The Members of
Tamilnadu Telecommunications Limited.
Report on the Audit of the Standalone Financial Statements Adverse
We have audited the standalone financial statements of Tamilnadu TelecommunicationsLimited (the company') which comprise the balance sheet as at March 31st 2020 andthe statement of Profit and Loss (including other comprehensive income) statement ofchanges in equity and the statement of cash flows for the year statements including asummary of significant accounting policies and other explanatory information.
In our opinion and to the best of our information and according to the explanationgiven 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 andfair view in conformity with the Indian accounting standards prescribed under section 133of the act read with the companies (Indian Accounting Standards) Rules 2015 as amended(Ind AS') and other accounting principles generally accepted in India of the stateof affairs of the Company as at March 31st 2020 the loss and total comprehensive incomechanges in equity and its cash flows for the year ended on that 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.1625137896/-(including a loss of Rs.146151719/- incurred during FY 2019-20) 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 not operated its factory since 2017 and NO sales effected formore than two years. It is also pertinent to note that power connections in the factoryare disabled. Further as represented by the company the machineries would involve majoroverhauling cost to resume operations and the company is also unable to obtain support forsupply of major raw material required for manufacture from its supplier. Also the companyhas not bagged any new orders to substantiate the going concern assumption.
As per Standard on Auditing (SA) 570 "If the financial statements have beenprepared using the going concern endedandnotestothefinancial basis of accounting but inthe auditor's judgement management's use of the going concern basis of accounting in thefinancial statements is inappropriate the requirement in paragraph 21 for the auditor toexpress an adverse opinion applies regardless of whether or not the financial statementsinclude disclosure of the inappropriateness of management's use of the going concern basisof accounting." Hence considering the cumulative effect of the factors detailed inthe above paragraph in the revival of the company we conclude that the Going Concernassumption of the management in preparation of financial statements is inappropriate.
2) The Company has not recognized the following financial liability/asset at Fair Valuein terms of IndAS 109 (including comparative figures as of 31st March 2019) and impact ofthe same on the financial Statements is not ascertainable. i) Amounts due to M/s FujikuraLimited amounting to Rs.20003590/- (Previous Year Rs.19378840/-) ii) TradeReceivables (considered good) amounting to Rs.71410295/- (Previous YearRs.71257092/-) iii) Unsecured Trade Payables amounting to Rs.34409374/- (PreviousYear Rs. 33107285/-)
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.1174917114/- (Previous Year Rs.1083968014/-) 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 the status under Micro Small and Medium Enterprises Development Act2006. Hence the disclosure relating to amounts unpaid as at the year end together withinterest paid/payable under this Act could not be ascertained. Our opinion is not modifiedin this respect.
Key Audit Matters
Key Audit Matters are those matters that in our professional judgement where of mostsignificant 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 Auditors 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 Shareholders' Information but does not include thestandalone financial statements and our Auditor's Report thereon. Our opinion on thestandalone financial statements does not cover the other information and we do not expressany 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 material misstatementof this other information we are required to report that fact. We have nothing to reportin 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 the accounting Standards 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.
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 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 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 omission misrepresentations or the override of internal control.
Obtain an understanding of internal control relevant to the audit in orderto design 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 thereasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concernbasis of accounting and based on the audit evidence obtained whether a materialuncertainty exist 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 the Companyto cease to continue as a 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 themall relationships and other matters that may reasonably be thought to bear on ourindependence and were applicable related safe guards.
From the matters communicated with those charged with governance we determined thosematters that were of most significance in the audit of financial statements of the currentperiod and are therefore the key audit matters. We describe these matters in our auditor'sreport unless law or regulation precludes public disclosure about the matter or when inextremely rare circumstances we determined that a matter should not be communicated inour report because the adverse consequences of doing so would reasonably be expected tooutweigh 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 2020 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2020 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
Company and the operating effectiveness of such controls refer to our separate Reportin "Annexure B". Our report expresses unmodified opinion on the adequacy andoperating effectiveness of the Company's internal financial controls over financialreporting.
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 as disclosed the impact of pending litigations on its financial positionin its financial statements - Refer Note 28 (SL. Nos.3111516) to the financialstatements:
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 2019-20 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 2019-20) 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 2019-20. |
Annexure " A " to the Auditor's Report
(Referred to in paragraph 1 under Report on Other Legal and RegulatoryRequirements' section of our report to the Members of Tamilnadu Telecommunications Limitedof 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 physically verified by the management at reasonableintervals 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 as requiredunder 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 been the last day of the financialyear outstanding 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 Pay- able-Interest Charges ||886248 ||Apr'18 to Sep' 2019 |
|Municipal Tax ||Property Tax ||5147950 ||Since 2009-10 to 2019-20(Apr'19 to Sep'19) |
|Total || ||13738415 || |
c) The details of disputed dues of Sales Tax and Duties of Customs which have not beendeposited as on 31st March 2020 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 2012- 13 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.
| ||For R. Bupathy & Co |
| ||Chartered Accountants |
| ||Firm Regn No. 000525S |
|Place: Chennai ||CA V. Thiagarajan |
|Date : 31.07.2020 ||Partner |
|UDIN:20203328AAAACB5504 ||ICAI M. No. 203328 |
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 31 2020 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.
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 Financial Reporting (the "Guidance Note") issued by the Institute ofChartered Accountants of India and the Standards on Auditing prescribed under Section143(10) of the Companies Act 2013 to the extent applicable to an audit of internalfinancial controls. Those Standards and the Guidance Note require that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance aboutwhether adequate 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 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. Providereasonable assurance that transactions are recorded as necessary to permit preparation offinancial statements in accordance with generally accepted accounting principles and thatreceipts and expenditures of the company are being made only in accordance withauthorisations of management and directors of the company; and III. Provide reasonableassurance regarding prevention or timely detection of unauthorised acquisition use ordisposition of the company's assets that could have a material effect on the financialstatements.
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.
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 31 2020 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.
| ||For R. Bupathy & Co |
| ||Chartered Accountants |
| ||Firm Regn No. 000525S |
|Place: Chennai ||CA V. Thiagarajan |
|Date : 31.07.2020 ||Partner |
|UDIN:20203328AAAACB5504 ||ICAI M. No. 203328 |