not entered into any non-cash transactions withdirectors or persons connected with him. Accordingly the provisions of clause 3 (xv) ofthe Order are not applicable to the Company and hence not commented upon.
xv. In our opinion the company is not required to be registered under section 45 IA ofthe Reserve Bank of India Act 1934 and accordingly the provisions of clause 3 (xvi) ofthe Order are not applicable to the Company and hence not commented upon.
| ||For V VISWANATHAN & ASSOCIATES |
| ||Chartered Accountants |
|Place Chennai ||Firm Registration No-013713S |
|Date - 15/04/2017 ||V VISWANATHAN |
| ||Membership No. 228990 |
"Annexure B" to the Independent Auditor's Report of even date on theStandalone Financial Statements of GEMINI COMMUNICATIONS LIMITED.
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013. We have audited the internal financial controls overfinancial reporting of GEMINI COMMUNICATIONS LIMITED as of March 31 2017 in conjunctionwith our audit of the standalone financial statements of the Company for the year ended onthat date.
Management's Responsibility for Internal Financial Controls.
The Company's management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls Over Financial Reportingissued by the Institute of Chartered Accountants of India. These responsibilities includethe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to company's policies the safeguarding of its assets the preventionand detection of frauds and errors the accuracy and completeness of the accountingrecords and the timely preparation of reliable financial information as required underthe Companies Act 2013.
Our responsibility is to express an opinion on the Company's internal 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 Reportingand the Standards on Auditing issued by ICAI and deemed to be prescribed under section143(10) of the Companies Act 2013 to the extent applicable to an audit of internalfinancial controls both applicable to an audit of Internal Financial Controls and bothissued by the Institute of Chartered Accountants of India.
Those Standards and the Guidance Note require that we comply with ethical requirementsand plan and perform the audit to obtain reasonable assurance about whether adequateinternal financial controls over financial reporting was established and maintained and ifsuch controls operated effectively in all material respects. Our audit involves performingprocedures to obtain audit evidence about the adequacy of the internal financial controlssystem over financial reporting and their operating effectiveness. Our audit of internalfinancial controls over financial reporting included obtaining an understanding ofinternal financial controls over financial reporting assessing the risk that a materialweakness exists and testing and evaluating the design and operating effectiveness ofinternal control based on the assessed risk.
The procedures selected depend on the auditor's judgment including the assessment ofthe risks of material misstatement of the financial statements whether due to fraud orerror. We believe that the audit evidence we have obtained is sufficient and appropriateto provide a basis for our audit opinion on the Company's internal financial controlssystem over 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 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 except nonproper maintenance of books of accounts and due to SARFASI Act action has been taken bythe Banks based on the internal control over financial reporting criteria established bythe Company considering the essential components of internal control stated in theGuidance Note on Audit of Internal Financial Controls Over Financial Reporting issued bythe Institute of Chartered Accountants of India
| ||For V VISWANATHAN & ASSOCIATES |
| ||Chartered Accountants |
| ||Firm Registration No-013713S |
|Place Chennai ||V VISWANATHAN |
|Date - 15/04/2017 ||Membership No. 228990 |