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Sri Adhikari Brothers Television Network Ltd.

BSE: 530943 Sector: Media
NSE: SABTN ISIN Code: INE416A01036
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VOLUME 1000
52-Week high 5.05
52-Week low 0.95
P/E
Mkt Cap.(Rs cr) 3
Buy Price 1.00
Buy Qty 4031.00
Sell Price 1.24
Sell Qty 50.00

Sri Adhikari Brothers Television Network Ltd. (SABTN) - Auditors Report

Company auditors report

To the Members of Sri Adhikari Brothers Television Network Limited

Report on the Audit of the Standalone Financial Statements

Qualified Opinion

We have audited the standalone financial statements of Sri Adhikari Brothers TelevisionNetwork Limited (“the Company”) which comprise the balance sheet as at March31 2019 and the statement of Profit and Loss statement of changes in equityand thestatement of cash flows for the year then ended and notes to the financial statementsincluding a summary of significant accounting policies and other explanatory information.

In our opinion and to the best of our information and according to the explanationsgiven to us except for the effects of the matter described in the Basis for QualifiedOpinion and Emphasis of Matters section of our report the aforesaid financial statementsgive the information required by the Companies Act 2013 in the manner so required and givea true and fair view in conformity with the accounting principles generally accepted inIndia of the state of affairs of the Company as at March 31 2019 and its loss changesin equityand its cash flows for the year ended on that date.

Basis for Qualified Opinion

i) Due to defaults in repayment of loans taken from Banks the account of the companyhas been classified as non-performing asset by banks and except two banks other bankshave not charged the interest / reversed the unpaid interest charged from the date theaccount has been classified as non-performing. No provision has been made in the books ofaccounts maintained by the Company for interest / penal interest if any on these termloans amounting to about Rs. 102649567/- (exact amount cannot be ascertained) hence tothat extent finance cost total loss and current financial liabilities is estimated to beunderstated by about Rs. 102649567/- (exact amount cannot be ascertained) for the yearended March 31 2019.

ii) The aggregate carrying value of business and commercial rights in the books of theCompany as on March 31 2019 is Rs. 1301099857/-. The revenue generation frommonetization of these assets is significantly lower than the expected revenue during theyear ended March 31 2019 and due to which the Company has incurred substantial lossesduring the year ended March 31 2019. Hence there is an indication of impairment in thevalue of these business and commercial rights. However in the absence of exact amount ofdiminution in the value of these business and commercial rights we are unable to quantifythe amount of impairment of these business and commercial rights and its consequentialeffects on the financial statements as on March 31 2019.

We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder section 143(10) of the Companies Act 2013. Our responsibilities under thoseStandards are further described in the Auditor's Responsibilities for the Audit of theFinancial Statements section of our report. We are independent of the Company inaccordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia together with the ethical requirements that are relevant to our audit of thefinancial statements under the provisions of the Companies Act 2013 and we have fulfilledour other ethical responsibilities in accordance with these requirements and the ICAI'sCode of Ethics. We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our qualified opinion.

Emphasis of Matter

i) We draw attention to Note No. 32 forming part of financial statements regardingpreparation of accounts on going concern basis notwithstanding the fact that loans havebeen recalled back by secured lenders current liabilities are substantially higher thanthe current assets issue of notices under Securitisation and Reconstruction of FinancialAssets and Enforcement of Security Interest Act 2002 recovery proceedings initiated withdebt recovery tribunal and taking over symbolic possession of immovable properties by thesecured lenders of the Company and in case of other borrowers wherein corporate guaranteewas given by the Company substantial losses incurred by the Company during the yearending March 31 2019 and negative other equity of Rs. 297838216/- as on March 312019. The appropriateness of assumption of going concern is mainly dependent on approvalof company's resolution plan with the secured lenders company's ability to generategrowth in cash flows in future to meet its obligation. We are of the opinion that theconcept of preparation of accounts on going concern basis has to be reviewed periodicallyand be suitably modified if required. Our opinion is not modified in respect of thismatter.

ii) During the financial year 2018-2019 the Company has been served a legal noticefrom one of its secured lenders proposing to initiate proceedings under Insolvency andBankruptcy Code 2016 by filing necessary application before the jurisdictional NationalCompany Law Tribunal (NCLT) as per the applicable law and rules.

iii) The Company has not recognized deferred tax assets in view of virtual uncertaintyof sufficient future taxable income to set off current year losses and unabsorbeddepreciation.

Information Other than the Financial Statements and Auditor's Report Thereon

The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Board's report and ManagementDiscussion and Analysis but does not include the Secretarial Audit report Standalonefinancial statements and our auditor's report thereon. The Board's report and ManagementDiscussion and Analysis is expected to be made available to us after the date of thisauditor's report.

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

In connection with our audit of the standalone financial statements our responsibilityis to read the other information identified above when it becomes available and in doingso consider whether the other information is materially inconsistent with the standalonefinancial statements or our knowledge obtained in the audit or otherwise appears to bematerially misstated.

When we read the Board's report and Management Discussion and Analysis if we concludethat there is a material misstatement therein we are required to communicate the matterto those charged with governance and make disclosures and take specific actions as perapplicable laws and regulations if required.

Key Audit Matters

Except for the matter described in the Basis for Qualified Opinion section and Emphasisof Matters paragraph we have determined that there are no other key audit matters tocommunicate in our report.

Responsibilities of Management and Those Charged with Governance for the FinancialStatements

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 financial statements that give a true and fair view of the financialposition financial performance changes in equity and cash flows of the Company inaccordance with the accounting principles generally accepted in India including theAccounting Standards specified under Section 133 of the Act. This responsibility alsoincludes maintenance of adequate accounting records in accordance with the provisions ofthe Act for safeguarding of the assets of the Company and for preventing and detectingfrauds and other irregularities; selection and application of appropriate accountingpolicies; making judgments and estimates that are reasonable and prudent; and designimplementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring 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.

In preparing the financial statements the Board of Directors 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 unlessthe Board of Directors either intends to liquidate the Company or to cease operations orhas no realistic alternative but to do so.

Those Board of Directors are also responsible for overseeing the Company's financialreporting process.

Auditor's Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financialstatements as a whole are free from material misstatement whether due to fraud or errorand to issue an auditor's report that includes our opinion. Reasonable assurance is a highlevel of assurance but is not a guarantee that an audit conducted in accordance with SAswill always detect a material misstatement when it exists. Misstatements can arise fromfraud or error and are considered material if individually or in the aggregate theycould reasonably be expected to influence the economic decisions of users taken on thebasis of these financial statements.

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

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

• Obtain an understanding of internal control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under section 143(3)(i)of the Companies Act 2013 we are also responsible for expressing our opinion on whetherthe company has adequate internal financial controls system in place and the operatingeffectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management's use of the going concern basisof accounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe financial statements or if such disclosures are inadequate to modify our opinion.Our conclusions are based on the audit evidence obtained up to the date of our auditor'sreport. However future events or conditions may cause the Company to cease to continue asa going concern.

• Evaluate the overall presentation structure and content of the financialstatements including the disclosures and whether the financial statements represent theunderlying transactions and events in a manner that achieve fair presentation.

We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.

From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the financial statements of thecurrent period and are therefore the key audit matters.

We describe these matters in our auditor's report unless law or regulation precludespublic disclosure about the matter or when in extremely rare circumstances we determinethat a matter should not be communicated in our report because the adverse consequences ofdoing so would reasonably be expected to outweigh the public interest benefits of suchcommunication.

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 Companies Act 2013 we give in the “Annexure A” a statement on the mattersspecified in paragraphs 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 purpose 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 Statement of Changes inEquity and the Cash Flow Statement dealt with by this Report are in agreement with thebooks of account.

d) In our opinion subject to Basis of Qualified Opinion and Emphasis of Matterssection in our report the aforesaid standalone financial statements comply with theAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014.

e) On the basis of the written representations received from the directors as on March31 2019 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2019 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”.

g) With respect to other matters to be included in the Auditor's Report in accordancewith Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinion and to thebest 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 Note No.28 to the financial statements.

ii. The Company did not have any long term contracts including derivate contracts forwhich there were any material foreseeable losses.

iii. There has been no delay in transferring material amounts to the Investor Educationand Protection Fund by the Company.

“ANNEXURE A” FORMING PART OF INDEPENDENT AUDITOR'S REPORT

The Annexure referred to in our Independent Auditor's Report of even date to themembers of the Company on the standalone Ind AS financial statements for the year endedMarch 31 2019 we report that:

On the basis of such checks as we considered appropriate and according to theinformation and explanations given to us during the course of our audit we report that:

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

(b) According to the information and explanation given to us the fixed assets havebeen physically verified by the management at the end of the year and the discrepanciesnoticed on such verification have been properly dealt with in the books of accounts.

(c) According to the information and explanation given to us and on the basis ofrecords furnished to us the title deeds / ownership of the immovable properties are heldin the name of the company. However the secured lenders of the Company and the borrowersfor whom corporate guarantee has been given by the Company has taken symbolic possessionof the immovable properties held in the name of the Company in the current financial year.

ii) Physical verification of inventories has been conducted at reasonable intervals bythe management. The Company is generally maintaining proper records of inventory and nomaterial discrepancies were noticed on physical verification between physical stock andthe books records.

iii) The Company has not granted any loan secured or unsecured to companies firmsLimited Liability Partnerships or other parties covered in the register maintained u/s 189of the Act; hence the Clause (iii) of paragraph 3 of the Order are not applicable to theCompany.

iv) In our opinion and according to the information and explanations given to us theprovisions of section 185 and 186 of the Act in respect of loans investments guaranteesand security given as applicable have been complied by the Company.

v) The company has not accepted any deposit and hence directive issued by the ReserveBank of India and provisions of sections 73 to 76 or any other provisions of CompaniesAct 2013 and Rules framed thereunder will not be applicable to the Company.

vi) The Central Government has not prescribed the maintenance of cost records undersub- section (1) of section 148 of the Act for any of the activities of the Company; hencethe Clause (vi) of paragraph 3 of the Order are not applicable to the Company.

vii) a) According to the information and explanations given to us and on the basis ofour examination of the records the Company has been generally regular in depositingundisputed statutory dues including Provident Fund Employees State Insurance Income TaxGST and other statutory dues with the appropriate authorities.According to the informationand explanations given to us there were no outstanding statutory dues as on March 312019 for a period of more than six months from the date they became payable.

b) According to information and explanation given to us there are no disputedstatutory dues including Provident Fund Employees State Insurance Income Tax GST andother statutory dues which have not been deposited on account of dispute except as statedbelow :-

Name of Statute Nature of dues Year(s) to which it pertains Amount Not Paid (in Lakhs) Forum where dispute is pending
Income Tax Act 1961 Income Tax demand 2000-01 35.08 Mumbai High Court

viii) The company has defaulted in repayment of loans or borrowings to banks. Thelender wise details with the period and amount of default is as follows :-

Serial No. Name of Bank Period of default (in months) Amount of default as on March 31 2019 (in Rs.)
1 Canara Bank 28 Rs. 352301581/-
2 Central Bank of India 64 Rs. 81863725/-
3 Dhanlaxmi Bank 21 Rs. 65621131/-
4 Indian Overseas Bank 19 Rs. 115980252/-
6 State Bank of India 19 Rs. 130044424/-

The default of interest / penal interest / late payment / other charges if any onloans outstanding as on March 31 2019 cannot be precisely ascertained as the account ofthe Company has turned non-performing and some banks have not charged interest from thedate the account has turned non-performing. The disclosure of the same is also mentionedin Point (i) of Basis of Qualified Opinion paragraph of our audit report.

ix) Based upon the audit procedures performed and according to the information andexplanations given to us the company has not raised money by way of initial public offeror further public offer (including debt instruments) and term loans during the financialyear hence clause (ix) of paragraph 3 of the Order is not applicable to the company.

x) To the best of our knowledge and belief and according to the information andexplanations given to us and considering the size and nature of the Company's operationsno fraud of material significance on or by the Company have been noticed or reportedduring the year and nor have we been informed of such case by the management.

xi) According to the information and explanation given to us and based on ourexamination of the records the Company has paid for managerial remuneration in accordancewith the requisite approvals mandated by the provisions of section 197 read with ScheduleV of the Act.

xii) In our opinion and according to the information and explanation given to us theCompany is not a Nidhi Company; hence Clause (xii) of paragraph 3 of the Order is notapplicable.

xiii) According to the information and explanations given to us and based on ourexamination of records of the Company transactions with the related parties are incompliance with section 177 and 188 of the Act where applicable and the details of suchtransactions have been disclosed in the standalone Ind AS financial statements as requiredby the applicable accounting standards.

xiv) Based upon the audit procedures performed and according to the information andexplanations given by the management the company has not made any preferential allotmentor private placement of shares or fully or partly convertible debentures during the year;hence the clause (xiv) of paragraph 3 of the Order is not applicable to the Company.

xv) According to the information and explanations given to us and based on ourexamination of records of the Company the Company has not entered into any non-cashtransactions with directors or persons connected with him; hence the clause (xv) ofparagraph 3 of the Order is not applicable.

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 Reserve Bank of India Act1934.

“ANNEXURE B” FORMING PART OF INDEPENDENT AUDITOR'S REPORT

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 SriAdhikari Brothers Television Network Limited (“the Company”) as of March 312019 in conjunction with our audit of the 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. These responsibilities includethe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to company's policies the safeguarding of its assets the preventionand detection of frauds and errors the accuracy and completeness of the accountingrecords and the timely preparation of reliable financial information as required underthe Companies Act 2013.

Auditors' 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 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 authorizations 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 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 2019 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.

For P. Parikh and Associates

Chartered Accountants

FRN: 107564W

Sandeep Parikh

Partner

Membership No.: 039713

Mumbai

May 30 2019