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Siti Networks Ltd.

BSE: 532795 Sector: Media
NSE: SITINET ISIN Code: INE965H01011
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OPEN 2.21
PREVIOUS CLOSE 2.32
VOLUME 118814
52-Week high 2.97
52-Week low 0.50
P/E
Mkt Cap.(Rs cr) 193
Buy Price 0.00
Buy Qty 0.00
Sell Price 2.21
Sell Qty 5961373.00
OPEN 2.21
CLOSE 2.32
VOLUME 118814
52-Week high 2.97
52-Week low 0.50
P/E
Mkt Cap.(Rs cr) 193
Buy Price 0.00
Buy Qty 0.00
Sell Price 2.21
Sell Qty 5961373.00

Siti Networks Ltd. (SITINET) - Auditors Report

Company auditors report

To the Members of SITI Networks Limited

REPORT ON THE AUDIT OF THE STANDALONE FINANCIAL STATEMENTS

QUALIFIED OPINION

1. We have audited the accompanying standalone financial statements ofSITI Networks Limited (‘the Company') which comprise the Balance Sheet as at 31March 2020 the Statement of Profit and Loss (including Other Comprehensive Income) theCash Flow Statement and the Statement of Changes in Equity for the year then ended and asummary of the significant accounting policies and other explanatory information.

2. In our opinion and to the best of our information and according tothe explanations given to us except for the effects of the matter described in the Basisfor Qualified Opinion section of our report the aforesaid standalone financial statementsgive the information required by the Companies Act 2013 (‘Act') in the mannerso required and give a true and fair view in conformity with the accounting principlesgenerally accepted in India including Indian Accounting Standards (‘Ind AS')specified under section 133 of the Act of the state of affairs of the Company as at 31March 2020 and its loss (including other comprehensive income) its cash flows and thechanges in equity for the year ended on that date.

BASIS FOR QUALIFIED OPINION

3. As described in note 47 to the accompanying standalone financialstatements the Company's ‘Revenue from operations' includesbroadcasters' share in subscription income from pay channels which hascorrespondingly been presented as an expense which is not in accordance with therequirements of Ind AS-115 ‘Revenue from contracts with customers'. Had themanagement disclosed the same on net basis the ‘Revenue from operations' andthe ‘Carriage sharing pay channel and related costs' each would have been lowerby ` 3902.38 million for the year ended 31 March 2020 while there would have been noimpact on the net loss for the year ended 31 March 2020.

4. We conducted our audit in accordance with the Standards on Auditingspecified under section 143(10) of the Act. Our responsibilities under those standards arefurther described in the Auditor's Responsibilities for the Audit of the 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(‘ICAI') together with the ethical requirements that are relevant to our auditof the financial statements under the provisions of the Act and the rules thereunder andwe have fulfilled our other ethical responsibilities in accordance with these requirementsand the Code of Ethics. We believe that the audit evidence we have obtained is sufficientand appropriate to provide a basis for our qualified opinion.

MATERIAL UNCERTAINTY RELATED TO GOING CONCERN

5. We draw attention to note 50 to the accompanying standalonefinancial statements which indicates that the Company has incurred a net loss (includingother comprehensive income) of ` 1900.96 million during the year ended 31_ March_ 2020and as of that date the Company's accumulated losses amount to `_18614.11_millionresulting in a negative net worth of

` 1678.82 million and its current liabilities exceeded its currentassets by ` 10364.83 million resulting in negative working capital. As at 31 March 2020there are delays/ defaults in repayment of obligations and borrowings. The above factorsalong with other matters as set forth in note 50 indicate a material uncertainty whichmay cast significant doubt about the Company's ability to continue as a goingconcern. However basis the impact of Tariff Order 2017 ongoing discussion with thelenders of the Company and other factors mentioned in aforesaid note to the accompanyingstandalone financial statements the management is of the view that going concern basis ofaccounting is appropriate for preparation of these financial statements.

The above assessment of the Company's ability to continue as goingconcern is by its nature considered as key audit matter in accordance with SA 701. Inrelation to the above key audit matter our audit work included but was not limited tothe following procedures:

We obtained an understanding of the management's process foridentification of events or conditions that may cast significant doubt over theCompany's ability to continue as a going concern and the process to assess thecorresponding mitigating factors existing against each such event or condition.

Evaluated the design and tested the operating effectiveness of keycontrols around aforesaid identification of events or conditions and mitigating factorsand controls around cash flow projections prepared by the management.

We obtained the projected cash flows for the next twelve months fromthe management basis their future business plans and considering the impact of TariffOrder 2017.

We held discussions with the management personnel to understand theassumptions used and estimates made by them for determining the future cash flowprojections.

The key assumptions such as revenue growth rate changes in direct andadministrative expenses and capital expenditure outflows were assessed forreasonableness by reference to historical data future market trends existing marketconditions business plans and our understanding of the business and the industry in whichthe Company operates.

We tested mathematical accuracy of the projections and appliedindependent sensitivity analysis to the key assumptions mentioned above to determineinputs leading to high estimation uncertainty of the cash flow projections.

We read the relevant correspondences with the lending banks.

We assessed the appropriateness and adequacy of disclosures made by theCompany with respect to the aforesaid events and conditions in accordance with theprovisions requirements of Ind AS 1 Presentation of Financial Statements.

KEY AUDIT MATTERS

6. Key audit matters are those matters that in our professionaljudgment were of most significance in our audit of the standalone financial statements ofthe current period. These matters were addressed in the context of our audit of thefinancial statements as a whole and in forming our opinion thereon and we do not providea separate opinion on these matters.

7. In addition to the matters described in the Basis for QualifiedOpinion and Material Uncertainty Related to Going Concern sections we have determined thematters described below to be the key audit matters to be communicated in our report.

Key audit matter How our audit addressed the key audit matter
Impairment assessment of non-current investments Our audit procedures included but were not limited to the following:
As described in Note 6 to the standalone financial statements the Company has investments of 3519.62 ` million in its subsidiaries associates and joint venture entities as at 31 March 2020 (hereinafter together referred to as ‘Component entities'). • We obtained understanding of the management process for identification of possible impairment indicators and process performed by the management for impairment testing.
Certain Component entities have been incurring losses in the current year and previous year and have negative cash flows from operations during the current as well as previous years thus resulting in possible impairment indicators. • We have performed detailed discussions with the management throughout the year to understand the impairment assessment process assumptions used and estimates made by management to assess the reasonableness of the recoverable amount and tested the operating effectiveness of controls implemented by management.
In view of the above management during the year ended 31 March 2020 has carried out impairment test for such investments whereby the carrying amount of the investments was compared with the fair value of the business of respective component entity. To determine the fair value management of the Company has prepared detailed cash flow projections based on business plans of the respective component entity expected growth rates of the business and other market related factors including the discount rates etc. • We obtained from the management of the Company the approved future business plans of the subsidiary companies and held detailed discussions with the management to understand the assumptions used and estimates made by them for determining the cash flow projections.
• We referred to the economic conditions prevalent in the jurisdiction in which the subsidiary company operates and understood from the management about the future business plans.
Based on the result of the aforesaid impairment tests no impairment has been noted. • We assessed the reasonableness of the assumptions used and appropriateness of the valuation methodology applied.
Considering the materiality of the amount involved and significant degree of judgement and subjectivity involved in the estimates and key assumptions used in determining the cash flows used in the impairment evaluation we have determined impairment of such investments as a key audit matter. • Working with our valuation specialists we have assessed the reasonableness of assumptions around discount rate beta etc used and valuation methodology applied for valuation of certain investment in optionally convertible debentures of the Component entities.
• Evaluated the appropriateness and adequacy of the related disclosures made in the standalone financial statements in accordance with the applicable accounting standards.
Provision for expected credit losses (ECL) Our audit procedures included but were not limited to the following:
Refer note 3(j) for significant accounting policy and note 35 for credit risk disclosures. • We obtained an understanding of the management process for segregating receivables into appropriate groups computation of average historical loss rate by age-band and adjustments made to historical loss rates (if any).
As described in note 10 trade receivables comprise a significant portion of the current financial assets of the Company. As at 31 March 2020 trade receivables aggregate to ` 2073.25 million (net of allowance for expected credit losses of ` 4524.03 million).
In accordance with Ind AS 109 the Company applies expected credit loss (ECL) model for measurement and recognition of impairment loss for financial assets. The Company has analysed the trend of trade receivables under different ageing bracket for last three years and calculated credit loss rate basis such ageing. The complexity in calculation of ECL is mainly related to calculations performed for different type of revenue streams in which the Company operates and the different recovery period for different categories of customers. Additional provision is recognised for the receivables which are specifically identified as doubtful or non-recoverable. • We assessed and tested the design and operating effectiveness of controls around management's assessment of the recoverability of trade receivables and corresponding provisioning for ECL. Also evaluated the controls over the modelling process validation of data and related approvals.
• We obtained from the management of the Company detailed assessment including computation of the ECL.
• We audited the underlying data and assessed reasonableness of the assumptions used for each age- band of trade receivables.
• We analyzed the methodology used by the management and considered the credit and payment history of specific parties to determine the trend used for arriving at the expected credit loss provision.
Further the management regularly assess each class of trade receivables for recoverability. Provision for ECL is adjusted considering the recovery trends noted for the respective class adjusted for forward looking estimates. • We obtained the details of receivables specifically identified by the management for provisioning over and above the ECL and corroborated them from the ageing schedule and held discussions with management on their recoverability.
Estimation of provisions and assessment of recoverability of amounts involves significant degree of judgement and evaluation basis the ongoing communications with the respective parties and is therefore considered as a key audit matter. • We assessed the appropriateness of disclosures made by the management for the ECL recognized in accordance with applicable accounting standards.

INFORMATION OTHER THAN THE FINANCIAL STATEMENTSAND AUDITOR'SREPORT THEREON

8. The Company's Board of Directors is responsible for the otherinformation. The other information comprises the information included in the AnnualReport but does not include the standalone financial statements and our auditor'sreport thereon. The Annual Report is expected to be made available to us after the date ofthis auditor's report.

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

In connection with our audit of the standalone financial statementsour responsibility is to read the other information identified above when it becomesavailable and in doing so consider whether the other information is materiallyinconsistent with the standalone financial statements or our knowledge obtained in theaudit or otherwise appears to be materially misstated.

When we read the Annual Report if we conclude that there is a materialmisstatement therein we are required to communicate the matter to those charged withgovernance.

RESPONSIBILITIES OF MANAGEMENT AND THOSE CHARGED WITH GOVERNANCE FORTHE STANDALONE FINANCIAL STATEMENTS

9. The accompanying standalone financial statements have been approvedby the Company's Board of Directors. The Company's Board of Directors isresponsible for the matters stated in section 134(5) of the Act with respect to thepreparation of these standalone financial statements that give a true and fair view of thefinancial position financial performance including other comprehensive income changes inequity and cash flows of the Company in accordance with the accounting principlesgenerally accepted in India including the 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 ofthe accounting records relevant to the preparation and presentation of the financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.

10. In preparing the financial statements management is responsiblefor assessing the Company's ability to continue as a going concern disclosing asapplicable matters related to going concern and using the going concern basis ofaccounting unless management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so.

11. Those Board of Directors is also responsible for overseeing theCompany's financial reporting process.

AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIALSTATEMENTS

12. Our objectives are to obtain reasonable assurance about whether thefinancial 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. Reasonableassurance is a high level of assurance but is not a guarantee that an audit conducted inaccordance with Standards on Auditing will always detect a material misstatement when itexists. Misstatements can arise from fraud or error and are considered material ifindividually or in the aggregate they could reasonably be expected to influence theeconomic decisions of users taken on the basis of these financial statements.

13. As part of an audit in accordance with Standards on Auditing weexercise professional judgment and maintain professional skepticism throughout the audit.We also:

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

Obtain an understanding of internal control relevant to the audit inorder to design audit procedures that are appropriate in the circumstances. Under section143(3)(i) of the Act we are also responsible for expressing our opinion on whether theCompany has adequate internal financial controls with reference to financial statements inplace and the operating effectiveness of such controls.

Evaluate the appropriateness of accounting policiesusedandthereasonablenessofaccountingestimates and related disclosures made by management;

Conclude on the appropriateness of management's use of the goingconcern basis of accounting and based on the audit evidence obtained whether a materialuncertainty exists related to events or conditions that may cast significant doubt on theCompany's ability to continue as a going concern. If we conclude that a materialuncertainty exists we are required to draw attention in our auditor's report to therelated disclosures in the financial statements or if such disclosures are inadequate tomodify our opinion. Our conclusions are based on the audit evidence obtained up to thedate of our auditor's report. However future events or conditions may cause theCompany to cease to continue as a going concern;

Evaluate the overall presentation structure and content of thefinancial statements including the disclosures and whether the financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation;

14. We communicate with those charged with governance regarding amongother matters the planned scope and timing of the audit and significant audit findingsincluding any significant deficiencies in internal control that we identify during ouraudit.

15. We also provide those charged with governance with a statement thatwe have complied with relevant ethical requirements regarding independence and tocommunicate with them all relationships and other matters that may reasonably be thoughtto bear on our independence and where applicable related safeguards.

16. From the matters communicated with those charged with governancewe determine those matters that were of most significance in the audit of the financialstatements of the current period and are therefore the key audit matters. We describethese matters in our auditor's report unless law or regulation precludes publicdisclosure about the matter or when in extremely rare circumstances we determine that amatter should not be communicated in our report because the adverse consequences of doingso would reasonably be expected to outweigh the public interest benefits of suchcommunication.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

17. Based on our audit we report that as also detailed in note 49 ofthe accompanying standalone financial statements the Company has paid managerialremuneration to its director amounting to ` 0.81 million which is in excess of the limitsprescribed under Section 197 of Act read with Schedule V of the Act in respect of whichapprovals from the shareholders have been obtained within the prescribed time limithowever prior approvals from the lenders as required under Section 197 have not beenobtained by the Company.

18. As required by the Companies (Auditor's Report) Order 2016(‘the Order') issued by the Central Government of India in terms of section143(11) of the Act we give in the Annexure I a statement on the matters specified inparagraphs 3 and 4 of the Order.

19. Further to our comments in Annexure I as required by section143(3) of the Act based on our audit we report to the extent applicable that:

a) we have sought and obtained all the information and explanationswhich to the best of our knowledge and belief were necessary for the purpose of our auditof the accompanying standalone financial statements;

b) except for the effects of the matter described in the Basis ofQualified Opinion section in our opinion proper books of account as required by law havebeen kept by the Company so far as it appears from our examination of those books;

c) the standalone financial statements dealt with by this report are inagreement with the books of account;

d) except for the effects of the matter described in the Basis ofQualified Opinion section in our opinion the aforesaid standalone financial statementscomply with Ind AS specified under section 133 of the Act;

e) the going concern matter described in paragraph 5 under the MaterialUncertainty Related to Going Concern section in our opinion may have an adverse effecton the functioning of the Company;

f) on the basis of the written representations received from thedirectors and taken on record by the Board of Directors none of the directors isdisqualified as on 31 March 2020 from being appointed as a director in terms of section164(2) of the Act;

g) the qualification relating to the maintenance of accounts and othermatters connected therewith is as stated in the Basis for Qualified Opinion section;

h) we have also audited the internal financial controls with referenceto financial statements of the Company as on 31 March 2020 in conjunction with our auditof the standalone financial statements of the Company for the year ended on that date andour report dated 29 June 2020 as per Annexure II expressed modified opinion; and

i) with respect to the other matters to be included in theAuditor's Report in accordance with rule 11 of the Companies (Audit and Auditors)Rules 2014 (as amended) in our opinion and to the best of our information and accordingto the explanations given to us:

i. the Company as detailed in note 39 to the standalone financialstatements has disclosed the impact of pending litigations on its financial position asat 31 March 2020;

ii. the Company did not have any long-term contracts includingderivative contracts for which there were any material foreseeable losses as at 31 March2020;

iii. there were no amounts which were required to be transferred to theInvestor Education and Protection Fund by the Company during the year ended 31 March 2020;and

iv. the disclosure requirements relating to holdings as well asdealings in specified bank notes were applicable for the period from 8 November 2016 to 30December 2016 which are not relevant to these standalone financial statements. Hencereporting under this clause is not applicable.

For Walker Chandiok & Co LLP
Chartered Accountants
Firm's Registration No.: 001076N/N500013
Rajni Mundra
Partner
Place: New Delhi Membership No.: 058644
Date: 29 June 2020 UDIN: 20058644AAAABF4958

ANNEXURE I TO THE INDEPENDENT AUDITOR'S REPORT

OF EVEN DATE TO THE MEMBERS OF SITI NETWORKS LIMITED ON THE STANDALONEFINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2020

Annexure I

Based on the audit procedures performed for the purpose of reporting atrue and fair view on the financial statements of the Company and taking intoconsideration the information and explanations given to us and the books of account andother records examined by us in the normal course of audit and to the best of ourknowledge and belief we report that:

(i) (a) The Company has maintained proper records showing fullparticulars including quantitative details and situation of property plant and equipment(‘PPE') except for some of the network equipment acquired in a scheme ofarrangement in an earlier year where the records are maintained for a group of similarassets and not for each individual asset. However the written down value of these assetsis nil.

(b) The Company has a regular program of physical verification of itsPPE that are verified in a phase manner over a period of three years which in ouropinion is reasonable having regard to the size of the Company and the nature of itsassets other than ‘set top boxes' and ‘broadband consumer premisesequipment (CPE)' which are installed either at customer premises or lying with thedistributors/ cable operators and ‘distribution equipment comprising overhead andunderground cables' since the physical verification of such items of PPE is notfeasible owing to the nature and location of these assets. Further the Company has notbeen able to reconcile the physical verification of certain ‘network equipment'acquired in a scheme of arrangement in an earlier year to the books of account due to lackof records thereof as mentioned in paragraph (a) above. According to the information andexplanations given to us the existence of ‘set top boxes' and CPE installed atcustomer premises is verified on the basis of the ‘active user' status of thecustomers. No material discrepancies were noticed on the physical verification of the PPEof the Company. However ‘set top boxes' and CPE lying with the distributors/cable operators ‘distribution equipment comprising overhead and undergroundcables' and ‘network equipment' acquired in a scheme of arrangement asaforementioned have not been physically verified by the management during the year asexplained above and we are therefore unable to comment on the discrepancies if any whichcould have arisen on verification thereof.

(c) The title deeds of all the immovable properties (which are includedunder the head PPE) are held in the name of the Company.

(ii) In our opinion the management has conducted physical verificationof inventory at reasonable intervals during the year and no material discrepancies betweenphysical inventory and book records were noticed on physical verification.

(iii) The Company has not granted any loan secured or unsecured tocompanies firms Limited Liability Partnerships (LLPs) or other parties covered in theregister maintained under Section 189 of the Act. Accordingly the provisions of clauses3(iii)(a) 3(iii)(b) and 3(iii)(c) of the Order are not applicable.

(iv) In our opinion the Company has complied with the provisions ofSections 186 in respect of investments. Further in our opinion the Company has notentered into any transaction covered under Section 185 and Section 186 of the Act inrespect of loans guarantees and security.

(v) In our opinion the Company has not accepted any deposits withinthe meaning of Sections_73 to 76 of the Act and the Companies (Acceptance of Deposits)Rules 2014 (as amended). Accordingly the provisions of clause 3(v) of the Order are notapplicable.

(vi) We have broadly reviewed the books of account maintained by theCompany pursuant to the Rules made by the Central Government for the maintenance of costrecords under sub-section (1) of Section 148 of the Act in respect of Company'sservices and are of the opinion that prima facie the prescribed accounts and recordshave been made and maintained. However we have not made a detailed examination of thecost records with a view to determine whether they are accurate or complete.

(vii) (a) The Company is regular in depositing undisputed statutorydues including provident fund employees' state insurance income-tax sales-taxservice tax duty of customs duty of excise value added tax cess and other materialstatutory dues as applicable to the appropriate authorities. Further no undisputedamounts payable in respect thereof were outstanding at the year-end for a period of morethan six months from the date they became payable.

(b) The dues outstanding in respect of income-tax sales taxservice-tax duty of customs duty of excise and value added tax on account of anydispute are as follows: Statement of disputed dues

Name of the statute Nature of dues Amount (` in million) Amount paid under protest (` in million) Period to which the amount relates Forum where dispute is pending
Finance Act 1994 Service tax 141.22 2.03 July 2003 to June 2008 Financial year 2005-2006 to Financial year 2008-2009 and Financial year 2011-2012 The Customs Excise and Service Tax Appellate Tribunal
Karnataka Value Added Tax Act 2003 Value added tax 8.61 - Financial year 2010-2011 High Court of Karnataka
Karnataka Value Added Tax Act 2003 Value added tax 2.79 - Financial year 2012-2013 Joint Commissioner Commercial Taxes (Appeals)
Kerala Value Added Tax Act 2003 Value added tax 4.49 - Financial year 2015-2016 State Tax Officer
Andhra Pradesh Value Added Tax Act 2005 Value added tax 1.70 - Financial year 2015- 2016 Additional Commissioner of Appeals
Andhra Pradesh Value Added Tax Act 2005 Value added tax 16.80 - Financial year 2016-2017 High Court of Andhra Pradesh
Andhra Pradesh Value Added Tax Act 2005 Value added tax 3.11 1.66 Financial year 2010-2017 Telangana Value Added Tax Appellate Tribunal
Delhi Value Added Tax Act 2004 Value added tax 0.71 - Financial year 2013-2014 Additional Commissioner (Appeals)
The Uttar Pradesh Value Added Tax Act 2008 Value added tax 8.19 - Financial year 2015-2016 to Financial year 2017-18 Appellate Deputy Commissioner Commercial Taxes (Appeals)
The Haryana Value Added Tax Act 2003 Value added tax 33.80 16.60 Financial year 2014-2015 to Financial year 2017-18 The Joint Excise and Taxation Commissioner (Appeals)
The Maharashtra Value Added Tax Act 2002 Value added tax 6.78 - Financial Year 2007-2008 Joint Commissioner Of Commercial Taxes (Appeals)
Custom Act 1962 Custom Duty 1011.22 20 Financial Year 2014-2015 till 2018-2019 Additional Director General (Adjudication) Directorate of Revenue Intelligence Delhi

(viii) The Company has no loans or borrowings payable to government andno dues payable to debenture-holders. The Company has defaulted in repayment ofloans/borrowings to the following banks and financial institution:

- which were paid on or before the Balance Sheet date:

Name of the lenders Amount of default during the year ended 31 March 2020 (` in million) Period of default (in days) Remarks
Principal Interest Principal Interest
In case of:
(a) Banks Axis Bank 424.59 44.79 1-91 1-91
49.97 - 92-183 -
Indus Ind Bank 145.92 72.15 1-88 1-88
Kotak Mahindra Bank 313.74 4.06 1-88 1-88
208.20 14.86 1-91 1-91
IDBI Bank
- 3.11 - 92-183

 

Name of the lenders Amount of default during the year ended 31 March 2020 (` in million) Period of default (in days) Remarks
Principal Interest Principal Interest
HDFC Limited - 20.00 - 1-91
15.00 20.00 92-183 92-183
37.50 5.69 1-91 1-91
RBL Bank Limited
- 4.55 - 92-183
555.74 31.09 1-91 1-91
Standard Chartered Bank
20.50 - 92-183 -
(b) Financial institution
Aditya Birla Finance
112.50 140.27 1-89 1-89
Limited

- which were unpaid as at 31 March 2020:

Name of the lenders Amount of default during the year ended 31 March 2020 (` in million) Period of default (in days) Remarks
Principal Interest Principal Interest
In case of:
(a) Banks
281.25 53.42 1-91 1-91
187.50 54.00 92-183 92-183
Axis Bank
312.50 56.33 184-275 184-275
187.50 21.02 276-366 276-366
Indus Ind Bank - 20.70 - 1-32
Kotak Mahindra Bank 31.25 12.36 1 1-88
100.00 6.87 1-91 1-91
IDBI Bank 104.00 6.97 92-183 92-183
- 2.58 - 184-275
330.00 64.09 1-91 1-91
- 64.79 - 92-183
HDFC Limited
330.00 64.87 184-275 184-275
315.00 24.48 276-366 276-366
- 13.35 - 1-91
RBL Bank Limited - 13.50 - 92-183
525.00 12.72 184-275 184-275
107.95 31.58 1-91 1-91
Standard Chartered Bank
344.29 31.70 92-183 92-183
- 9.57 - 184-275
(b) Financial institution
Aditya Birla Finance Limited 37.50 26.52 1-33 1-33

(ix) The Company did not raise moneys by way of initial public offer orfurther public offer (including debt instruments). In our opinion the term loans wereapplied for the purpose for which the loans were obtained.

(x) No fraud by the Company or on the Company by its officers oremployees has been noticed or reported during the period covered by our audit.

(xi) The Company has paid managerial remuneration which is in excess ofthe limits prescribed under Section 197 of the

Act read with Schedule V of the Act in respect of which approvals fromthe shareholders have been obtained within the prescribed time limit however priorapprovals from the lenders as required under Section 197 have not been obtained by theCompany. The details of the such excess managerial remuneration paid are as follows:

S. No Payment made to Amount Paid in excess of limits prescribed (` in million) Amount due for Recovery as at 31 March 2020 (`) Steps taken to secure the recovery of the amount Remarks (if any)
1 Whole time Director 0.81 million 0.81 million - The Company has submitted representation before lenders for reconsideration of remuneration so paid and approval is awaited for the same.

(xii) In our opinion the Company is not a Nidhi Company. Accordinglyprovisions of clause 3(xii) of the Order are not applicable.

(xiii) In our opinion all transactions with the related parties are incompliance with Sections 177 and 188 of Act where applicable and the requisite detailshave been disclosed in the financial statements etc. as required by the applicable IndAS.

(xiv) During the year the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures.

(xv) In our opinion the Company has not entered into any non-cashtransactions with the directors or persons connected with them covered under Section 192of the Act.

(xvi) The Company is not required to be registered under Section 45-IAof the Reserve Bank of India Act 1934.

For Walker Chandiok & Co LLP
Chartered Accountants
Firm's Registration No.: 001076N/N500013
Rajni Mundra
Partner
Place: New Delhi Membership No.: 058644
Date: 29 June 2020 UDIN: 20058644AAAABF4958

ANNEXURE II TO THE INDEPENDENT AUDITOR'S REPORT

OF EVEN DATE TO THE MEMBERS OF SITI NETWORKS LIMITED ON THE STANDALONEFINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2020

ANNEXURE II

INDEPENDENT AUDITOR'S REPORT ON THE INTERNAL FINANCIAL CONTROLSWITH REFERENCE TO FINANCIAL STATEMENTS UNDER CLAUSE _I_ OF SUB_SECTION 3 OF SECTION 143 OFTHE COMPANIES ACT 2013 _‘THE ACT'_

1. In conjunction with our audit of the standalone financial statementsof SITI Networks Limited (‘the Company') as at and for the year ended 31 March2020 we have audited the internal financial controls with reference to financialstatements of the Company as at that date.

RESPONSIBILITIES OF MANAGEMENT AND THOSE CHARGED WITH GOVERNANCE FORINTERNAL FINANCIALC ONTROLS

2. The Company's Board of Directors is responsible forestablishing and maintaining internal financial controls 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 (‘the GuidanceNote') issued by the Institute of Chartered Accountants of India (‘ICAI').These responsibilities include the design implementation and maintenance of adequateinternal financial controls that were operating effectively for ensuring the orderly andefficient conduct of the Company's business including adherence to theCompany's policies the safeguarding of its assets the prevention and detection offrauds and errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Act.

AUDITOR'S RESPONSIBILITY FOR THE AUDIT OF THE INTERNALFINAN CIALCONTROLS WITH REFERENCE TO FINANCIAL STATEMENTS

3. Our responsibility is to express an opinion on the Company'sinternal financial controls with reference to financial statements based on our audit. Weconducted our audit in accordance with the Standards on Auditing issued by the ICAIprescribed under Section 143(10) of the Act to the extent applicable to an audit ofinternal financial controls with reference to financial statements and the Guidance Noteissued by 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 with reference to financial statements wereestablished and maintained and if such controls operated effectively in all materialrespects.

4. Our audit involves performing procedures to obtain audit evidenceabout the adequacy of the internal financial controls with reference to financialstatements and their operating effectiveness. Our audit of internal financial controlswith reference to financial statements includes obtaining an understanding of suchinternal financial controls assessing the risk that a material weakness exists andtesting and evaluating the design and operating effectiveness of internal control based onthe assessed risk. The procedures selected depend on the auditor's judgementincluding the assessment of the risks of material misstatement of the financialstatements whether due to fraud or error.

5. We believe that the audit evidence we have obtained is sufficientand appropriate to provide a basis for our qualified audit opinion on the Company'sinternal financial controls with reference to financial statements.

MEANING OF INTERNALFINAN CIALC ONTROLS WITH REFERENCE TO FINANCIALSTATEMENTS

6. A company's internal financial controls with reference tofinancial statements is a process designed to provide reasonable assurance regarding thereliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles. Acompany's internal financial controls with reference to financial statements includethose policies and procedures that (1) pertain to the maintenance of records that inreasonable detail accurately and fairly reflect the transactions and dispositions of theassets of the company; (2) provide reasonable assurance that transactions are recorded asnecessary to permit preparation of financial statements in accordance with generallyaccepted accounting principles and that receipts and expenditures of the company arebeing made only in accordance with authorisations of management and directors of thecompany; and (3) provide reasonable assurance regarding prevention or timely detection ofunauthorised acquisition use or disposition of the company's assets that could havea material effect on the financial statements.

INHERENT LIMITATIONS OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TOFINANCIAL STATEMENTS

7. Because of the inherent limitations of internal financial controlswith reference to financial statements including the possibility of collusion or impropermanagement override of controls material misstatements due to error or fraud may occurand not be detected. Also projections of any evaluation of the internal financialcontrols with reference to financial statements to future periods are subject to the riskthat the internal financial controls with reference to financial statements may becomeinadequate because of changes in conditions or that the degree of compliance with thepolicies or procedures may deteriorate.

QUALIFIED OPINION

8. According to the information and explanations given to us and basedon our audit the following material weakness has been identified in the operatingeffectiveness of the Company's internal financial controls with reference tofinancial statements as at 31 March 2020:

The Company's internal financial controls over preparation offinancial statements with respect to presentation and disclosure of ‘Revenue fromoperations' in accordance with the requirement of Ind AS 115 ‘Revenue fromcontracts with customers' were not operating effectively which has resulted in amaterial misstatement in the amounts recognised as ‘Revenue from operations' and‘Carriage sharing pay channel and related costs' including the relevantdisclosures in the standalone financial statements while there is no impact on the netloss for the year ended 31 March 2020.

9. A ‘material weakness' is a deficiency or a combination ofdeficiencies in internal financial controls with reference to financial statements suchthat there is a reasonable possibility that a material misstatement of the company'sannual or interim financial statements will not be prevented or detected on a timelybasis.

10. In our opinion the Company has in all material respects adequateinternal financial controls with reference to financial statements as at 31 March 2020based on the internal financial controls with reference to financial statements criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note issued by the ICAI and except for the effects of the materialweakness described above on the achievement of the objectives of the control criteria theCompany's internal financial controls with reference to financial statements wereoperating effectively as at 31 March 2020.

11. We have considered the material weakness identified and reportedabove in determining the nature timing and extent of audit tests applied in our audit ofthe standalone financial statements of the Company as at and for the year ended 31 March2020 and the material weakness has affected our opinion on the standalone financialstatements of the Company and we have issued a qualified opinion on the standalonefinancial statements.

For Walker Chandiok & Co LLP
Chartered Accountants
Firm's Registration No.: 001076N/N500013

 

Rajni Mundra
Partner
Place: New Delhi Membership No.: 058644
Date: 29 June 2020 UDIN: 20058644AAAABF4958

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