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Tamil Nadu Telecommunications Ltd.

BSE: 523419 Sector: Engineering
NSE: TNTELE ISIN Code: INE141D01018
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VOLUME 2891
52-Week high 21.20
52-Week low 1.26
P/E
Mkt Cap.(Rs cr) 33
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Tamil Nadu Telecommunications Ltd. (TNTELE) - Auditors Report

Company auditors report

To

The Members of Tamilnadu Telecommunications Limited.

Report on the Audit of the Standalone Ind AS Financial Statements

Adverse Opinion

We have audited the standalone financial statements of Tamilnadu TelecommunicationsLimited ("the Company") which comprise the Balance sheet as at March 31 2021and the Statement of Profit and Loss (including Other Comprehensive Income) Statement ofchanges in equity and the Statement of cash flows for the year then ended and notes tothe financial statements including a summary of significant accounting policies and otherexplanatory information.

In our opinion and to the best of our information and according to the explanationsgiven to us because of the significance of the matter discussed in the Basis for AdverseOpinion section of our report the aforesaid financial statements do not give

a true and fair view in conformity with the Indian Accounting Standards prescribedunder section 133 of the Act read with the Companies (Indian Accounting Standards) Rules2015 as amended ("Ind AS") and other accounting principles generally acceptedin India of the state of affairs of the Company as at March 31st 2021 the loss andtotal comprehensive income changes in equity and its cash flows for the year ended onthat date.

Basis for Adverse Opinion

1. The Company's financial statements have been prepared using the going concernassumption of accounting. However the Company's accumulated losses of Rs.1723166612/-(including a loss of Rs.98028717/- incurred during the FY 2020-21) has eroded the NetWorth of the Company indicating the existence of material uncertainty that may cast adoubt about the Company's ability to continue as a Going Concern. The Company has notoperated its factory since 2017 and NO sales effected for more than three years. It isalso pertinent to note that power connections in the factory are disabled. Further asrepresented by the company the machineries would involve major overhauling cost to resumeoperations and the company is also unable to obtain support for supply of major rawmaterial required for manufacture from its supplier. Also the company has not bagged anynew orders to substantiate the going concern assumption.

As per Standard on Auditing (SA) 570 "If the financial statements have beenprepared using the going concern basis of accounting but in the auditor's judgmentmanagement's use of the going concern basis of accounting in the financial statements isinappropriate the requirement in paragraph 21 for the auditor to express an adverseopinion applies regardless of whether or not the financial statements include disclosureof the inappropriateness of management's use of the going concern basis ofaccounting."

Hence considering the cumulative effect of the factors detailed in the above paragraphin the revival of the company we conclude that the Going Concern assumption of themanagement in preparation of financial statements is inappropriate.

2. The Company has not recognized the following financial liability/asset at Fair Valuein terms of Ind AS 109 (including comparative figures as of 31st March 2020) and impact ofthe same on the financial Statements is not ascertainable.

i) Amounts due to M/s Fujikura Limited amounting to Rs.19807090/- (Previous Year-Rs.20003590/-)

ii) Trade Receivables (considered good amounting to Rs.71362110/- (Previous Year-Rs.71410296/-)

iii) Unsecured Trade Payables amounting to Rs.34114712/- (Previous YearRs.34409375/-).

Emphasis of Matter

1) We draw attention to Note No.28 (Sl.No.22) of the explanatory notes to the financialstatements which states the reason for non-recognition of amounts due to the holdingCompany viz. Telecommunications Consultants India Limited amounting toRs.1261887189/- (Previous Year - Rs.1174917114/-) at Fair Value in accordance withIndAS 109 and impact of the same on the financial statements is not ascertainable and Ouropinion is not modified in respect of this matter.

2) Attention is invited to Note Nos.3581415 of the notes to financial statementswhere the balances carried in the debtors creditors advances & deposits payable /recoverable are subject to confirmation from all parties (other than TelecommunicationsConsultants India Limited) as stated in Note No.28 (Sl.No.2). The impact if any onfinancial statements is not ascertainable and Our opinion is not modified in this respect.

3) Attention is invited to Note No. 28 (Sl.No.19) of the explanatory notes to thefinancial statements which states that the Company has not received information fromvendors regarding their status under the Micro Small and Medium Enterprises DevelopmentAct 2006. Hence the disclosure relating to amounts unpaid as at the year end togetherwith interest paid / payable under this Act could not be ascertained. Our opinion is notmodified in this respect.

Key Audit Matters

Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the financial statements of the current period. These matterswere addressed in the context of our audit of the financial statements as a whole and informing our opinion thereon and we do not provide a separate opinion on these matters.Except for the matters described in the Basis for Adverse Opinion section we havedetermined that there are no other key audit matters to communicate in our report.

Information Other than the Standalone 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 Management Discussion and AnalysisBoard's Report including Annexures to Board's Report Business Responsibility ReportCorporate Governance Report and Shareholder's Information but does not include thestandalone financial statements and our auditor's report thereon.

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

In connection with our audit of the standalone financial statements our responsibilityis to read the other information and in doing so consider whether the other informationis materially inconsistent with the standalone financial statements or our knowledgeobtained during the course of our audit or otherwise appears to be materially misstated.

If based on the work we have performed we conclude that there is a materialmisstatement of this other information we are required to report that fact. We havenothing to report in this regard.

Management's Responsibility for the Standalone 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 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 statement that givea true and fair view and are free from material misstatement whether due to fraud orerror.

In preparing the financial statements management is responsible for assessing theCompany's ability to continue as a going concern disclosing as applicable mattersrelated to going concern and using the going concern basis of accounting unless managementeither intends to liquidate the Company or to cease operations or has no realisticalternative but to do so.

The 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 they could reasonably be expected to influence theeconomic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with SAs we exercise professional judgement 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 onwhether the company has adequate internal financial controls system in place and theoperating effectiveness 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 achieves 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 them all relationships and other matters that may reasonably be thought to bear onour independence 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 ourauditor's report unless law or regulation precludes public disclosure about the matter orwhen in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.

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 "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 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 including Other ComprehensiveIncome Statement of Changes in Equity and the Cash Flow Statement dealt with by thisReport are in agreement with the books of account.

d) In our opinion the aforesaid standalone financial statements comply with the Ind ASspecified under Section 133 of the Act read with Rule 7 of the Companies (Accounts)Rules 2014.

e) Our observations in "The Basis for Adverse" Paragraph here-in-aboveregarding the assumption of Going Concern in our Opinion may have adverse effect on thefunctioning of the Company.

f) On the basis of the written representations received from the directors as on 31stMarch 2021 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2021 from being appointed as a director in terms of Section164 (2) of the Act.

g) With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate Report in "Annexure B". Our report expresses Unmodified opinion on theadequacy and operating effectiveness of the Company's internal financial controls overfinancial reporting.

h) With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our information and according to the explanations given to us:

I. The Company has disclosed the impact of pending litigations on its financialposition in its financial statements - Refer Note 28 (Sl.Nos.3 11 15 16) to thefinancial statements;

II. The Company has made provision as required under the applicable law or Indianaccounting standards for material foreseeable losses if any on long-term contracts.

III. According to the information and explanations given to us and based on ourexamination of the records there were no amounts required to be transferred to theInvestor Education and Protection Fund by the Company.

3. Report on the Directions issued by the Comptroller and Auditor General of Indiaunder Section 143(5) of the Companies Act 2013 for conducting audit of accounts for theyear 2020-21 is given below:-

1 Whether the Company has system in place to process all the accounting transactions through IT system? If yes the implications of processing of accounting transactions outside IT system on the integrity of the accounts along with the financial implications if any may be stated. The Company maintains Tally ERP as the accounting program for maintenance of books of accounts. Tally being the only IT system used by the Company not all transactions (including payroll processing stock procurement stock dispatch etc.) are computerized thereby resulting in involvement of human intervention. There is no financial implication.
2 Whether there is any restructuring of an existing loan or cases of waiver/write off of debts/loans/interest etc. made by a lender to the Company due to the company's inability to repay the loan? If yes the financial impact may be stated. In the current period under review (FY 2020-21) there is no restructuring of an existing loan or cases of waiver/write off of debts/ loans/interest etc. made by a lender to the Company even though the Company is not regular in repayment of its dues (Principal and Interest) with respect to the borrowings from M/s Telecommunications Consultants India Limited being one of the promoters of Company.
3 Whether funds received/ receivable for specific schemes from Central/State agencies were properly accounted for/utilized as per its terms and conditions? List the cases of deviation. The Company did not receive any funds for specific schemes from Central/State agencies during the FY 2020-21.
For R. Bupathy & Co
Chartered Accountants
Firm Regn No. 000525S
Place: Chennai CA V. Thiagarajan
Date : 21.06.2021 Partner
UDIN : 21203328AAAADJ9400 ICAI M. No. 203328

Annexure " A " to the Auditor's Report (Referred to in paragraph 1 under‘Report on Other Legal and Regulatory Requirements' section of our report to theMembers of Tamilnadu Telecommunications Limited of even date)

Based on the books and records produced before us and as per the information andexplanations given to us and based on such audit check that we considered necessary andappropriate we report that:

i) In respect of fixed assets

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

b) As explained to us fixed assets have been physically verified by the management atreasonable intervals and no material discrepancies were noticed on such verification.

c) The title deeds of Immovable properties are held in the name of the Company.

ii) In respect of its inventories:

a) As explained to us the inventories were physically verified during the year by theManagement at reasonable intervals.

b) In our opinion and according to the information and explanations given to us theCompany has maintained proper records of its inventories and no material discrepancieswere noticed on physical verification.

iii) In our opinion and according to the information and explanations provided theCompany has not granted any loans secured or unsecured to companies firms LimitedLiability Partnerships or other parties covered in the register maintained under Section189 of the Companies Act 2013 during the year. Hence reporting under clause 3(iii) ofparagraph 3 of the Order is not applicable.

iv) In our opinion and according to the information and explanations provided theCompany has neither made any investments nor advanced any loan either to its directors orto any other person in whom the directors are interested or provided any guarantee orsecurity. Therefore compliance under section 185 and 186 of the Companies Act 2013 asrequired under clause 3(iv) of paragraph 3 of the Order is not applicable.

v) The Company has not accepted any deposits from the public. Hence reporting underclause 3 (v) of paragraph 3 of the Order is not applicable.

vi) According to the information and explanations given to us the Central Governmenthas not prescribed the maintenance of cost records under sub-section (1) of section 148 ofthe Companies Act 2013 in respect of nature of business carried out by the Company andtherefore clause 3(vi) of paragraph 3 of the Order is not applicable.

vii) In respect of statutory dues

a) Undisputed statutory dues like Provident Fund Employees' State Insurance TDS andProperty Tax have not been regularly deposited with the appropriate authorities and therehave been serious delays in a large number of cases due to insufficiency of funds with theCompany.

b) Following is the summary of statutory dues as at the last day of the financial yearoutstanding for a period of more than six months from the date they become payable.

Name of the Statute Nature of the Dues Amount Period
Employees' State Insurance Act Employer and Employee Contribution 10839 July'18 to Sep' 2019
The Employees' Provident Funds And Miscellaneous Provisions Act Employer and Employee Contribution 6850900 July'18 to Sep' 2019
The Employees' Provident Funds And Miscellaneous Provisions Act Voluntary Contribution of Employee 842478 July'18 to Sep' 2019
Income Tax Act TDS Payable-Interest Charges 9890880 Apr'18 to Sep' 2020
Municipal Tax Property Tax 5993800 Since 2009-10 to 2019-20 (Apr'19 to Sep'20)
Total 23688897

c) The details of disputed dues of Sales Tax and Duties of Customs which have not beendeposited as on 31st March 2021 are as given below:

Statute Nature of Dues Amount (Rs.) Forum where dispute is pending Remarks
Sales Tax Additional Sales Tax(FY 2000-2001 & 2001-2002) 18608794 High Court of Madras Recognized as Contingent Liability in Balance Sheet
Sales Tax Non-Submission of C-Forms(AY 2001-02 02-03 and 03-04) 2295000 Commercial Sales Tax Department Recognized as Contingent Liability in Balance Sheet
Duty of Customs Difference in Classification of imports (FY 06-07) 10206795 Commissioner of Customs Recognized as Contingent Liability in Balance Sheet
Income Tax Default in Traces Website 1774729 Income Tax Department Recognized as Contingent Liability in Balance Sheet
Sales Tax VAT on disposal of Movable Assets (FY 2011-12 to 2015-16) 25725 Assistant Commissioner (CT) Provision created in books
Sales Tax Tax on cross verification of buyer and seller (FY 2013-14) 343057 Assistant Commissioner (CT) Provision created in books
Sales Tax Tax on Non Submission of C Forms (FY 2012-13 to FY 2015-16) 1435408 Assistant Commissioner (CT) Provision created in books
Sales Tax ITC Reversal for CST sales without C Form (FY 201213 to FY 2014-15) 2779291 Assistant Commissioner (CT) Provision created in books
TOTAL 37468799

viii) The Company has not borrowed any sums from Banks or Financial Institutions orDebenture holders and hence the question of default in repayment of dues to Banks orFinancial Institutions or Debenture holders and reporting under clause 3(viii) ofparagraph 3 of the Order does not arise.

ix) The Company has not raised any moneys by way of initial public offer or furtherpublic offer and term loans during the year and hence reporting under clause 3(ix) ofparagraph 3 of the Order is not applicable.

x) According to the information and explanations provided to us no fraud by theCompany or on the Company by its officers or employees has been noticed or reported duringthe course of our audit.

xi) The managerial remuneration has been paid or provided in accordance with therequisite approvals and within the ceiling limit as per the provisions of Section 197 readwith Schedule V of the Act.

xii) The Company is not a Nidhi Company. Accordingly clause 3(xii) of paragraph 3 ofthe Order is not applicable.

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

xiv) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year. Accordingly clause 3(xiv) of paragraph 3 of the order is not applicable.

xv) According to the information and explanations given to us and based on ourexamination of the records the Company has not entered into non-cash transactions withdirectors or persons connected with him. Accordingly clause 3(xv) of paragraph 3 of theorder is not applicable.

xvi) The Company is not required to be registered under Section 45-IA of the ReserveBank of India 1934. Accordingly paragraph 3(xvi) of the order is not applicable.

Annexure "B" to the Independent Auditor's Report

(Referred to in paragraph 2(f) under ‘Report on Other Legal and RegulatoryRequirements' section of our report to the Members of Tamilnadu Telecommunications Limitedof even date)

Report on the Internal Financial Controls Over Financial Reporting under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 ("the Act")

We have audited the internal financial controls over financial reporting of TamilnaduTelecommunications Limited ("the Company") as of March 312021 in conjunctionwith our audit of the standalone financial statements of the Company for the year ended onthat date.

Management's Responsibility for Internal Financial Controls

The Board of Directors of the Company is responsible for establishing and maintaininginternal financial controls based on the internal control over financial reportingcriteria established by the Company considering the essential components of internalcontrol stated in the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting issued by the Institute of Chartered Accountants of India. Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to respective company's policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information as required under the Companies Act 2013.

Auditor's Responsibility

Our responsibility is to express an opinion on the internal financial controls overfinancial reporting of the Company based on our audit. We conducted our audit inaccordance with the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting (the "Guidance Note") issued by the Institute of Chartered Accountantsof India and the Standards on Auditing prescribed under Section 143(10) of the CompaniesAct 2013 to the extent applicable to an audit of internal financial controls. ThoseStandards and the Guidance Note require that we comply with ethical requirements and planand perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls over financial reporting was established and maintained and if suchcontrols 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 internal financial controls system overfinancial reporting of the Company.

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:

I. Pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company;

II. 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

III. 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 to the best of our information and according to the explanations givento us the Company has in all material respects an adequate internal financial controlssystem over financial reporting and such internal financial controls over financialreporting were operating effectively as at March 312021 based on the internal controlover financial reporting criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note on Audit of Internal FinancialControls Over Financial Reporting issued by the Institute of Chartered Accountants ofIndia.

.