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Pritish Nandy Communications Ltd.

BSE: 532387 Sector: Media
NSE: PNC ISIN Code: INE392B01011
BSE 00:00 | 18 Mar 18.80 -0.20
(-1.05%)
OPEN

18.40

HIGH

19.85

LOW

18.15

NSE 00:00 | 18 Mar 18.55 -0.55
(-2.88%)
OPEN

19.75

HIGH

19.75

LOW

18.00

OPEN 18.40
PREVIOUS CLOSE 19.00
VOLUME 650
52-Week high 22.50
52-Week low 11.60
P/E 25.75
Mkt Cap.(Rs cr) 27
Buy Price 18.35
Buy Qty 1.00
Sell Price 18.80
Sell Qty 500.00
OPEN 18.40
CLOSE 19.00
VOLUME 650
52-Week high 22.50
52-Week low 11.60
P/E 25.75
Mkt Cap.(Rs cr) 27
Buy Price 18.35
Buy Qty 1.00
Sell Price 18.80
Sell Qty 500.00

Pritish Nandy Communications Ltd. (PNC) - Auditors Report

Company auditors report

To

The Members

Pritish Nandy Communications Limited

REPORT ON THE STANDALONE INDIAN ACCOUNTING STANDARDS (IND AS) FINANCIAL STATEMENTS

We have audited the accompanying standalone Ind AS financial statements of PritishNandy Communications Limited ("the Company") which comprise the Balance Sheetas at March 31 2018 and the Statement of Profit and Loss (including Other ComprehensiveIncome) the Cash Flow Statement and the Statement of Changes in Equity for the year thenended and a summary of the significant accounting policies and other explanatoryinformation.

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 Indian AccountingStandards (Ind AS) prescribed under Section 133 of the Act.

This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding the assets of the Company andfor preventing 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 ofthe accounting records relevant to the preparation and presentation of the standalone IndAS financial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.

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 of the standalone Ind AS financial statements in accordance withthe Standards on Auditing specified under Section 143(10) of the Act. Those Standardsrequire that we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether the standalone Ind AS financial statements are freefrom material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the standalone Ind AS financial statements. The procedures selecteddepend on the auditor's judgment including the assessment of the risks of materialmisstatement of the standalone Ind AS financial statements whether due to fraud or error.In making those risk assessments the auditor considers internal financial controlrelevant to the Company's preparation of the standalone Ind AS financial statements thatgive a true and fair view in order to design audit procedures that are appropriate in thecircumstances. An audit also includes evaluating the appropriateness of the accountingpolicies used and the reasonableness of the accounting estimates made by the Company'sDirectors as well as evaluating the overall presentation of the standalone Ind ASfinancial statements.

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 March 31 2018 and its profit(financial performance including other comprehensive income) its cash flows and thechanges in equity for the year ended on that date.

EMPHASIS OF MATTER

We draw attention to Note 37(a) on the standalone Ind AS financial statements whichrelates to investment in wholly owned subsidiary company "PNC Wellness Ltd." Theinvestment in this subsidiary stands at Rs.174.60 lakh whereas the net worth of thesubsidiary is Rs.72.38 lakh as at March 31 2018. Considering that Company has madeprovision for diminution in value of investment in this subsidiary by 1/5th of its bookvalue and considers the balance retained book value as fully realizable no furtherprovision is made for the diminution in book value of investment which is considered astemporary.

We further draw attention to Note 37(b) on the standalone Ind AS financial statementswhich relates to investment in subsidiary company "PNC Digital Ltd.". Theinvestment in this subsidiary stands at Rs.70.20 lakh whereas the net worth of thesubsidiary is Rs.8.37 lakh as at March 31 2018. The Company has agreed to provide itsfilms to this subsidiary to explore revenue opportunities on the digital platform andexploit it to its commercial advantage. In view of the fact that this subsidiary hasunfettered access to the film content of the holding company and requires no additionalsubstantive capital deployment to generate revenue no provision for diminution in value ofinvestment which is considered temporary has been made in the accounts.

We further draw attention to Note 39(a) on the standalone Ind AS financial statementswhich describe the facts related to the legal proceedings initiated by the Company for therecovery of an advance of Rs.150.00 lakh. The management considers the same as good andfully recoverable. The legal opinion obtained by the Company supports this. We have reliedon the opinion and consequently the Company has not made provision of any amount thereagainst.

We further draw attention to Note 39(b) on the standalone Ind AS financial statementswhich describes that the Company has received an award of Rs.352.00 lakh in its favour inthe arbitration case filed against White Feather Films. The Company has also received arevised order for the amount of interest which the Company has not found satisfactory andhence it has moved an appeal with the Bombay High Court. White Feather Films has gone inappeal against the above said award and has been directed to deposit an amount ofRs.300.00 lakh by the Bombay High Court. Proceedings are ongoing.

We further draw attention to Note 40 on the standalone Ind AS financial statementswhich describes the facts related to the arbitration proceedings initiated by the Companyagainst Prasar Bharati on account of wrongful encashment of bank guarantee of Rs.750.50lakh. The Company has obtained legal opinion from Justice AM Ahmadi former Chief Justiceof Supreme Court of India which supports the Company's stand that the amount is fullyrecoverable and hence no provision is made there against.

Our opinion is not modified in respect of the above matters.

OTHER MATTERS

The comparative financial information of the Company for the year ended March 31 2017and the transition date opening balance sheet as at April 1 2016 included in thesestandalone Ind AS financial statements are based on the previously issued statutoryfinancial statements prepared in accordance with the Companies (Accounting Standards)Rules 2006 audited by the predecessor auditor whose report for the year ended March 312017 and March 31 2016 dated May 24 2017 and May 26 2016 respectively expressed anunmodified opinion on those standalone financial statements as adjusted for thedifferences in the accounting principles adopted by the Company on transition to the IndAS which have been audited by us.

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 in terms of Section 143 (11) of the Act we give in"Annexure A" a statement on the matters specified in paragraphs 3 and 4 of theOrder.

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;

c. The Balance Sheet the Statement of Profit and Loss the Cash Flow Statement andStatement 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 theIndian Accounting Standards prescribed under Section 133 of the Act;

e. On the basis of the written representations received from the directors as on March31 2018 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2018 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 over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate Report in "Annexure B"; and

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 standalone Ind AS financial statements - Refer Note no 37 39 and 40 tothe standalone Ind AS financial statements;

ii. the Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses.

iii. there has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.

ANNEXURE A TO THE INDEPENDENT AUDITOR'S REPORT

(Referred to in paragraph 1 under ‘Report on Other Legal and RegulatoryRequirements Rs.section of

Independent Auditors. Report on standalone Ind AS financial statements of even date)

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

b. According to the information and explanations given to us fixed assets have beenphysically verified by the management during the year and in our opinion the frequency ofverification is reasonable having regard to the size of the Company and the nature of itsassets. We are informed that no material discrepancies were noticed on such verification.

c. According to the information and explanations given to us and on the basis of ourexamination of the records of the Company there are no immovable properties held by theCompany. Therefore sub clause (c) of the paragraph 3 (i) of the Order is not applicableto the Company.

ii. As explained to us by the management the production/ making of content requiresvarious types qualities and quantities of content related consumables and inputs indifferent denominations. Due to the multiplicity and complexity of items it is notpracticable to maintain quantitative record/ continuous stock register as the process ofmaking content is not amenable to it. All the purchases of content related consumables aretreated as consumed. In view of this the Company does not maintain stock register exceptthe record of the finished content unamortized content unfinished content and also doesnot carry out physical verification of stock. However management physically verifies thefinished content in the hand at the end of the year.

iii. As informed to us the Company has not granted any loans secured or unsecured tocompanies firms Limited Liability Partnerships or other parties covered in the registermaintained under Section 189 of the Companies Act 2013.

iv. According to the information and explanations given to us the Company has notgiven any loans made investments provided guarantees and securities during the year ascontemplated under Section 185 and 186 of the Act.

v. In our opinion and according to the information and explanations given to us theCompany has not accepted deposits from the public during the year. Therefore paragraph3(v) of the Order is not applicable.

vi. According to information and explanations given to us the maintenance of costrecords under Section 148 (1) of the Act is not prescribed under the Companies (CostRecords and Audit) Rules 2014.

vii. a. According to information and explanations given to us and on the basis of ourexamination of

the records of the Company amounts deducted/ accrued in the books of account inrespect of undisputed statutory dues including provident fund employees. state insuranceincome-tax sales-tax service tax goods and services tax duty of customs duty ofexcise value added tax cess and other material statutory dues as applicable to it havebeen regularly deposited during the year by the Company with the appropriate authorities.As explained to us there were no undisputed statutory dues as mentioned above in arrearsas at March 31 2018 for a period of more than six months from the date they becamepayable.

b. According to the information and explanations given to us the dues in respect ofincome tax (including TDS) sales tax service tax duty of customs duty of excise andvalue added tax that have not been deposited with the appropriate authorities on accountof dispute and the forum where the disputes are pending as on March 31 2018 are as givenbelow

Name of the statute Nature of the dues Amount Rs.in lakh* Period to which it relates Forum where dispute is pending
Bombay Sales Tax Act 1959 Tax 15.21(Note 1) FY 2003-2004 Jt. Commissioner of Sales Tax (Appeals) II Mumbai City Division Mumbai
Bombay Sales Tax Act 1959 Tax 3.55 FY 2004-2005 Jt. Commissioner of Sales Tax (Appeals) II Mumbai City Division Mumbai
MVAT Act 2002 Tax and Interest 27.24 FY 2005-2006 Deputy Commissioner of Sales Tax Appeals - I Mumbai
MVAT Act 2002 Tax Interest and Penalty 2.86 FY 2006-2007 Deputy Commissioner of Sales Tax Appeal Mumbai
MVAT Act 2002 Interest 37.88 FY 2007-2008 Deputy Commissioner of Sales Tax Appeals - II Mumbai
MVAT Act 2002 Interest 0.99 FY 2008-2009 Deputy Commissioner of Sales Tax Appeals - I Mumbai

*Interim Stay has been granted in these matters till disposal of respective firstappeals.

Note 1: An amount of Rs.1.00 lakh is paid under protest against the said demand.

viii. According to the information and explanations given to us the Company has notdefaulted in repayment of dues to financial institutions. The Company did not have anyoutstanding debentures dues to banks and Governments.

ix. The Company did not raise any money by way of initial public offer or furtherpublic offer (including debt instruments) during the year. In our opinion and according tothe explanations given to us on an overall basis the term loans were applied for thepurposes for which those were raised.

x. To the best of our knowledge and belief and according to the information andexplanations given to us no material fraud on or by the Company has been noticed orreported during the course of our audit.

xi. According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has paid/ provided for managerialremuneration in accordance with the requisite approvals mandated by the provisions ofSection 197 read with Schedule V to the Act.

xii. In our opinion and according to the information and explanations given to us theCompany is not a nidhi company. Therefore paragraph 3(xii) of the Order is notapplicable.

xiii. In our opinion and according to the information and explanations given to us andbased on our examination of the records of the Company all transactions with the relatedparties are in compliance with Sections 177 and 188 of the Act where applicable and thedetails have been disclosed in Note 34 on the standalone Ind AS financial statements asrequired by the applicable Accounting Standards.

xiv. According to the information and explanations given to us and based on ourexamination of the records of the Company no preferential allotment or private placementof shares or fully or partly convertible debentures has been made by the Company duringthe year under review. Therefore paragraph 3(xiv) of the Order is not applicable.

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 any non-cashtransactions with directors or persons connected with him as specified under Section 192of the Act. Therefore paragraph 3(xv) of the Order is not applicable.

xvi. The Company is not required to be registered under Section 45-IA of the ReserveBank of India Act 1934 and therefore the provisions of paragraph 3(xvi) of the Order isnot applicable.

(Referred to in paragraph 2 under ‘Report on Other Legal and RegulatoryRequirementsRs.section of Independent Auditor's Report on standalone Ind AS financialstatements of even date).

Report on the Internal Financial Controls under Clause (i) of Sub-Section 3 of Section143 of the Companies Act 2013 ("the Act").

We have audited the internal financial controls over financial reporting of PritishNandy Communications Limited ("the Company") as of March 31 2018 in conjunctionwith our audit of the standalone Ind AS financial statements of the Company for the yearended on that date.

MANAGEMENT'S RESPONSIBILITY FOR INTERNAL FINANCIAL CONTROLS

The Company's management is responsible for establishing 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 Companies Act 2013.

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 on Audit of Internal Financial Controls Over Financial Reporting(the "Guidance Note") and the Standards on Auditing issued by ICAI and deemedto be prescribed under Section 143(10) of the Companies Act 2013 to the extentapplicable to an audit of internal financial controls both applicable to an audit ofInternal Financial Controls and both issued by the Institute of Chartered Accountants ofIndia. 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 was 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 includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists testing and evaluating the design andoperating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgment 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 internalfinancial control over financial reporting is a process designed to provide reasonableassurance regarding the reliability of financial reporting and the preparation offinancial statements for external purposes in accordance with generally acceptedaccounting principles. A Company's internal financial control over financial reportingincludes those policies and procedures that

1. pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the Company;

2. provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accountingprinciples and that receipts and expenditures of the Company are being made only inaccordance with authorisations of management and directors of the Company; and

3. provide reasonable assurance regarding prevention or timely detection ofunauthorised acquisition use or disposition of the Company's assets that could have amaterial 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 controlover 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 March 31 2018 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.