GTL Infrastructure Ltd.
|BSE: 532775||Sector: Telecom|
|NSE: GTLINFRA||ISIN Code: INE221H01019|
|BSE 00:00 | 18 May||0.77||
|NSE 00:00 | 18 May||0.80||
|Mkt Cap.(Rs cr)||962|
|Mkt Cap.(Rs cr)||962.24|
GTL Infrastructure Ltd. (GTLINFRA) - Auditors Report
Company auditors report
THE MEMBERS OF
GTL INFRASTRUCTURE LIMITED
Report on the Audit of the Financial Statements
We have audited the accompanying Financial Statements ofGTLINFRASTRUCTURE LIMITED ("the Company") which comprise the Balance Sheet asat March 31 2019 the Statement of Profit and Loss (including Other ComprehensiveIncome) the Statement of Changes in Equity and Statement of Cash Flows for the year thenended and notes to the financial statements including a summary of significant accountingpolicies and other 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 except for the possible effects of the matters described in theBasis for Qualified Opinion' para below the aforesaid Financial Statementsgive the information required by the Companies Act 2013 ("the Act") in themanner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India of the state of affairs of the Company as at March31 2019 and its loss including other comprehensive income changes in equity and its cashflows for the year ended on that date.
Basis for Qualified Opinion
Attention is drawn to Note No. 41 to the financial statements whichinter alia states that the Hon'ble Supreme Court of India held that "MobileTelecommunication Tower" is a building and State can levy property tax on the same.Pending petitions of the Company before the appropriate Courts non-receipt of demandnotices for property tax in respect of majority of the Telecommunication Towers and alsodue to Company's right to recover such property tax amount from certain customersthe company is unable to quantify the amount of property tax to be borne by it andaccordingly has not made any provision for the same. We are unable to quantify the amountof the property tax if any to be accounted for and its consequential effects on thefinancial statements.
We conducted our audit in accordance with Standards on Auditing (SAs)specified 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 together with theethical requirements that are relevant to our audit of the financial statements under theprovisions of the Act and we have fulfilled our other ethical responsibilities inaccordance with these requirements and the ICAI's Code of Ethics. We believe that theaudit evidence we have obtained is sufficient and appropriate to provide a basis for ourqualified opinion.
Material Uncertainty Related to Going Concern
We draw attention to the Note nos. 55 and 3(a)(vi) to the financialstatements regarding preparation of financial statements on going concern basisnotwithstanding the fact that the company continue to incurred the cash losses defaultedto repayment of principal and interest to its lenders one of the secured lenders hasapplied before the National Company Law Tribunal (NCLT) under Insolvency and BankruptcyCode 2016 Aircel one of the major customers of the Company has filed Insolvencypetition before NCLT resulting into substantial reduction in the tenancy provisions forimpairment for Non-current assets and substantial erosion of its net-worth since theHon'ble Supreme Court has struck down the RBI circular dated 12.02.2018 and 78.93%(by value) of the Company's borrowing has been assigned to Edelweiss AssetReconstruction Company Limited (EARC) and expected to have realignment of debt by the EARCin accordance with the Company's cash flow. These conditions along with other mattersset forth in notes to the financial statements indicate that a material uncertainty existsthat may cast significant doubt on the Company's ability to continue as a goingconcern. The appropriate of the assumptions of the going concern is critically dependedupon the Company's ability to raise finance and generate cash flows in future to meetits obligation and to restructure its borrowing with the lenders.
Our opinion is not modified in respect of this matter.
Emphasis of Matter
As at March 31 2019 balance confirmations from two of the lenders withrespect to borrowings including interest accrued thereon aggregating to र 52112 Lakhshave not been received. Our opinion is not modified in respect of this matter.
Key Audit Matters (KAM)
Key audit matters are those matters that in our professional judgmentwere of most significance in our audit of the Company's financial statements of thecurrent period. These matters were addressed in the context of our audit of the financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters.
The Company's Board of Directors is responsible for the otherinformation. The other information comprises the management discussion & analysis anddirector's report included in the annual report but does not include the FinancialStatements and our auditor's report thereon. The above information is expected to bemade available to us after the date of this auditor's report. Our opinion on theFinancial Statements does not cover the other information and we do not express any formof 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 above other information if we conclude that thereis material misstatement therein we are required to communicate the matter to thosecharged with governance.
Management's Responsibility for the Financial Statements
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 FinancialStatements that give a true and fair view of the state of affairs (financial position)loss (financial performance including other comprehensive income) cash flows and thestatement of changes in equity of the Company in accordance with the accounting principlesgenerally accepted in India including Ind AS prescribed under Section 133 of the Act readwith relevant rules issued thereunder.
This responsibility also includes maintenance of adequate accountingrecords in accordance with the provisions of the Act for safeguarding of the assets of theCompany and 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.
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. Those Board of Directors arealso responsible for overseeing the Company's financial reporting process
Auditors' Responsibility for the audit of the Financial Statements
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 SAs will always detect a material misstatement when it exists.Misstatements can arise from fraud or error and are considered material if individuallyor in the aggregate they could reasonably be expected to influence the economic decisionsof users taken on the basis of these Financial Statements.
As part of an audit in accordance with SAs we exercise professionaljudgment 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 financial controls relevant to theaudit in order to design audit procedures that are appropriate in the circumstances. Undersection 143(3) (i) of the Act we are also responsible for expressing our opinion onwhether the Company has adequate internal financial controls system in place and theoperating effectiveness 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 theability of the Company 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. We communicate with those charged with governance regarding among othermatters the planned scope and timing of the audit and significant audit findingsincluding any significant deficiencies in internal control that we identify during ouraudit. 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.Fromthematterscommunicatedwiththosechargedwithgovernance we determine those matters thatwere of most significance in the audit of the Financial Statements of the current periodand are therefore the key audit matters. We describe these matters in our auditor'sreport unless law or regulation precludes public disclosure about the matter or when inextremely rare circumstances we determine that a matter should not be communicated in ourreport because the adverse consequences of doing so would reasonably be expected tooutweigh the public interest benefits of such communication.
The comparative financial information for the year ended March 31 2018have been audited by the predecessor auditor who had audited the Financial Statements forthe year ended March 31 2018 and has expressed a modified opinion.
Our opinion is not modified in respect of this matter.
1. As required by Section 143 (3) of the Act we report that: a. Wehave sought and obtained all the information and explanations which to the best of ourknowledge and belief were necessary for the purposes of our audit. b. In our opinionproper books of account as required by law have been kept by the Company so far as itappears from our examination of those books. c. The Balance Sheet the Statement of Profitand Loss (Including other comprehensive income) the Cash Flow Statement and Statement ofChanges in Equity dealt with by this Report are in agreement with the books of account. d.In our opinion the aforesaid financial statements comply with the Ind AS prescribed underSection 133 of the Act. e. The matter described in the Basis for QualifiedOpinion' paragraph above and the matter described under Material Uncertainty Relatedto Going Concern paragraph above in our opinion may have an adverse effect on thefunctioning of the Company. f. On the basis of the written representations received fromthe directors as on March 31 2019 and taken on record by the Board of Directors none ofthe directors is disqualified as on March 31 2019 from being appointed as a director interms of Section 164 (2) of the Act. g. With respect to the adequacy of the internalfinancial controls over financial reporting of the Company and the operating effectivenessof such controls refer to our separate Report in "Annexure A". h. Withrespect to the other matters to be included in the Auditor's Report in accordancewith the requirements of section 197(16) of the Act as amended: In our opinion and to thebest of our information and according to the explanations given to us the remunerationpaid by the Company to its directors during the year is in accordance with the provisionsof section 197 of the Act. i. 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 according tothe explanations given to us: (i) The Company has disclosed the impact of pendinglitigations on its financial position in its financial statements in Note No. 38 39 and40 to the financial statements except in respect of property tax as detailed in Note No.41 to the financial statements where the amount is not quantifiable and which is also amatter of qualified opinion in this report; (ii) The Company has made provisions asrequired under the applicable law or Ind AS for material foreseeable losses if any onlong term contracts including derivative contracts; (iii) There were no amounts which wererequired to be transferred to the Investor Education and Protection Fund by the Company.
2. As required by the Companies (Auditor's Report) Order 2016("CARO 2016") issued by the Central Government in terms of Section 143(11) ofthe Act we give in "Annexure B" a statement on the matters specified inparagraphs 3 and 4 of CARO 2016.
"ANNEXURE A" TO THE INDEPENDENT AUDITOR'S REPORT
(Referred to in paragraph 1 (g) under Report on Other Legal andRegulatory Requirements' of our report of even date to the members of GTLInfrastructure Limited on the financial statements for the year ended March 31 2019)Report on the Internal Financial Controls Over Financial Reporting under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls over financialreporting of GTL INFRASTRUCTURE LIMITED (the Company') as of March 312019 in conjunction with our audit of the financial statements of the Company for the yearended on that date.
Management's Responsibility for Internal Financial Controls
The Company's management is responsible for establishing andmaintaining internal financial controls based on the internal control over financialreporting criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting (the Guidance Note') issued by the Institute of CharteredAccountants of India (ICAI). These responsibilities include the design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the orderly and efficient conduct of its business including adherence tocompany's policies the safeguarding of its assets the prevention and detection offrauds and errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Companies Act 2013.
Our responsibility is to express an opinion on the Company'sinternal financial controls over financial reporting based on our audit. We conducted ouraudit in accordance with the Guidance Note issued by the ICAI and the Standards ofAuditing prescribed under Section 143(10) of the Companies Act 2013 to the extentapplicable to an audit of internal financial controls. Those Standards and the GuidanceNote require that we comply with ethical requirements and plan and perform the audit toobtain reasonable assurance about whether adequate internal financial controls overfinancial reporting was established and maintained and if such controls operatedeffectively in all material respects. Our audit involves performing procedures to obtainaudit evidence about the adequacy of the internal financial controls system over financialreporting and their operating effectiveness. Our audit of internal financial controls overfinancial reporting included obtaining an understanding of internal financial controlsover financial reporting assessing the risk that a material weakness exists and testingand evaluating the design and operating effectiveness of internal control based on theassessed risk. The procedures selected depend on the auditor's judgement includingthe assessment of the risks of material misstatement of the Ind AS financial statementswhether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the Company's internalfinancial controls system over financial reporting.
Meaning of Internal Financial Controls over Financial Reporting
A company's internal financial control over financial reporting isa process designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles. A company's internal financial controlover financial reporting includes those policies and procedures that (1) pertain to themaintenance of records that in reasonable detail accurately and fairly reflect thetransactions and dispositions of the assets of the company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of financialstatements in accordance with generally accepted accounting principles and that receiptsand expenditures of the company are being made only in accordance with authorisations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised 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 FinancialReporting
Because of the inherent limitations of internal financial controls overfinancial reporting including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected. Also projections of any evaluation of the internal financial controls overfinancial reporting to future periods are subject to the risk that the internal financialcontrol over financial reporting may become inadequate because of changes in conditionsor that the degree of compliance with the policies or procedures may deteriorate.
In our opinion to the best of our information and according to theexplanations given to us 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 2019 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note issued by theICAI.
"ANNEXURE B" TO INDEPENDENT AUDITOR'S REPORT
(Referred to in paragraph 2 under the heading "Report on OtherLegal and Regulatory Requirements" of our report of even date to the members of GTLINFRASTRUCTURE LIMITED on the financial statements for the year ended March 31 2019) i.In respect of its fixed assets: a. The Company has maintained proper records showing fullparticulars including quantitative details and situation of fixed assets on the basis ofavailable information.
b. As explained to us the Company has physically verified certainassets in accordance with a phased program of verification which in our opinion isreasonable having regard to the size of the Company and the nature of its assets. Nomaterial discrepancies were noticed on such physical verification as compared with theavailable records. c. According to the information and explanations given to us the titledeeds of immovable properties are held in the name of the Company except in respect offollowing immovable properties as detailed below:
Further as informed to us in respect of 8 immovable properties havingNet Book Value of र 3619 Lakhs in respect of which the original title deeds have beendeposited with the lenders as security have been verified based on the photocopies of thedocuments for those immovable properties and based on such documents the title deeds areheld in the name of the company. ii. As explained to us inventories have been physicallyverified during the year by the management and in our opinion the frequency ofverification is reasonable. Discrepancies noticed on physical verification of theinventories between the physical inventories and book records were not material havingregard to the size of the operations of the Company and the same have been properly dealtwith. iii. The Company has not grant any loan secured or unsecured to companies firmslimited liability partnerships or other parties covered in the register maintained undersection 189 of the Act. Therefore clause (iii) of paragraph 3 of the CARO 2016 is notapplicable to the Company. iv. In our opinion and according to the information andexplanations given to us the Company has not granted any loan or made any investment orprovided any guarantees or security to the parties covered under section 185 and 186.Therefore clause (v) of paragraph 3 of the CARO 2016 is not applicable to the Company. v.According to the information and explanations given to us the Company has not acceptedany deposits from the public within the provisions of section 73 to 76 of the Act and theRule framed there-under. Therefore clause (v) of paragraph 3 of the CARO 2016 is notapplicable to the Company. vi. According to the information and explanations given to usthe Central Government has not prescribed the cost records to be maintained undersub-Section (1) of Section 148 of the Act in respect of business activities carried on bythe Company. Therefore clause (vi) of paragraph 3 of the CARO 2016 is not applicable tothe Company. vii. According to the information and explanations given to us in respect ofstatutory dues: a. The Company has been generally regular in depositing undisputedstatutory dues including provident fund employees' state insurance income taxduty of customs duty of excise value added tax cess and any other statutory dues asapplicable with the appropriate authorities during the year. According to information andexplanation given to us no undisputed amounts payable in respect of such statutory dueswere outstanding as at March 31 2019 for a period of more than six months from the datethey become payable. b. The disputed statutory dues of income tax sales tax entry taxand value added tax and service tax aggregating to र 26663 Lakhs that have not beendeposited on account of disputed matters pending before appropriate authorities as under:
(*) Net of amount deposited under protest
As detailed in Note No. 41 to the Financial Statements the Company hasdisputed various matters related to Property tax payable on its telecommunication towersin respect of which it is not possible to quantify the amount in dispute. viii. Based onour audit procedures and information and explanations given by the management andconsidering the Corporate Debt Restructuring (CDR) scheme with banks financialinstitution; we are of the opinion that as on March 31 2019 the Company has defaulted inrepayment of loans to banks financial institution EARC foreign lenders and FCCB holdersaggregating to र 59517 Lakhs. Lender wise details of such default are as under:
* During the year certain banks has assigned all their rights titleand interests in financial assistances granted by them to the Company in favor of EARC.ix. According to the information and explanations given to us the Company did not raiseany money by way of initial public offer or further public offer (including debtinstruments) and term loans during the year. Accordingly clause (ix) of paragraph 3 ofthe CARO 2016 is not applicable to the Company. x. Based on our audit procedures performedfor the purpose of reporting the true and fair view of the financial statements and on thebasis of information and explanations given by the management no fraud by the Company oron the Company by its officers or employees has been noticed or reported during the year.xi. In our opinion and according to the information and explanations given to us theCompany has paid / provided for managerial remuneration in accordance with the requisiteapprovals mandated by the provisions of section 197 read with Schedule V to the Act. xii.In our opinion and according to the information and explanations given to us the Companyis not a nidhi company. Therefore clause (xii) of paragraph 3 of the CARO 2016 is notapplicable to the Company. xiii. According to the information and explanations given to usand based on our examination of the records of the Company transactions with the relatedparties are in compliance with sections 177 and 188 of the Act where applicable anddetails of such transactions have been disclosed in the financial statements as requiredby the applicable accounting standards. xiv. According to the information and explanationsgiven to us and based on our examination of the records of the Company the Company hasnot made any preferential allotment or private placement of shares or fully or partlyconvertible debentures during the year. The Company has allotted equity shares onconversion of FCCB's. Therefore clause (xiv) of paragraph 3 of the CARO 2016 is notapplicable to the Company. xv. According to the information and explanations given to usand based on our examination of the records of the Company the Company has not enteredinto non-cash transactions with directors or persons connected with him. Therefore clause(xv) of paragraph 3 of the CARO 2016 is not applicable to the Company. xvi. In our opinionand according to the information and explanations provided to us the Company is notrequired to be registered under section 45-IA of the Reserve Bank of India Act 1934.