The Members of
Ortel Communications Limited
Report on the Financial Statements
We have audited the accompanying financial statements of Ortel Communications Limited("the Company") which comprise the Balance Sheet as at 31stMarch 2017 theStatement of Profit and Loss and the Cash Flow Statement for the year then ended and asummary of significant accounting policies and other explanatory information.
Management's Responsibility for the Financial Statements
The Company's Board of Directors is responsible for the matters stated in Section134(5) of the Companies Act 2013 ("the Act") with respect to the preparation ofthese financial statements that give a true and fair view of the financial positionfinancial performance and cash flows of the Company in accordance with the accountingprinciples generally accepted in India including the Accounting Standards specified underSection 133 of the Act read with Rule 7 of the Companies (Accounts) Rules 2014. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; anddesign implementation and maintenance of adequate internal financial controls andensuring their operating effectiveness and 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 financial statements based on ouraudit. We have taken into account the provisions of the Act the accounting and auditingstandards and matters which are required to be included in the audit report under theprovisions of the Act and the Rules made thereunder.
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 performing procedures to obtain audit evidence about the amounts anddisclosures in the financial statements. The procedures selected depend on the auditors'judgment including the assessment of the risks of material misstatement of the financialstatements whether due to fraud or error. In making those risk assessments the auditorconsiders internal financial control relevant to the Company's preparation of thefinancial statements that give a true and fair view in order to design audit proceduresthat are appropriate in the circumstances. An audit also includes evaluating theappropriateness of accounting policies used and the reasonableness of the accountingestimates made by the Company's Directors as well as evaluating the overall presentationof the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the financial statements.
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 the Actin the manner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in Indiaof the state of affairs of the Company as at 31stMarch 2017 its profit and its cash flows for the year ended on that date.
Emphasis of Matter
We draw attention to Note No. 47(a) and (b) to the financial statements relating tochange in estimates by the Company for providing for doubtful receivables and for writingoff bad debts. Our opinion is not modified in respect of this matter.
Report on Other Legal and Regulatory Requirements
(1) As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government of India in terms of sub-section (11) of Section 143 ofthe Act we give in "Annexure 1" a statement on the matters specified inparagraphs 3 and 4 of the Order to the extent applicable.
(2) As required by Section 143(3) of the Act we report that:
a. We have sought and except for the matter obtained all the information andexplanations which to the best of our knowledge and belief were necessary for the purposesof 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 and the Cash Flow Statementdealt with by this Report 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 read with Rule 7 of the Companies(Accounts) Rules 2014;
e. The matters described under the Emphasis of Matters paragraph above in our opinionmay have an adverse effect on the functioning of the Company;
f. On the basis of written representations received from the directors as on 31st March 2017 and taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2017 from being appointed as a director in terms of Section164 (2) of the Act;
g. With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls we give ourseparate Report in "Annexure 2".
h. 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 Notes 29 and 41 to the financial statements;
(ii) The Company did not have any long-term contracts including derivative contractsfor which 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.
(iv) The Company has provided requisite disclosures in the financial statements as toholdings as well as dealings in Specified Bank Notes (SBNs) during the period from 8thNovember 2016 to 30th December 2016 (Refer Note No. 48 to the financial statements). Wereport that the disclosures in respect of the amounts mentioned in the Total' columnof the said Note No. 48 are in accordance with the books of account maintained by thecompany and as produced to us by the Management. However we are unable to obtainsufficient and appropriate audit evidence to report on the amounts mentioned under thecolumns for SBNs' and Other denomination notes'.
Further as reported in the said Note No.48 amounts agregating to Rs. 327.01 lakhshave been received from transactions which are not permited.
For Haribhakti & Co. LLP
ICAI Firm Registration No.103523W/W100048
Anand Kumar Jhunjhunwala
Membership No. 056613
ANNEXURE 1 TO THE INDEPENDENT AUDITOR'S REPORT
[Referred to in paragraph 1 under Report on Other Legal and RegulatoryRequirements' in our Independent Auditor's Report of even date to the members of theCompany on the financial statements for the year ended 31stMarch 2017]
(i) (a) The Company is maintaining proper records showing full particulars includingquantitative details and situation of fixed assets.
(b) According to the information and explanations given to us the Company's Management("management") physically verifies its fixed assets annually (except asignificant portion of cables and network equipment for which as explained to usphysical verification is not practicable) which in our opinion is reasonable havingregard to the size of the Company and the nature of its fixed assets. As informed nomaterial discrepancies were noticed on such verification of fixed assets during the year.
(c) The title deeds of immovable properties recorded in the books of account of theCompany are held in the name of the Company.
(ii) According to the information and explanations given to us the inventory has beenphysically verified by the management during the year. In our opinion the frequency ofverification is reasonable. As explained to us there were no material discrepancies onphysical verification of inventory as compared to the book records.
(iii) According to the information and explanations given to us and on the basis of ourexamination of the books of account the Company has not granted any loans secured orunsecured to companies firms Limited Liability Partnerships or other parties covered inthe register maintained under Section 189 of the Act.
(iv) According to the information and explanations given to us in respect of loansinvestments guarantees and security the Company has complied with the provisions ofSections 185 and 186 of the Act.
(v) According to the information and explanations given to us the Company has notaccepted any deposits from the public.
(vi) The maintenance of cost records has been specified by the Central Government undersubsection (1) of Section 148 of the Act. We have broadly reviewed such records and are ofthe opinion that prima facie the prescribed accounts and records have been made andmaintained. We have not however made a detailed examination of the records with a viewto determine whether they are accurate or complete.
(vii) (a) According to the records of the Company amounts deducted/accrued in thebooks of account in respect of undisputed statutory dues including provident fundemployees' state insurance income-tax sales tax duty of customs duty of excise valueadded tax cess and any other material statutory dues have generally been regularlydeposited with the appropriate authorities.
However according to the records of the Company amounts deducted/accrued in the booksof account in respect of service tax dues have not been regularly deposited with theappropriate authority and there have been significant delays in depositing the same in alarge number of cases.
According to the information and explanations given to us no undisputed amountspayable in respect of the aforesaid dues were in arrears as at 31st March 2017 for aperiod of more than six months from the date they became payable.
(b) According to the information and explanations given to us the dues as at 31stMarch 2017 of income-tax sales tax service tax duty of customs duty of excise andvalue added tax which have not been deposited on account of any dispute are as follows :
|Name of the Statute ||Nature of dues ||Amount (Rs. In Lakhs) ||Period to which the amount relates (Financial Year) ||Forum where dispute is pending |
|Income Tax Act 1961 ||Tax and interest thereon for non deduction of tax at source ||175.15* ||2005- 06 2006- 07 2008-09 & 2010-11 ||Commissioner of Income Tax (Appeals) Bhubaneswar |
|Finance Act 1994 ||Service Tax and interest thereon ||1449.87 ||2006-07 to 2014-15 ||Commissioner of Central Excise Customs a Service Tax Bhubaneswar |
|Finance Act 1994 ||Service Tax and interest thereon ||13.00 ||2013-14 ||Addl. Commissioner (Audit) of Central Excise Customs a Service Tax Bhubaneswar |
* Rs.60.06 lakhs hasbeen deposited in this regard.
(viii) Based on our audit procedures and as per the information and explanations givento us by the management we are of the opinion that during the year the Company has notdefaulted in repayment of loans or borrowings to a financial institution bank orGovernment except for details given below :
|Particulars ||Amount of default as at 31* March 2017 (Rs. In Lakhs) ||Period of Default |
|Name of the Lenders : Bank || || |
|Karnataka Bank Limited ||124.36 ||Less than 90 days |
|JCO Bank ||12500 ||Less than 90 days |
The Company has not issued any debentures as at the balance sheet date.
(ix) In our opinion and according to the information and explanations given to usmoneys raised by way of initial public offer and term loans were prima facie applied forthe purposes for which those were raised. The Company has not raised any money by way offurther public offer (including debt instruments).
(x) Based upon the audit procedures performed for the purpose of reporting the true andfair view of the financial statements and as per the information and explanations given tous by the management we report that we have neither come across any instance of fraud bythe Company or on the Company by its officers or employees noticed or reported during theyear nor have we been informed of any such case by the management.
(xi) According to the information and explanations given to us managerial remunerationhas been paid/provided in accordance with the requisite approvals mandated by theprovisions of Section 197 read with Schedule V to the Act.
(xii) The Company is not a Nidhi Company.
(xiii) According to the information and explanations given to us all transactionsentered into by the Company with the related parties are in compliance with Sections 177and 188 of the Act where applicable and the details have been disclosed in the FinancialStatements etc. as required by the applicable accounting standards.
(xiv) The Company has not made any preferential allotment or private placement ofshares or fully or partly convertible debentures during the year under review.
(xv) As per the information and explanations given to us the Company has not enteredinto any non-cash transactions during the year with directors or persons connected withthem.
(xvi) In our opinion and according to the information and explanations given to us theCompany is not required to be registered under Section 45- IA of the Reserve Bank of IndiaAct 1934.
For Haribhakti & Co. LLP
ICAI Firm Registration No. 103523W/W100048
Anand Kumar Jhunjhunwala
Membership No. 056613
19th May 2017
ANNEXURE - 2 TO THE INDEPENDENT AUDITOR'S REPORT
[Referred to in paragraph (2) g under Report on Other Legal and RegulatoryRequirements' in our Independent Auditor's Report of even date to the members of theCompany on the financial statements for the year ended 31st March 2017]
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 financial reporting of the Companyas of 31st March 2017 in conjunction with our audit of the financial statements of theCompany for the year ended on that date.
Management's Responsibility for Internal Financial Controls
The Company's Board of Directors is responsible for establishing and maintaininginternal financial controls based on the internal control over financial reportingcriteria established by the Company considering the essential components of internalcontrol stated in the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting (the "Guidance Note") issued by the Institute of Chartered Accountantsof 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 adherencetocompany's policies the safeguarding of its assets the prevention and detection offrauds anderrors the accuracy and completeness of the accounting records and the timelypreparation ofreliable financial information as required under the Act.
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 accordancewiththe Guidance Note and the Standards on Auditing specified under section 143(10) of theAct to the extent applicable to an audit ofinternal financial controls both issued by theICAI. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls over financial reporting were established andmaintained and if such controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacyofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgement including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls systemover financial reporting.
Meaning of Internal Financial Controls Over Financial Reporting
A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedures that (1) pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the company;(2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures of the company are being made only in accordance with authorisations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised acquisitionuse 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 controlsover 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 31st March 2017 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.
For Haribhakti & Co. LLP
ICAI Firm Registration No.103523W/W100048
19 th May 2017.