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Ortel Communications Ltd.

BSE: 539015 Sector: Media
NSE: ORTEL ISIN Code: INE849L01019
BSE 00:00 | 22 Feb 3.55 -0.10
(-2.74%)
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3.50

HIGH

3.55

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3.50

NSE 00:00 | 22 Feb 3.60 0.10
(2.86%)
OPEN

3.50

HIGH

3.65

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3.45

OPEN 3.50
PREVIOUS CLOSE 3.65
VOLUME 5700
52-Week high 30.45
52-Week low 3.04
P/E
Mkt Cap.(Rs cr) 12
Buy Price 3.50
Buy Qty 300.00
Sell Price 3.78
Sell Qty 500.00
OPEN 3.50
CLOSE 3.65
VOLUME 5700
52-Week high 30.45
52-Week low 3.04
P/E
Mkt Cap.(Rs cr) 12
Buy Price 3.50
Buy Qty 300.00
Sell Price 3.78
Sell Qty 500.00

Ortel Communications Ltd. (ORTEL) - Auditors Report

Company auditors report

To

The Members of

Ortel Communications Limited

Report on the Standalone Ind AS Financial Statements

We have audited the accompanying standalone Ind AS financial statements of OrtelCommunications Limited ("the Company") which comprise the Balance Sheet as at31stMarch 2018 the Statement of Profit and Loss (including Other Comprehensive Income)the Cash Flow Statement and the Statement of Changes in Equity for the year then ended anda summary of significant accounting policies and other explanatory information.

Management's Responsibility for the Standalone Ind AS 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 standalone Ind AS financial statements that give a true and fair view of the stateof affairs (financial position) profit or loss (financial performance including othercomprehensive income) cash flows and changes in equity of the Company in accordance withthe accounting principles generally accepted in India including the Accounting Standardsspecified under Section 133 of the Act read with Rule 7 of the Companies (Accounts)Rules 2014. This responsibility also includes maintenance of adequate accounting recordsin accordance with the provisions of the Act for safeguarding 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 and ensuring their operating effectiveness and the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe standalone Ind AS financial statements that give a true and fair view and are freefrom material misstatement whether due to fraud or error.

In preparing the standalone Ind AS financial statements management is responsible forassessing the Company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessmanagement either intends to liquidate the Company or to cease operations or has norealistic alternative but to do so.

Auditor's Responsibility

Our responsibility is to express an opinion on these standalone Ind AS financialstatements based on our audit.

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 standalone Ind AS financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures in the standalone Ind AS financial statements. The procedures selected dependon the auditor's judgment including the assessment of the risks of material misstatementof the standalone Ind AS financial statements whether due to fraud or error. In makingthose risk assessments the auditor considers internal financial control relevant to theCompany's preparation of the standalone Ind AS financial statements that give a true andfair view in order to design audit procedures that are appropriate in the circumstances.An audit also includes evaluating the appropriateness of accounting policies used and thereasonableness of the accounting estimates made by the Company's Directors as well asevaluating the overall presentation of the standalone Ind AS financial statements.

We are also responsible to conclude on the appropriateness of management's use of thegoing concern basis of accounting and based on the audit evidence obtained whether amaterial uncertainty exists related to events or conditions that may cast significantdoubt on the Company's ability to continue as a going concern. If we conclude that amaterial uncertainty exists we are required to draw attention in the auditor's report tothe related disclosures in the standalone Ind AS financial statements or if suchdisclosures are inadequate to modify the opinion. Our conclusions are based on the auditevidence obtained up to the date of the auditor's report. However future events orconditions may cause the Company to cease to continue as a going concern.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the standalone Ind AS financial statements.

Opinion

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone Ind AS financial statements give the informationrequired by the Act in the manner so required and give a true and fair view in conformitywith the accounting principles generally accepted in India including the Ind AS of thestate of affairs (financial position) of the Company as at 31st March 2018 its loss(financial performance including other comprehensive income) its cash flows and changesin equity for the year ended on that date.

Emphasis of Matters

We draw attention to Note No.47(a) to the standalone Ind AS financial statementsrelating to provision for doubtful receivables amounting to Rs. 3063.76 lakhs Note No.47(b) relating to credit notes issued amounting to Rs. 1625.20 lakhs and Note No. 47(c)relating to provision for credit notes amounting to Rs.3194.17 lakhs.

Our opinion is not modified in respect of these matters.

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 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 except for cost recordsregarding which we have been informed by the management that the prescribed accounts andrecords are in the process of being made and maintained;

c. The Balance Sheet the Statement of Profit and Loss the Cash Flow Statement and theStatement of Changes in Equity dealt with by this Report are in agreement with the booksof account;

d. In our opinion the aforesaid standalone Ind AS financial statements comply with theAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014;

e. The matters described under the ‘Emphasis of Matters' paragraph above in ouropinion may have an adverse effect on the functioning of the Company;

f. On the basis of the written representations received from the directors as on31stMarch 2018 and taken on record by the Board of Directors none of the directors isdisqualified as on 31stMarch 2018 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 standalone Ind AS financial statements - Refer Note Nos. 38 and 46 to thestandalone Ind AS 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.

For Haribhakti & Co. LLP

Chartered Accountants

ICAI Firm Registration No. 103523W/W100048

Sd/-

Anand Kumar Jhunjhunwala

Partner

Membership No. 056613

Bhubaneswar 22nd May2018

ANNEXURE1 TO THE INDEPENDENT AUDITOR'S REPORT

[Referred to in paragraph 1 under 'Report on Other Legal and Regulatory Requirements'in the Independent Auditor's Report of even date to the members of the Company on thestandalone Ind AS financial statements for the year ended 31st March 2018.

(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 within the provisions of section 73 to 76 of the Actand rules framed there under.

(vi) The maintenance of cost records has been specified by the Central Government undersub-section (1) of Section 148 of the Act. We have been informed by the management thatthe prescribed accounts and records are in the process of being made and maintained.

(vii) (a) According to the records of the Company amounts deducted/accrued in thebooks of account in respect of undisputed statutory dues including provident fund salestax duty of customs duty of excise value added tax cess and any other materialstatutory dues have generally been regularly deposited with the appropriate authorities.

According to the records of the Company amounts deducted/accrued in the books ofaccount in respect of undisputed employees' state insurance income tax service taxgoods and services tax entertainment tax and profession tax have not been regularlydeposited with the appropriate authorities and there have been significant delays indepositing the same in a large number of cases.

According to the records of the Company amounts deducted/accrued in the books ofaccount in respect of undisputed service tax goods and services tax and entertainmenttax which were outstanding as on the last day of the financial year for a period of morethan six months from the date they became payable are as follows:

Name of the statute Nature of dues Amount (Rs. In Lakhs) Period to which the amount relates
Finance Act 1994 Service Tax 604.56 October 2016 to June 2017
The Integrated Goods and Services Tax Act 2017 Integrated Goods and Services Tax 4.26 July 2017 to August 2017
The Central Goods and Services Tax Act 2017 Central Goods and Services Tax 156.78 July 2017 to Aug 2017
The Odisha Goods and Services Tax Act 2017 State Goods and Services Tax 157.44 July 2017 to Aug 2017
The Andhra Pradesh Goods and Services Tax Act 2017 State Goods and Services Tax 34.08 July 2017 to Aug 2017
The Telangana Goods and Services Tax Act 2017 State Goods and Services Tax 25.63 July 2017 to Aug 2017
The Chhattisgarh Goods and Services Tax Act 2017 State Goods and Services Tax 14.97 July 2017 to Aug 2017
The West Bengal Goods and Services Tax Act 2017 State Goods and Services Tax 1.50 July 2017 to Aug 2017
The Madhya Pradesh Goods and Services Tax Act 2017 State Goods and Services Tax 1.08 July 2017 to Aug 2017
The Orissa Entertainments Tax Act 1946 Entertainment Tax 51.61 April 2017 to June 2017
The Andhra Pradesh Entertainments Tax Act 1939 Entertainment Tax 13.95 March 2017 to June 2017
Chhattisgarh Entertainment Duty and Advertisement Tax Act 1936 Entertainment Tax 13.72 April 2017 to June 2017
The Madhya Pradesh Entertainments Duty and Advertisements Tax Act 1936 Entertainment Tax 1.30 April 2017 to June 2017

(b) According to the information and explanations given to us the dues as at 31stMarch 2018 of income-tax sales tax service tax duty of customs duty of excise andvalue added tax and goods and services tax which have not been deposited on account ofany dispute are as follows:

Name of the Statute Nature of dues Amount Period to which the amount relates Forum where dispute is pending
(Rs. In Lakhs) (Financial Year)
Income Tax Act 1961 Tax and interest thereon for non-deduction of tax at source 175.15* 2005-06 2006-07 2008-09 a 2010-11 Commissioner of Income Tax (Appeals) Bhubaneswar
Finance Act 1994 Service Tax and interest thereon 241.97 2006-07 2007-08 a 2009-10 Commissioner GST a Central Excise Bhubaneshwar
Finance Act 1994 Service Tax and interest thereon 1179.29** 2010-11 to 2014-15 Customs Excise a Service Tax Appellate Tribunal Kolkata
Finance Act 1994 Service Tax and interest thereon 13.00 2013-14 Addl. Commissioner(Audit) of Central Excise Customs a Service Tax Bhubaneswar
Finance Act 1994 Service Tax 338.06 2015-16 Commissioner GST a Central Excise Bhubaneshwar
Central Excise Act 1944 Cenvat Creditreversal 741.29 2016-17 Superintendent (Audit)GST a Central ExciseBhubaneshwar Circle

*Rs.60.06 lakhs has been deposited in this regard.

** Rs. 44.22 lakhs has been 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 aggregate default during the year ended 31st March 2018(Rs. In Lakhs) Period of Default
Name of the Lenders :
Banks:
Karnataka Bank Limited 350.60 7 to 89 days
UCO Bank 384.08 1 to 135 days
Financial Institutions:
Srei Equipment Finance Limited 2626.55 4 to 151 days

(ix) In our opinion and according to the information and explanations given to us termloans were prima facie applied for the purposes for which those were raised. The Companyhas not raised any money during the year by way of initial public offer or further publicoffer (including debt instruments).

(x) Based upon the audit procedures performed for the purpose of reporting the true andfair view of the standalone Ind AS financial statements and as per the information andexplanations given to us by the management we report that we have neither come across anyinstance of fraud by the Company or on the Company by its officers or employees noticedor reported during the year 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 standaloneInd AS financial statements 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

Chartered Accountants

ICAI Firm Registration No. 103523W/W100048

Sd/-

Anand Kumar Jhunjhunwala

Partner

Membership No. 056613

Bhubaneswar 22nd May 2018

[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 standalone Ind AS financial statements for the year ended 31st March 2018]

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 2018 in conjunction with our audit of the standalone Ind AS financialstatements of the Company 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 adherence tocompany's policies the safeguarding of its assets the prevention and detection of fraudsand errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Act.

Auditor's Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note and the Standards on Auditing specified under section 143(10) ofthe Act to the extent applicable to an audit of internal financial controls both issuedby the ICAI. 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 adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness.

Our audit of internal financial controls over financial reporting included obtaining anunderstanding of internal financial controls over financial reporting assessing the riskthat a material weakness exists and testing and evaluating the design and operatingeffectiveness of internal control based on the assessed risk. The procedures selecteddepend on the auditor's judgement including the assessment of the risks of materialmisstatement 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

Acompany's internal financial control over financial reporting is a process designed toprovide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. Acompany'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 acquisition use or disposition of thecompany's assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls Over Financial Reporting

Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlsover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.

Opinion

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 31stMarch 2018 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

Chartered Accountants

ICAI Firm Registration No. 103523W/W100048

Sd/-

AnandKumar Jhunjhunwala

Partner

Membership No.056613

Bhubaneswar

22nd May 2018