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OnMobile Global Ltd.

BSE: 532944 Sector: Telecom
NSE: ONMOBILE ISIN Code: INE809I01019
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VOLUME 1202
52-Week high 45.35
52-Week low 12.95
P/E
Mkt Cap.(Rs cr) 294
Buy Price 28.15
Buy Qty 1136.00
Sell Price 28.35
Sell Qty 1230.00
OPEN 29.45
CLOSE 28.40
VOLUME 1202
52-Week high 45.35
52-Week low 12.95
P/E
Mkt Cap.(Rs cr) 294
Buy Price 28.15
Buy Qty 1136.00
Sell Price 28.35
Sell Qty 1230.00

OnMobile Global Ltd. (ONMOBILE) - Auditors Report

Company auditors report

To the Members of

ONMOBILE GLOBAL LIMITED

Report on the Audit of the Standalone Financial Statements Opinion

We have audited the standalone financial statements of Onmobile Global Limited("the Company") which comprise the standalone balance sheet as at 31 March2019 and the standalone statement of profit and loss (including other comprehensiveincome) standalone statement of changes in equity and standalone statement of cash flowsfor the year then ended and notes to the standalone financial statements including asummary of the significant accounting policies and other explanatory information(hereinafter referred to as "the standalone financial statements") In ouropinion and to the best of our information and according to the explanations given to usthe aforesaid standalone financial statements give the information required by theCompanies Act 2013 ("Act") in the manner so required and give a true and fairview in conformity with the accounting principles generally accepted in India of thestate of affairs of the Company as at 31 March 2019 and profit and other comprehensiveincome changes in equity and its cash flows for the year ended on that date.

basis for Opinion

We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder Section 143(10) of the Act. Our responsibilities under those SAs are furtherdescribed in the Auditor's Responsibilities for the Audit of the Standalone 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 standalone financial statementsunder the provisions of the Act and the Rules thereunder and we have fulfilled our otherresponsibilities 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 Matters

Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone financial statements of the current period.These matters were addressed in the context of our audit of the standalone financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters.

Impairment of Investments in subsidiaries See note 4 to the standalone financialstatements

The key audit matters How the matter was addressed in our audit
The Company is carrying significant investment in subsidiaries amounting to INR 3253.49 million (net of impairment provision amounting to INR 568.11 million) as at 31 March 2019. Testing operating effectiveness of controls over the review of the impairment analysis.
The annual impairment testing was significant to our audit because of the financial quantum of the assets in the context of the standalone financial statements as well as the fact that the testing relies on critical judgements estimates and assumptions. We evaluated the forecasts by comparing them with the historical growth trends agreeing the forecast used in prior year models to its actual performance of the business and also agreed to the management approved plans.
Significant judgment is required in forecasting the future cash flows together with the rate at which they are discounted. We reviewed the sensitivity analysis prepared by the Management to test the reasonably possible change in key assumptions used in the valuation carried out and its consequential impact on impairment analysis if any.

Recoverability of Trade receivables (including unbilled receivables) and receivablesfrom subsidiaries (including unbilled receivables) (Refer note 6 and note 10 to theStandalone financial statement)

The key audit matters How the matter was addressed in our audit matter
The Company has trade receivables including unbilled receivables from external parties amounting to INR 567.15 million (net of allowance for expected credit loss INR 169.50 million) and receivables from subsidiaries amounting to INR 876.08 million (net of expected credit loss INR 333.28 million) as at 31 March 2019. Tested the design of internal financialcontrols and operating effectiveness of the relevant key controls;
The key audit matters How the matter was addressed in our audit matter
The Company's customers and subsidiaries operate in a number of geographical locations having different credit profiles. Enquired with Company's management of the significant and long overdue balances with reference to recent history of settlement default or disputes and the ageing profile of the relevant trade and other receivables and receivables from subsidiaries.
Management judgement is required in determining the appropriate level of allowance for expected credit losses to be recorded in respect of such receivables using the life time expected credit losses analysis. Reviewed the appropriateness of level of allowance for expected credit losses by considering the historical cash collection trends and the local economic environment in each of the geographies.
Recoverability of trade and other receivables was an area of focus for us because of significance of the amounts involved in context of the standalone financial statements and the fact that it involved critical estimates.
Recoverability of deferred tax assets (Refer note 28 to Standalone financial statements)
The key audit matters How the matter was addressed in our audit matter
The balance of deferred tax assets recognized as at 31 March 2019 in the standalone financial statements is INR 526.30 million which includes Minimum Alternate Tax (‘MAT') entitlement credits amounting to INR 273 million arising on account of tax holiday benefits enjoyed by the Company. Our audit procedures included assessing the revenue and profit forecast against the historical performance remaining period of tax holiday benefit which the Company enjoys.
Assessment of recoverability of such MAT credits and deferred tax assets require management to prepare forecasts for future profitability and potential tax liabilities which involves significant judgment and accordingly was an area of focus. We also assessed the sensitivity of key assumptions including the growth rate and the impact of tax holiday benefit for future years on the ability to utilize the MAT credits.

Information Other than the Standalone Financial Statements and Auditors' Report Thereon

The Company's Management and Board of Directors are responsible for the otherinformation. The other information comprises of Management Reports such as Board's ReportManagement Discussion and Analysis Corporate Governance Report and BusinessResponsibility Report (but does not include the Financial Statements and our Auditor'sReport thereon) which we obtained prior to the date of this Auditor's Report and theremaining reports which is expected to be made available to us after that date.

Our opinion on the standalone financial statements does not cover the other informationand we do not express any form of assurance conclusion thereon.

In connection with our audit of the standalone financial statements our responsibilityis to read the other information and in doing so consider whether the other informationis materially inconsistent with the standalone financial statements or our knowledgeobtained in the audit or otherwise appears to be materially misstated. If based on thework we have performed we conclude that there is a material misstatement of this otherinformation we are required to report that fact. We have nothing to report in thisregard.

When we read the other sections of Annual Report (other than those mentioned above) ifwe conclude that there is a material misstatement therein we are required to communicatethe matter to those charged with governance and take necessary actions as applicableunder the applicable laws and regulations.

Management's Responsibility for the Standalone Financial Statements

The Company's Management and Board of Directors are responsible for the matters statedin Section 134(5) of the Act with statements respecttothepreparationofthesestandalonefinancial that give a true and fair view of the state of affairsprofit/ loss and other comprehensive income changes in equity and cash flows of theCompany in accordance with the accounting principles generally accepted in Indiaincluding the Indian Accounting Standards (Ind AS) specified under Section 133 of the Act.This responsibility also includes maintenance of adequate accounting records in accordancewith the provisions of the Act for safeguarding of the assets of the Company and forpreventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; and design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the accuracy and completeness of theaccounting records relevant to the preparation and presentation of the standalonefinancial that give a true and fair view and are free from material misstatement whetherdue to fraud or error.

In preparing the standalone financial statements Management and Board of Directors areresponsible for assessing the Company's ability to continue as a going concerndisclosing as applicable matters related to going concern and using the going concernbasis of accounting unless Management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so.

Board of Directors is also responsible for overseeing the Company's financial reportingprocess.

Our objectives are to obtain reasonable assurance about whether the standalonefinancial 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. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these standalone financial statements.

Auditor's Responsibilities for the Audit of the Standalone Financial Statements

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

Identify and assess the risks of material misstatement of the standalone 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 to designaudit procedures that are appropriate in the circumstances. Under Section 143(3)(i) of theAct 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 reasonableness ofaccounting estimates and related disclosures made by Management.

Conclude on the appropriateness of Management's use of the going concern basis ofaccounting 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 standalone financial statements or if such disclosures are inadequate to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor's report. However future events or conditions may cause the Company to cease tocontinue as a going concern.

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

We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit. We alsoprovide those charged with governance with a statement that we have complied with relevantethical requirements regarding independence and to communicate with them allrelationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.

From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the standalone financial statementsof the current period and are therefore the key audit matters. We describe these mattersin our auditors' report unless law or regulation precludes public disclosure about thematter or 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

1. As required by the Companies (Auditors' Report) Order 2016 ("the Order")issued by the Central Government in terms of Section 143 (11) of the Act we give in the"Annexure A" a statement on the matters specified in paragraphs 3 and 4 of theOrder to the extent applicable.

(A) 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 standalone balance sheet the standalone statement of profit and loss (includingother comprehensive income) the standalone statement of changes in equity and thestandalone statement of cash flows dealt with by this Report are in agreement with thebooks of account.

d) In our opinion the aforesaid standalone financial statements comply with the Ind ASspecified under Section 133 of the Act.

e) On the basis of the written representations received from the directors as on 31March 2019 taken on record by the Board of Directors none of the directors isdisqualified as on 31 March 2019 from being appointed as a director in terms of Section164(2) of the Act.

f) 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 B".

(B) With respect to the other matters to be included in the Auditors' 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:

a) The Company has disclosed the impact of pending litigations as at 31 March 2019 onits financial position in its standalone financial statements - Refer Note 29 to thestandalone financial statements;

b) The Company has made provision as required under the applicable law or accountingstandards for material foreseeable losses if any on long-term contracts includingderivative contracts- Refer Note 34 to the standalone financial statements;

c) There are no amounts which are required to be transferred to the Investor Educationand Protection Fund by the Company during the year ended 31 March 2019; and

d) The disclosures in the Standalone Ind AS Financial Statements regarding holdings aswell as dealings in specified bank notes during the period from 8 November 2016 to 30December 2016 have not been made in these Standalone Ind AS Financial Statements sincethey do not pertain to the financial year ended 31 March 2019.

(C) With respect to the matter to be included in the Auditors' Report under Section197(16):

In our opinion and according to the information and explanations given to us theremuneration paid by the company to its directors during the current year is in accordancewith the provisions of Section 197 of the Act. The remuneration paid to any director isnot in excess of the limit laid down under Section 197 of the Act. The Ministry ofCorporate Affairs has not prescribed other details under Section 197(16) which arerequired to be commented upon by us.

For b S R & Co. llP

Chartered Accountants

Firm's Registration No: 101248W/W-100022

Sampad Guha Thakurta

Partner

Membership No: 060573

Bangalore 24 May 2019

ANNEXURE A TO THE INDEPENDENT AUDITOR'S REPORT

In respect of the Annexure referred to in Independent Auditor's Report to the membersof the Company on the standalone financial statements of Onmobile Global Limited for theyear ended 31 March 2019. We report that:

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

(b) The Company has a regular programme of physical verification of its fixed assetsby which all fixed assets are verified in a phased manner over a period of three years. Inour opinion this periodicity of physical verification is reasonable having regard to thesize of the Company and the nature of its assets. In accordance with this programmecertain fixed assets were verified during the year and no material discrepancies werenoticed on such verification.

(c) According to the information and explanations given to us and basis our examinationof the records of the Company the Company does not hold any immovable properties as at 31March 2019.

(ii) The Company does not have any physical inventories and thus paragraph 3(ii) ofthe Order is not applicable to the Company.

(iii) According to the information and explanations given to us the Company has grantedunsecured loans to companies covered in the register maintained under Section 189 of theCompanies Act 2013 (‘the Act').

(a) In our opinion the rate of interest and other terms and conditions on which theloans have been granted to the companies listed in the register maintained under Section189 of the Act are not prima facie prejudicial to the interest of the Company.

(b) In the case of the loans granted covered in the register maintained under Section189 of the Act the principal and interest are repayable on demand and there were nodemand for repayments during the year.

(c) There are no overdue amounts in respect of the loans granted to companies coveredin the register maintained under Section 189 of the Act

(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 with respectto the loans given investments made guarantees and securities given as applicable.

(v) According to information and explanations given to us the Company has not acceptedany deposits during the year.

(vi) The Central Government of India has not prescribed the maintenance of cost recordsunder section 148(1) of the Act for any of the activities of the Company.

(vii) (a) According to the information and explanations given to us and on the basis ofour examination of the records of the Company amounts deducted/ accrued in the books ofaccount in respect of undisputed statutory dues including provident fund employees' Stateinsurance income-tax goods and service tax cess and other material statutory dues havegenerally been regularly deposited during the year with the appropriate authorities.According to the information and explanation given to us the Company did not have anydues on account of sales tax duty of customs and duty of excise.

According to the information and explanations given to us no undisputed amountspayable in respect of Provident fund Employees' State Insurance Income-tax Goods andServices tax Cess and other material statutory dues were in arrears as at 31 March 2019for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us there are no dues ofincome-tax or service tax or goods and service tax or duty of Customs or duty of excise orvalue added tax which have not been deposited by the Company on account of any disputesexcept for the following:

Name of the statute Nature of dues Amount disputed (INR in million) Period to which the amount relates Forum where dispute is pending
Income-tax Ordinance 1984 Bangladesh Income tax 3.25 FY 2009-10 High Court of Bangladesh
Income-tax Act 1961 Income tax 1.16 FY 2007-08 High Court of Karnataka
Income-tax Act 1961 Income tax 127.32 FY 2013-14 Dispute Resolution Panel (DRP)
Income-tax Act 1961 Income tax 20.01 FY 2014-15 Income Tax Appellate Tribunal (ITAT)
Finance Act 1994 Service tax 5.51 FY 2006-07 to FY 2008-09 CESTAT

* net of amounts paid under protest and/or adjusted against refunds.

(viii) The Company does not have any loans or borrowings from financial institutionsbanks and government or has not issued any debentures.

(ix) According to the information and explanations given to us the Company has notraised any money by way of public issue or further public offer (including debtinstruments) during the year.

(x) According to the information and explanations given to us no material fraud by theCompany or on the Company by its officers or employees has been noticed or reported duringthe year.

(xi) According to the information and explanations given to us and based on examinationof the records of the Company the Company has paid/provided managerial remuneration inaccordance with the requisite approvals as per the provisions of Section 197 read withSchedule V to the Act.

(xii) In our opinion and according to the information and explanations given to us theCompany is not a nidhi company.

(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 standalone financial statements as required by theapplicable accounting standards.

(xiv) According to the information and explanations given 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.

(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. (xvi) According to theinformation and explanation given to us the Company is not required to be registeredunder Section 45-IA of the Reserve Bank of India Act 1934.

For b S R & Co. llP

Chartered Accountants

Firm's Registration No: 101248W/W-100022

Sampad Guha Thakurta

Partner

Membership No: 060573

Bangalore 24 May 2019

ANNEXURE B TO THE INDEPENDENT AUDITOR'S REPORT

Annexure B to the Independent Auditor's Report of even date on standalone financialstatements of Onmobile Global Limited for the year ended 31 March 2019

Report on the Internal Financial Controls with reference to standalone financialstatements under Clause (i) of Sub-section 3 of Section 143 of the Companies Act 2013("the Act") (Referred to in paragraph A (f) under ‘Report on Other legaland Regulatory Requirements' section of our report of even date)

Opinion

We have audited the internal financial controls with reference to financial statementsof Onmobile Global Limited ("the Company") as of 31 March 2019 in conjunctionwith our audit of the standalone financial statements of the Company for the year ended onthat date. In our opinion the Company has in all material respects adequate internalfinancial controls with reference to financial statements and such internal financialcontrols were operating effectively as at 31 March 2019 based on the internal financialcontrols with reference to financial statements criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Note onAudit of Internal Financial Controls Over Financial Reporting issued by the Institute ofChartered Accountants of India (the "Guidance Note").

Management's Responsibility for Internal Financial Controls

The Company's management and the Board of Directors are responsible for establishingand maintaining internal financial controls based on the internal financial controls withreference to financial statements criteria established by the Company considering theessential components of internal control stated in the Guidance Note. Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to company's policies the safeguarding ofits assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the Companies Act 2013 (hereinafter referred to as"the Act").

Auditor's Responsibility

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 and the Standards on Auditing prescribed undersection 143(10) of the Act to the extent applicable to an audit of internal financialcontrols with reference to financial statements. Those Standards and the Guidance Noterequire that we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether adequate internal financial controls with reference tofinancial statements were established and maintained and whether such controls operatedeffectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls with reference to financial statements and their operatingeffectiveness. Our audit of internal financial controls with reference to financialstatements included obtaining an understanding of such internal financial controlsassessing 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 whether due to fraud or error. misstatement of the standalone financial Webelieve that the audit evidence we have obtained is sufficient and appropriate to providea basis for our audit opinion on the system with reference to financial Company's internalfinancial year.

Meaning of Internal Financial Controls with reference to standalone financialstatements with reference to financial statements is a process designed to providereasonable A company's internal financial 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 include 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 standalonefinancial statements

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 controls with reference to financial statements may become inadequatebecause of changes in conditions or that the degree of compliance with the policies orprocedures may deteriorate.

For b S R & Co. llP

Chartered Accountants

Firm's Registration No: 101248W/W-100022

Sampad Guha Thakurta

Partner

Membership No: 060573

Bangalore 24 May 2019