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Music Broadcast Ltd.

BSE: 540366 Sector: Media
NSE: RADIOCITY ISIN Code: INE919I01024
BSE 00:00 | 03 Apr 14.94 0.10
(0.67%)
OPEN

14.55

HIGH

17.40

LOW

14.34

NSE 00:00 | 03 Apr 14.85 0.10
(0.68%)
OPEN

14.75

HIGH

15.00

LOW

14.35

OPEN 14.55
PREVIOUS CLOSE 14.84
VOLUME 2580
52-Week high 49.88
52-Week low 12.50
P/E 9.34
Mkt Cap.(Rs cr) 516
Buy Price 14.94
Buy Qty 6.00
Sell Price 17.30
Sell Qty 270.00
OPEN 14.55
CLOSE 14.84
VOLUME 2580
52-Week high 49.88
52-Week low 12.50
P/E 9.34
Mkt Cap.(Rs cr) 516
Buy Price 14.94
Buy Qty 6.00
Sell Price 17.30
Sell Qty 270.00

Music Broadcast Ltd. (RADIOCITY) - Auditors Report

Company auditors report

TO THE MEMBERS OF MUSIC BROADCAST LIMITED

Report on the audit of the Financial Statements

Opinion

1. We have audited the accompanying financial statements of Music Broadcast Limited("the Company") which comprise the Balance Sheet as at March 31 2019 and theStatement of Profit and Loss (including Other Comprehensive Income) Statement of Changesin Equity and Statement of Cash Flows for the year then ended and notes to the financialstatements including a summary of significant accounting policies and other explanatoryinformation.

2. In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid financial statements give the information required by theCompanies Act 2013 ("the Act") in the manner so required and give a true andfair view in conformity with the accounting principles generally accepted in India of thestate of affairs of the Company as at March 31 2019 and total comprehensive income(comprising profit and other comprehensive income) changes in equity and its cash flowsfor the year then ended.

Basis for opinion

3. We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder Section 143(10) of the Act. Our responsibilities under those Standards are furtherdescribed in the Auditor's Responsibilities for the Audit of the Financial Statementssection of our report. We are independent of the Company in accordance with the Code ofEthics issued by the Institute of Chartered Accountants of India together with the ethicalrequirements that are relevant to our audit of the financial statements under theprovisions of the Act and the Rules thereunder and we have fulfilled our other ethicalresponsibilities in accordance with these requirements and the Code of Ethics. We believethat the audit evidence we have obtained is sufficient and appropriate to provide a basisfor our opinion.

Key audit matter

4. Key audit matter is that matter that in our professional judgment was of mostsignificance in our audit of the financial statements of the current period. This matterwas addressed in the context of our audit of the financial statements as a whole and informing our opinion thereon and we do not provide a separate opinion on this matter.

Key audit matter How our audit addressed the key audit matter
Assessment of contingent liability relating to litigation in respect of payment of royalty for use of sound recordings Our audit procedures on management's assessment of litigation included:
[Refer to note 25(a) (Contingent Liabilities) and note 1 (Significant accounting policies) to the financial statements] The Company has received certain claims amounting to Rs. 429.17 lakhs towards payment of royalty (‘Claims') for use of sound recordings over its radio stations for the period July 2007 to August 2010 which is under litigation at a judicial forum. • Gaining an understanding of the claims through discussions with the management and reviewing the underlying relevant supporting documentation with the music licensing company;
From the above disputed amount the Company has paid Rs. 200 lakhs under protest to the music licensing company. • Evaluating the design and testing the operating effectiveness of key controls relating to assessment of contingent liability;
Based on the legal advice obtained by the management and considering the merits of the case the management expects a favourable outcome of the litigation and hence the amount of claims has been disclosed as a contingent liability in the financial statements. • Discussing with the management the material developments during the year in relation to the litigation;
We focused on this area as the eventual outcome of claims is uncertain and the position taken by the management is based on the application of material judgement and estimation. • Obtaining independent letter from the Company's external legal counsel including the status of the litigation their views regarding the likely outcome and magnitude of the potential exposure;
• Reviewing the minutes of board of directors meetings in respect of discussions relating to legal matters;
• Considering the management's assessment of the matter that material outflow on account of the litigation is not probable; and
• Reviewing the adequacy and completeness of the Company's disclosures.
Based on the above procedures performed we determined the management assessment of the contingent liability relating to litigation in respect of royalty claims as reasonable.

Other Information

5. The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the annual report but does not includethe financial statements and our auditor's report thereon.

Our opinion on the financial statements does not cover the other information and we donot express any form of assurance conclusion thereon.

In connection with our audit of the financial statements our responsibility is to readthe other information and in doing so consider whether the other information ismaterially inconsistent with the financial statements or our knowledge obtained in theaudit or otherwise appears to be materially misstated. If based on the work we haveperformed we conclude that there is a material misstatement of this other information weare required to report that fact.

We have nothing to report in this regard.

Responsibilities of management and those charged with governance for the financialstatements

6. The Company's Board of Directors is responsible for the matters stated in Section134(5) of the Act with respect to the preparation of these financial statements that givea true and fair view of the financial position financial performance changes in equityand cash flows of the Company in accordance with the accounting principles generallyaccepted in India including the Accounting Standards specified under Section 133 of theAct. This responsibility also includes maintenance of adequate accounting records inaccordance 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.

7. In preparing the financial statements management is responsible for assessing theCompany's ability to continue as a going concern disclosing as applicable mattersrelated to going concern and using the going concern basis of accounting unless managementeither intends to liquidate the Company or to cease operations or has no realisticalternative but to do so. Those Board of Directors are also responsible for overseeing theCompany's financial reporting process.

Auditor's responsibilities for the audit of the financial statements

8. Our objectives are to obtain reasonable assurance about whether the financialstatements as a whole are free from material misstatement whether due to fraud or errorand to issue an auditor's report that includes our opinion. Reasonable assurance is a highlevel of assurance but is not a guarantee that an audit conducted in accordance with SAswill always detect a material misstatement when it exists. Misstatements can arise fromfraud or error and are considered material if individually or in the aggregate theycould reasonably be expected to influence the economic decisions of users taken on thebasis of these financial statements.

9. As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional scepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financialstatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentional omissions misrepresentations or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under Section 143(3)(i)of the Act we are also responsible for expressing our opinion on whether the Company hasadequate internal financial controls with reference to financial statements in place andthe operating effectiveness of such controls.

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

• Conclude on the appropriateness of management's use of the going concern basisof accounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe financial statements or if such disclosures are inadequate to modify our opinion.Our conclusions are based on the audit evidence obtained up to the date of our auditor'sreport. However future events or conditions may cause the Company to cease to continue asa going concern.

• Evaluate the overall presentation structure and content of the financialstatements including the disclosures and whether the financial statements represent theunderlying transactions and events in a manner that achieves fair presentation.

10. We communicate with those charged with governance regarding among other mattersthe planned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.

11. 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 safe guards.

12. From the matters communicated with those charged with governance we determinethose matters that were of most significance in the audit of the financial statements ofthe current period and are therefore the key audit matters. We describe these matters inour auditor's report unless law or regulation precludes public disclosure about the matteror when in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.

Report on other legal and regulatory requirements

13. As required by the Companies (Auditor's Report) Order 2016 ("theOrder") issued by the Central Government of India in terms of sub-section (11) ofSection 143 of the Act we give in the "Annexure B" a statement on the mattersspecified in paragraphs 3 and 4 of the Order to the extent applicable.

14. 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 the bestof our knowledge and belief were necessary for the purposes of our audit.

(b) In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books.

(c) The Balance Sheet the Statement of Profit and Loss (including other comprehensiveincome) the Statement of Changes in Equity and Cash Flow Statement dealt with by thisReport are in agreement with the books of account.

(d) In our opinion the aforesaid financial statements comply with the AccountingStandards specified under Section 133 of the Act.

(e) On the basis of the written representations received from the directors as on March31 2019 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2019 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 with reference tofinancial statements of the Company and the operating effectiveness of such controlsrefer to our separate Report in "Annexure A".

(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 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 financial statements – Refer Note 25(a) and 25(b) to the financialstatements.

ii. The Company did not have derivative contracts and in respect of other long-termcontracts there were no material foreseeable losses as at March 31 2019.

iii. There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company during the year ended March 31 2019.

iv. The reporting on disclosures relating to Specified Bank Notes is not applicable tothe Company for the year ended March 31 2019.

For Price Waterhouse Chartered Accountants LLP Firm Registration Number:012754N/N500016

Chartered Accountants
Anurag Khandelwal
Place: Mumbai Partner
Date: May 27 2019 Membership Number 078571

Annexure A to Independent Auditors' Report

Referred to in paragraph 14(f) of the Independent Auditors' Report of even date to themembers of Music Broadcast Limited on the financial statements for the year ended March31 2019

Report on the Internal Financial Controls with reference to financial statements underClause (i) of Sub-section 3 of Section 143 of the Act

1. We have audited the internal financial controls with reference to financialstatements of Music Broadcast Limited ("the Company") as of March 31 2019 inconjunction with our audit of the financial statements of the Company for the year endedon that date.

Management's Responsibility for Internal Financial Controls

2. 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 (ICAI). These responsibilitiesinclude the design implementation and maintenance of adequate internal financial controlsthat were operating effectively for ensuring the orderly and efficient conduct of itsbusiness including adherence to company's policies the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the Act.

Auditors' Responsibility

3. Our responsibility is to express an opinion on the Company's internal financialcontrols with reference to financial statements based on our audit. We conducted our auditin accordance with the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting (the "Guidance Note") and the Standards on Auditing 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 ICAI. Those Standards and the Guidance Note require that we complywith ethical requirements and plan and perform the audit to obtain reasonable assuranceabout whether adequate internal financial controls with reference to financial statementswas established and maintained and if such controls operated effectively in all materialrespects.

4. Our audit involves performing procedures to obtain audit evidence about the adequacyof the internal financial controls system with reference to financial statements and theiroperating effectiveness. Our audit of internal financial controls with reference tofinancial statements included obtaining an understanding of internal financial controlswith reference to financial statements assessing the risk that a material weaknessexists and testing and evaluating the design and operating effectiveness of internalcontrol based on the assessed risk. The procedures selected depend on the auditor'sjudgement including the assessment of the risks of material misstatement of the financialstatements whether due to fraud or error.

5. 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 systemwith reference to financial statements.

Meaning of Internal Financial Controls with reference to financial statements

6. A company's internal financial controls with reference to financial statements is aprocess 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 controlswith reference to financial statements includes those policies and procedures that (1)pertain to the maintenance of records that in reasonable detail accurately and fairlyreflect the transactions and dispositions of the assets of the company; (2) providereasonable assurance that transactions are recorded as necessary to permit preparation offinancial statements in accordance with generally accepted accounting principles and thatreceipts and expenditures of the company are being made only in accordance withauthorisations of management and directors of the company; and (3) provide reasonableassurance regarding prevention or timely detection of unauthorised acquisition use ordisposition of the company's assets that could have a material effect on the financialstatements.

Inherent Limitations of Internal Financial Controls with reference to financialstatements

7. Because of the inherent limitations of internal financial controls with reference tofinancial statements 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 withreference to financial statements to future periods are subject to the risk that theinternal financial control controls with reference to financial statements may becomeinadequate because of changes in conditions or that the degree of compliance with thepolicies or procedures may deteriorate.

Opinion

8. In our opinion the Company has in all material respects an adequate internalfinancial controls system with reference to financial statements and such internalfinancial controls with reference to financial statements were operating effectively as atMarch 31 2019 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.

For Price Waterhouse Chartered Accountants LLP
Firm Registration Number: 012754N/N500016
Chartered Accountants
Anurag Khandelwal
Place: Mumbai Partner
Date: May 27 2019 Membership Number 078571

Annexure B to Independent Auditors' Report

Referred to in paragraph 13 of the Independent Auditors' Report of even date to themembers of Music Broadcast Limited on the financial statements as of and for the yearended March 31 2019

i. (a) The Company is maintaining proper records showing full particulars includingquantitative details and situation of fixed assets (property plant and equipment).

(b) The fixed assets (property plant and equipment) are physically verified by theManagement according to a phased programme designed to cover all the items over a periodof 3 years which in our opinion is reasonable having regard to the size of the Companyand the nature of its assets. Pursuant to the programme a portion of the fixed assets(property plant and equipment) has been physically verified by the Management during theyear and no material discrepancies have been noticed on such verification.

(c) The title deeds of immovable properties as disclosed in Note 3 on fixed assets(property plant and equipment) to the financial statements are held in the name of theCompany.

ii. The Company is in the business of rendering services and consequently does nothold any inventory. Therefore the provisions of Clause 3(ii) of the said Order are notapplicable to the Company.

iii. The Company has not granted any loans secured or unsecured to companies firmsLimited Liability Partnerships or other parties covered in the register maintained underSection 189 of the Act. Therefore the provisions of Clause 3(iii) (iii)(a) (iii)(b) and(iii)(c) of the said 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 186 of the Companies Act 2013 inrespect of the loan and investments made. The Company has not provided any guarantees orsecurity to the parties covered under Section 186. Further the Company has not grantedany loans or made any investments or provided any guarantees or security to the partiescovered under Section 185.

v. The Company has not accepted any deposits from the public within the meaning ofSections 73 74 75 and 76 of the Act and the Rules framed there under to the extentnotified.

vi. Pursuant to the rules made by the Central Government of India the Company isrequired to maintain cost records as specified under Section 148(1) of the Act in respectof its products. We have broadly reviewed the same and are of the opinion that primafacie the prescribed accounts and records have been made and maintained. We have nothowever made a detailed examination of the records with a view to determine whether theyare accurate or complete.

vii. (a) According to the information and explanations given to us and the records ofthe Company examined by us in our opinion the Company is regular in depositing theundisputed statutory dues including provident fund employees' state insurance incometax cess goods and services tax and other material statutory dues as applicable withthe appropriate authorities. Also refer note 25 (c) to the financial statements regardingmanagement's assessment on certain matters relating to provident fund.

(b) According to the information and explanations given to us and the records of theCompany examined by us there are no dues of sales tax service-tax value added tax andgoods and services tax which have not been deposited on account of any dispute. Theparticulars of dues of income tax as at March 31 2019 which have not been deposited onaccount of a dispute are as follows:

Name of the statute Nature of dues Amount Period to which the amount relates Forum where the dispute is pending
(Rs. in Lakhs)
Income Tax Act 1961 Income tax 5.02 A.Y. 2009-10 Deputy Commissioner of Income Tax
Income Tax Act 1961 Income tax 98.92 A.Y. 2009-10 Commissioner of Income Tax (Appeals)
Total 103.94

viii. According to the records of the Company examined by us and the information andexplanation given to us the Company has not defaulted in repayment of loans or borrowingsto any financial institution or bank or Government or dues to debenture holders as at thebalance sheet date.

ix. In our opinion and according to the information and explanations given to us themoneys raised by way of initial public offer (including debt instruments) and term loanshave been applied for the purposes for which they were obtained.

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 employeesnoticed or reported during the year nor have we been informed of any such case by theManagement.

xi. The Company has paid/ provided for managerial remuneration in accordance with therequisite approvals mandated by the provisions of Section 197 read with Schedule V to theAct.

xii. As the Company is not a Nidhi Company and the Nidhi Rules 2014 are not applicableto it the provisions of Clause 3(xii) of the Order are not applicable to the Company.

xiii. The Company has entered into transactions with related parties in compliance withthe provisions of Sections 177 and 188 of the Act. The details of such related partytransactions have been disclosed in the financial statements as required under IndianAccounting Standard (Ind AS) 24 Related Party Disclosures specified under Section 133 ofthe Act.

xiv. The Company has not made any preferential allotment or private placement of sharesor fully or partly convertible debentures during the year under review. Accordingly theprovisions of Clause 3(xiv) of the Order are not applicable to the Company.

xv. The Company has not entered into any non-cash transactions with its directors orpersons connected with him. Accordingly the provisions of Clause 3(xv) of the Order arenot applicable to the Company.

xvi. The Company is not required to be registered under Section 45-IA of the ReserveBank of India Act 1934. Accordingly the provisions of Clause 3(xvi) of the Order are notapplicable to the Company.

For Price Waterhouse Chartered Accountants LLP
Firm Registration Number: 012754N/N500016
Chartered Accountants
Anurag Khandelwal
Place: Mumbai Partner
Date: May 27 2019 Membership Number 078571