TATA COMMUNICATIONS LIMITED
ANNUAL REPORT 2011-2012
AUDITORS` REPORT
TO THE MEMBERS OF
TATA COMMUNICATIONS LIMITED
1. We have audited the attached Balance Sheet of TATA COMMUNICATIONS
LIMITED ("the Company") as at 31 March, 2012, the Statement of Profit and
Loss and the Cash Flow Statement of the Company for the year ended on that
date, both annexed thereto. These financial statements are the
responsibility of the Company`s Management. Our responsibility is to
express an opinion on these financial statements based on our audit.
2. We conducted our audit in accordance with the auditing standards
generally accepted in India. Those Standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatements. An audit includes
examining, on a test basis, evidence supporting the amounts and the
disclosures in the financial statements. An audit also includes assessing
the accounting principles used and the significant estimates made by the
Management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
3. As required by the Companies (Auditor`s Report) Order, 2003 (CARO)
issued by the Central Government in terms of Section 227(4A) of the
Companies Act, 1956, we enclose in the Annexure a statement on the matters
specified in paragraphs 4 and 5 of the said Order.
4. Further to our comments in the Annexure referred to in paragraph 3
above, we report that:
(i) 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;
(ii) 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;
(iii) 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;
(iv) in our opinion, the Balance Sheet, the Statement of Profit and Loss
and the Cash Flow Statement dealt with by this report are in compliance
with the Accounting Standards referred to in Section 211(3C) of the
Companies Act, 1956;
(v) in our opinion and to the best of our information and according to the
explanations given to us, the said accounts give the information required
by the Companies Act, 1956 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, 2012;
(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.
5. On the basis of the written representations received from the Directors
as on 31 March, 2012 taken on record by the Board of Directors, we report
that none of the Directors is disqualified as on 31 March, 2012 from being
appointed as a director in terms of Section 274(1)(g) of the Companies Act,
1956.
For S.B. BILLIMORIA & CO.
Chartered Accountants
(Registration No. 101496W)
Saira Nainar
Partner
(Membership No. 040081)
MUMBAI, 21 May, 2012
ANNEXURE TO THE AUDITORS` REPORT
(Referred to in paragraph 3 of our report of even date)
(i) Having regard to the nature of the Company`s business/ activities/
result for the year, clauses (x), (xiii), (xiv) and (xviii) of CARO 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) According to the information and explanations given to us, the fixed
assets were physically verified by the management in accordance with the
programme of verification, which in our opinion, is reasonable having
regard to the size of the Company and the nature of its assets. According
to information and explanation 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 and such
disposal has, in our opinion, not affected the going concern status of the
Company.
(iii) In respect of its inventory:
(a) As explained to us, the stocks of stores and spares have been verified
by the Management in accordance with the programme of verification. In our
opinion, the frequency of verification is reasonable.
(b) In our opinion and according to the information and explanations given
to us, the procedures of physical verification of stocks followed by the
Management are 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 is maintaining proper records of inventory. The
discrepancies noticed on verification between the physical stocks and book
records were not material having regard to the size of the operations of
the Company.
(iv) In respect of unsecured loans granted by the Company to companies
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.773.04 crores to four wholly owned subsidiaries listed
in the register maintained under Section 301 of the Companies Act, 1956. At
the year end, the loans granted to the four subsidiaries aggregate
Rs.880.75 crores. The maximum balance outstanding during the year was
Rs.1,535.13 crores.
(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 receipts 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 interest-bearing loan
from a wholly owned subsidiary listed in the register maintained under
Section 301 of the Companies Act, 1956. The maximum amount of loan
outstanding during the year was Rs. 20 crores.
(f) In our opinion, the rate of interest and other terms and conditions on
which the loan was taken from companies listed in the register maintained
under Section 301 of the Companies Act, 1956 are not, prima facie,
prejudicial to the interest of the Company.
(g) In the case of loans taken from companies, parties listed in the
register maintained under Section 301, the Company has been regular in
repaying the principal amounts as stipulated and in the payment of
interest.
(v) In our opinion and according to the information and explanations given
to us, 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 the sale of goods and services. We have not observed
any continuing major weakness in the internal control systems.
(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 need 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, 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 deposit from the public during the year. In
respect of unclaimed deposits, the Company has complied with the provisions
of Sections 58A & 58AA or any other relevant provisions of the Companies
Act, 1956.
(viii) In our opinion, the Company has an 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 is generally regular in depositing
with appropriate authorities undisputed statutory dues including Provident
Fund, Investor Education and Protection Fund, Employees` State Insurance,
Income tax, Wealth tax, Sales tax, Customs duty, Excise Duty, Service tax,
Cess and other material statutory dues applicable to it.
(b) According to the information and explanations given to us, no
undisputed amounts payable in respect of Provident fund, Investor Education
and Protection Fund, Employees` state insurance, Income tax, Sales tax,
Customs duty, Excise duty and cess were in arrears, as at 31 March, 2012
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 Sales tax, Service tax, Cess and Income tax which have not been
deposited as on 31 March, 2012 on account of any dispute are given below:
Particulars & Period to which the Forum where the Amount
Nature of Dues amount relates dispute is pending (Rs. in
Crores)
Sales Tax:
Levy of sales tax FY 2006-07, 2007-08, Joint Commissioner of 74.94
of tele- 2008-09 Commercial Taxes
communications
service
Central Sales Tax:
Levy of CST on FY 2005-06, 2006-07, Joint Commissioner of 2.79
interstate purchase 2007-08 Commercial Taxes
VAT:
Levy of sales tax FY 2008-09 Joint Commissioner of 0.11
on tele- Commercial Taxes
communications
service
Cess:
Cess FY 2005-06 to 2008-09 Navi Mumbai Municipal 1.14
Corporation
Income Tax Act:
Penalty on AY 2004-05 Income Tax Apellate 1.37
Disallowance Tribunal
on Depreciation
Demand notice AY 2007-08 Income Tax Apellate 197.18
Tribunal
Tax deducted AY 2008-09, TDS Officer 0.01
at Source AY 2009-10
Tax deducted AY 2007-08,AY 2008-09, Rectification Application 1.29
at Source AY 2009-10,AY 2010-11, Before TDS officers
AY 2011-12
Tax deducted AY 2007-08,AY 2008-09, Commissioner of 52.97
at Source AY 2009-10,AY 2010-11, Income-tax (Appeals)
AY 2011-12
(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) In our opinion and according to the information and explanations
given to us, the terms and conditions on which the Company has given
guarantee for loans taken by others from banks or financial institutions
are not prima facie prejudicial to the interest of the Company.
(xiv) In our opinion and according to the information and explanations
given to us, the term loans have been applied 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, short-term funds
aggregating to Rs. 716.38 crores have, prima facie, been used for long
term purposes.
(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)
Saira Nainar
Partner
(Membership No. 040081)
MUMBAI, 21 May, 2012 |