17:29 Nov 23, 2014  

Tata Communications Ltd

HSL Code: VSNLTD   |   BSE Code: 500483  |   NSE Symbol: TATACOMM  |   ISIN: INE151A01013
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INDEPENDENT AUDITORS





TO THE MEMBERS OF TATA COMMUNICATIONS LIMITED

Report on the Financial Statements

We have audited the accompanying financial statements of TATA COMMUNICATIONS LIMITED ("the Company"), which comprise the Balance Sheet as at 31 March, 2014, and the Statement of Profit and Loss and the Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information.

Management`s Responsibility for the Financial Statements

The Company`s Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards notified under the Companies Act, 1956 ("the Act") (which continue to be applicable in respect of Section 133 of the Companies Act, 2013 in terms of General Circular 15/2013 dated 13 September, 2013 of the Ministry of Corporate Affairs) and in accordance with the accounting principles generally accepted in India. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors` Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditors` judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company`s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company`s internal control. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

(a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31 March, 2014;

(b) in the case of the Statement of Profit and Loss, of the profit of the Company for the year ended on that date; and

(c) in the case of the Cash Flow Statement, of the cash flows of the Company for the year ended on that date.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor`s Report) Order, 2003 ("the Order") issued by the Central Government in terms of Section 227(4A) of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

2. As required by Section 227(3) of the Act, we report that:

(a) We have obtained all the information and explanations which to the best of 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 the Company so far as it appears from our examination of those books.

(c) The Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement dealt with by this Report are in agreement with the books of account.

(d) In our opinion, the Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement comply with the Accounting Standards notified under the Act (which continue to be applicable in respect of Section 133 of the Companies Act, 2013 in terms of General Circular 15/2013 dated 13 September, 2013 of the Ministry of Corporate Affairs).

(e) On the basis of the written representations received from the directors as on 31 March, 2014 taken on record by the Board of Directors, none of the directors is disqualified as on 31 March, 2014 from being appointed as a director in terms of Section 274(1)(g) of the Act.

For S. B. BILLIMORIA & CO.
Chartered Accountants
(Registration No. 101496W)
R. A. BANGA
Partner
MUMBAI, 13 May, 2014 (Membership No. 037915)

ANNEXURE TO THE INDEPENDENT AUDITORS` REPORT

(Referred to in paragraph 1 under `Report on Other Legal and Regulatory Requirements` section of our report of even date)

(i) Having regard to the nature of the Company`s business/ activities/ result during the year, clauses (x), (xiii), (xiv) and (xviii) of paragraph 4 of the Order are not applicable to the Company.

(ii) In respect of its fixed assets:

(a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

(b) The Company has a program of verification of fixed assets to cover all the items in a phased manner over a period of 3 years which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. Pursuant to the program, certain fixed assets were physically verified by the Management during the year. According to the information and explanations given to us, no material discrepancies were noticed on such verification.

(c) The fixed assets disposed off during the year, in our opinion, do not constitute substantial part of fixed assets of the Company.

(iii) In respect of its inventory:

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

(b) In our opinion and according to the information and explanations given to us, the procedures of physical verification of inventories followed by the Management were reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) In our opinion and according to the information and explanations given to us, the Company has maintained proper records of its inventories and no material discrepancies were noticed on physical verification.

(iv) In respect of unsecured loans granted by the Company to companies, firms or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956 and according to the information and explanations given to us:

(a) During the year, the Company has granted unsecured interest-bearing loans aggregating Rs 217.74 crores to one party. At the year end, the outstanding balances of loans granted aggregated Rs 318.43 crores (number of parties 2) and the maximum amount involved during the year was Rs 318.43 crores (number of parties 2).

(b) The rate of interest and other terms and conditions of such loans are, in our opinion, prima facie not prejudicial to the interests of the Company.

(c) The receipt of principal amounts and interest have been as per stipulations.

(d) There are no overdue amounts and hence the provisions of sub-clause (d) of clause 4(iii) of CARO are not applicable to the Company.

(e) During the year, the Company has not taken any loans secured or unsecured, from companies, firms or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956.

(v) In our opinion and according to the information and explanations given to us, having regard to the explanation that certain items purchased and sold are of special nature and their prices cannot be compared with alternative quotation, there is adequate internal control system commensurate with the size of the Company and the nature of its business for the purchase of inventory and fixed assets and for the sale of goods and services. During the course of our audit, we have not observed any continuing major weakness in such internal control system.

(vi) In respect of contracts or arrangements entered in the Register maintained in pursuance of Section 301 of the Companies Act, 1956, to the best of our knowledge and belief and according to the information and explanations given to us:

(a) The particulars of contracts or arrangements referred to Section 301 that needed to be entered in the Register maintained under the said Section have been so entered.

(b) Where each of such transaction is in excess of Rs 5 lakhs in respect of any party, having regard to the explanations that some of the items purchased and sold, are of special nature and their prices cannot be compared with alternative quotations, the transactions have been made at prices which are prima facie reasonable having regard to the prevailing market prices at the relevant time.

(vii) According to the information and explanations given to us, the Company has not accepted any deposits from the public during the year. In respect of unclaimed deposits, the Company has complied with the provisions of Sections 58A and 58AA or any other relevant provisions of the Companies Act, 1956.

(viii) In our opinion, the Company has an adequate internal audit system commensurate with the size and nature of its business.

(ix) We have broadly reviewed the books of account and records maintained by the Company relating to telecommunication activities pursuant to the Rules made by the Central Government for the maintenance of cost records under Section 209(1)(d) of the Companies Act, 1956 and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. We have, however, not made a detailed examination of the records with a view to determining whether they are accurate or complete.

(x) (a) According to the information and explanations given to us in respect of statutory dues, the Company has generally been regular in depositing undisputed statutory dues including provident fund, investor education and protection fund, employees` state insurance, income-tax, sales tax, wealth tax, service tax, customs duty, excise duty, cess and other material statutory dues applicable to it with the appropriate authorities.

(b) According to the information and explanations given to us, there were no undisputed amounts payable in respect of provident fund, investor education and protection fund, employees` state insurance, income tax, sales tax, wealth tax, service tax, customs duty, excise duty, cess and other material statutory dues were in arrears, as at 31 March, 2014 for a period of more than six months from the date they became payable.

(c) According to the information and explanations given to us, details of dues of income-tax, sales tax, wealth tax, service tax, custom duty, excise duty and cess which have not been deposited as on 31 March, 2014 on account of any dispute are given below:

Name of Statute Nature of Dues Forum where the dispute is pending Period to which the amount relates Amount involved ( Rs in crores)
Income Tax Laws Income Tax Appellate Authority - Tribunal Level AY 2007-08, 2008-09 306.78
Income Tax Laws Income Tax Appellate Authority -Commissioner (Appeals) AY 2010-11 15.41
Income Tax Laws Income Tax- TDS Appellate Authority -Commissioner (Appeals) AY 2007-08 to AY 2012-13 65.54
Income Tax Laws Income Tax Appellate Authority - Income Tax Officer AY 1997-98, 2009-10 200.39
Income Tax Laws Income Tax -TDS Appellate Authority - Income Tax Officer AY 2006-07, 2008-09 to 2013-14 1.13
ESI Act ESI Appellate Authority - ESIC Court February 2008 to March 2014 33.74
Sales Tax Laws Sales Tax West Bengal Commercial Tax Appellate and Revision Board FY 2006-07 0.02
Central Sales Tax Laws Central Sales Tax West Bengal Commercial Tax Appellate and Revision Board FY 2006-07, 2007-08 1.08
VAT Act VAT Joint Commissioner of Commercial Taxes FY 2009-10 0.18

Out of the above amounts aggregating Rs 624.27 crores, Rs 521.84 crores have been stayed for recovery by the relevant authorities.

(xi) In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to financial institutions or banks or debenture holders.

(xii) In our opinion and according to the information and explanations given to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) According to the information and explanations given to us, the Company has not given any guarantees for loans taken by others from banks or financial institutions, the terms and conditions, whereof, in our opinion are prejudicial to the interests of the Company.

(xiv) In our opinion and according to the information and explanations given to us, the term loans have been applied by the Company during the year for the purposes for which they were obtained.

(xv) In our opinion and according to the information and explanations given to us and on an overall examination of the Balance Sheet of the Company, we report that funds raised on short term basis, have not been used during the year for long term investment.

(xvi) According to the information and explanations given to us and the records examined by us, security/ charges have been created in respect of secured debentures issued.

(xvii) During the year covered by our report, the Company has not raised any money by way of public issues.

(xviii) To the best of our knowledge and belief and according to the information and explanations given to us, no fraud by the Company and no material fraud on the Company was noticed or reported during the year.

For S. B. BILLIMORIA & CO.
Chartered Accountants
(Registration No. 101496W)
R. A. BANGA
Partner
MUMBAI, 13 May, 2014 (Membership No. 037915)
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