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Idea Cellular

BSE: 532822  |  NSE: IDEA  |  ISIN: INE669E01016  |  Telecommunications - Service

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Auditor's Report Year End : Mar '08
1.  We have audited the attached Balance Sheet of Idea Cellular Limited
 (‘the Company’) as at March 31, 2008 and also the Profit and Loss
 Account and the Cash Flow Statement of the Company for the year ended
 on that date, annexed thereto (together referred to as ‘fnancial
 statements’). These fnancial statements are the responsibility of the
 Company’s management. Our responsibility is to express an opinion on
 these fnancial statements based on our audit.
 
 2.  We conducted our audit in accordance with auditing standards
 generally accepted in India. Those Standards require that we plan and
 perform the audit to obtain reasonable assurance about whether the
 fnancial statements are free of material misstatement.  An audit
 includes examining, on a test basis, evidence supporting the amounts
 and disclosures in the fnancial statements. An audit also includes
 assessing the accounting principles used and significant estimates made
 by management, as well as evaluating the overall fnancial 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, (‘the
 said Order’) issued by the Central Government of India in terms of
 sub-section (4A) of Section 227 of the Companies Act, 1956, on the
 basis of such checks of the books and records of the Company as we
 considered necessary and appropriate, and according to information and
 explanations given to us during the course of the audit, we enclose in
 the Annexure a statement on the matters specified in paragraphs 4 and 5
 of the said Order.
 
 4.  Attention is invited to Note 12 of Schedule 22 B of the Financial
 Statements. As detailed in the said note, pending the transfer of
 Telecom licences of the erstwhile Idea Mobile Telecommunications
 Limited, BTA Cellcom Limited and Idea Telecommunications Limited in the
 name of the Company, the Company has given effect to the scheme of
 Amalgamation with effect from April 1, 2006. Implications if any, in
 the event of non transfer of the licences are not ascertainable at this
 stage.
 
 5.  Further to our comments in the Annexure referred to in paragraph 3
 above, 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 appears from our examination of those
 books;
 
 c) the Balance Sheet, Profit and Loss Account and Cash Flow Statement
 dealt with by this report are in agreement with the books of account;
 
 d) in our opinion, the Balance Sheet, Profit and Loss Account and Cash
 Flow Statement dealt with by this report comply with the Accounting
 Standards referred to in sub-section (3C) of Section 211 of the
 Companies Act, 1956 so far as they apply to the Company;
 
 e) on the basis of the written representations received from the
 directors as on March 31, 2008 and taken on record by the Board of
 Directors, we report that none of the directors is disqualified as on
 March 31, 2008 from being appointed as a director in terms of Clause
 (g) of sub-section (1) of Section 274 of the Companies Act, 1956; and
 
 f) subject to what has been stated in paragraph 4 above, in our opinion
 and to the best of our information and according to the explanations
 given to us, the said fnancial statements read together with the notes
 thereon 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:
 
 (i) in the case of the Balance Sheet, of the state of affairs of the
 Company as at March 31, 2008;
 
 (ii) in the case of the Profit and Loss Account, of the profit of the
 Company for the year ended on that date; and
 
 (iii) in the case of the Cash Flow Statement, of the cash flows of the
 Company for the year ended on that date.
 
 Annexure to the Auditors’ Report
 
 (Referred to in paragraph 3 of our report of even date)
 
 1.  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) Fixed Assets have been physically verified by the management
 according to the regular programme of periodical verification in phased
 manner which in our opinion is reasonable having regard to the size of
 the Company and the nature of its fixed assets. Pursuant to the
 programme, a portion of the fixed assets has been physically verified
 by the management during the year and no material discrepancies between
 the book records and the physical inventory have been noticed.
 
 c) During the year the Company has not disposed off substantial part of
 the fixed assets.
 
 2.  In respect of its inventories:
 
 a) The inventories, except for those lying with the third parties, have
 been physically verified by the management at the year-end. In our
 opinion, the frequency of such verification is reasonable.
 
 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 are reasonable and adequate in relation to
 the size of the Company and the nature of its business.
 
 c) On the basis of our examination of the records of inventory and
 according to the information and explanations given to us, we are of
 the opinion that the Company is maintaining proper records of
 inventory. The discrepancies noticed on verification between the
 physical stock and the book records were not material.
 
 3.  According to the information and explanations given to us, the
 Company has not granted/taken any loans, secured or unsecured, to/from
 companies, firms or other parties covered in the register maintained
 under Section 301 of the Companies Act, 1956.
 
 4.  In our opinion, and according to the information and explanations
 given to us, having regard to explanation that major capital goods and
 spares thereof purchased are of special nature and suitable alternative
 sources do not exist for obtaining comparable quotations, there are
 adequate internal control procedures commensurate with the size of the
 Company and the nature of its business with regard to 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
 failure to correct major weaknesses in such internal controls systems
 with regard to purchase of inventory and fixed assets and for the sale
 of goods and services.
 
 5.  In our opinion and according to the information and explanations
 given to us, there were no contracts, particulars of which needed to be
 entered in the register maintained under Section 301 of the Companies
 Act, 1956 and hence provisions of paragraph 4(v)(b) of the said Order
 relating to reasonableness of price having regard to prevailing market
 price is not applicable to the Company.
 
 6.  In our opinion and according to the information and explanations
 given to us, the Company has not accepted any deposits from the public
 to which the directives issued by the Reserve Bank of India and the
 provisions of Sections 58A and 58AA of the Companies Act, 1956 and the
 rules framed there under are applicable.
 
 7.  In our opinion, the Company has an internal audit system
 commensurate with the size and nature of its business.
 
 8.  We have broadly reviewed the books of account maintained by the
 Company pursuant to the rules prescribed by the Central Government for
 maintenance of cost records under Section 209(1)(d) of the Companies
 Act, 1956 in respect of telecommunication activities and are of the
 opinion that prima facie, the prescribed accounts and records have been
 made and maintained. However, we have not made a detailed examination
 of the records.
 
 9.  In respect of statutory dues:
 
 a) According to the information and explanations given to us and the
 records of the Company examined by us, in our opinion, the Company is
 generally regular in depositing the undisputed statutory dues including
 provident fund, employees’ state insurance, income-tax, sales tax,
 wealth tax, service tax, customs duty, excise duty, cess and any other
 statutory dues as applicable with the appropriate authorities.
 
 b) According to the information and explanations given to us, no
 undisputed amount payable in respect of provident fund, employees’
 state insurance, income-tax, sales tax, wealth tax, service tax,
 customs duty, excise duty, cess and any other statutory dues applicable
 to it were in arrears, as at March 31, 2008 for a period of more than
 six months from the date they became payable.
 
 c) According to the information and explanations given to us, there are
 no dues of Excise duty, Wealth tax, Customs duty, Employees’ State
 Insurance which have not been deposited on account of any dispute. The
 dues of Income tax, Service tax and Sales tax as disclosed below have
 not been deposited by the Company on account of disputes.
 
 Name of the Statute                   Nature of     Period to which the
                                       Dues          amount pertains
 
 Andhra Pradesh General Sales 
 Tax Act, 1957                         Sales Tax       1997-98
 
 Uttar Pradesh Trade Tax Act, 1948     Sales Tax       2004-05
 
 Delhi Sales Tax Act, 1975             Sales Tax       2003-04
 
 Delhi Sales Tax Act, 1975             Sales Tax       2004-05
 
 Gujarat Sales Tax Act, 1969           Sales Tax       1998-99 
                                                       to 2001-02
 
 Gujarat Sales Tax Act, 1969           Sales Tax       2006-07
 
 Chhattisgarh Commercial Tax Act, 1994 Sales Tax       2001-02 to 
                                                       2003-04
 
 Madhya Pradesh Commercial 
 Tax Act, 1994                         Sales Tax       2003-04
 
 Chhattisgarh Commercial Tax Act, 1994 Sales Tax       2000-01
 
 Kerala Sales tax Act, 1963            Sales Tax       1997-98 to 1998-99
 
 Kerala Sales tax Act, 1963            Sales Tax       1998-99
 
 Kerala Sales tax Act, 1963            Sales Tax       1997-98
 
 Uttar Pradesh Trade Tax Act, 1948     Sales Tax       2003-04
 
 Uttar Pradesh Trade Tax Act, 1948     Sales Tax       2007-08
 
 Income Tax Act, 1961                  Income-tax     1997-98,1998-99 &
                                                      2000-2001
 
 Income Tax Act, 1961                  Income-Tax     2004-05
 
 Income Tax Act, 1961                  Income-Tax     2002-03
 
 Income Tax Act, 1961                  Income-Tax     2000-01
 
 Finance Act, 1994 
 (Service Tax provisions)              Service Tax    2003-04
 
 Finance Act, 1994 
 (Service Tax provisions)              Service Tax    2004-05 & 2005-06
 
 Finance Act, 1994 
 (Service Tax provisions)              Service Tax    2004-05, 2005-06
                                                      & 2006-07
 
 Finance Act,1994 
 (Service Tax provisions)              Service Tax    2004-05 & 2005-06
 
 Finance Act, 1994 
 (Service Tax provisions)              Service Tax    2004-05 & 2005-06
 
 Finance Act, 1994 
 (Service Tax provisions)              Service Tax    2004-05, 2005-06 &
                                                      2006-07
 
 Finance Act, 1994 
 (Service Tax provisions)              Service Tax    2004-05, 2005-06 &
                                                      2006-07
 
    Amount                 Forum where the
 (Rs. Million)           dispute is pending
 
   2.89        Andhra Pradesh High Court
   0.05        Joint Commissioner (Appeals)
   2.65        Additional Commissioner (Appeals)
 
  90.10        Additional Commissioner of Sales Tax
              (Appeals)
 
   7.04        Sales Tax Tribunal
 
   0.83        Deputy Commissioner of Commercial Tax,
              (Appeals)
 
   1.30        Deputy Commissioner (Appeals)
 
   0.79        Deputy Commissioner (Appeals)
 
   0.31        Appellate Board
 
  15.36        Kerala High Court
 
   0.06        Deputy Commissioner Sales tax
 
   0.40        Sales Tax Appellate Tribunal
 
   0.22        Joint Commissioner (Appeals)
 
   0.58        Allahabad High Court
 
   1.90        Assessing Officer (TDS)/ITAT
 
   3.98        Commissioner of Income Tax (Appeals)
 
   2.61        Income Tax Appellate Tribunal, Hyderabad
 
   6.00        Commissioner of Income Tax (Appeals)
 
   0.75        Commissioner Appeal, Central Excise
 
   2.45        Central Excise, Service Tax Appellate Tribunal
 
  19.12        Central Excise, Service Tax Appellate Tribunal
 
   5.54        Commissioner (Appeals), Central Excise
 
  15.57        Central Excise, Service Tax Appellate Tribunal
 
 209.45        Central Excise, Service Tax Appellate Tribunal
 
 503.24        Commissioner Central Excise
 
 10.  The accumulated losses of the Company are less than fifty percent
 of its net worth and the Company has not incurred cash losses during
 the current fnancial year covered by our audit and the immediately
 preceding fnancial year.
 
 11.  In our opinion and according to the information and explanations
 given to us, the Company has not defaulted in repayment of dues to the
 fnancial institutions and banks.
 
 12.  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.
 
 13.  The Company is not a chit fund or a nidhi/ mutual benefit fund/
 society. Therefore, the provisions of paragraph 4(xiii) of the said
 Order are not applicable to the Company.
 
 14.  In our opinion and according to the information and explanations
 given to us, the Company is not dealing in or trading in shares,
 securities, debentures and other investments.
 
 15.  In our opinion and according to the information and explanations
 given to us, the terms and conditions of the guarantees given by the
 Company for loans taken by others from banks and fnancial institutions
 are not prima facie prejudicial to the interest of the Company.
 
 16.  In our opinion and according to the information and explanations
 given to us, the term loans taken by the Company have been applied for
 the purpose for which they were raised to the extent utilised.
 
 17.  On the basis of an overall examination of the balance sheet of the
 Company, in our opinion and according to the information and
 explanations given to us, as at the balance sheet date funds amounting
 to Rs. 8,845.90 million raised on a short-term basis have been used for
 long-term purpose.
 
 18.  The Company has not made preferential allotment of shares to
 parties and companies covered in the register maintained under Section
 301 of the Companies Act, 1956, during the year.
 
 19.  The Company has not issued any debentures during the year.
 
 20.  The management has disclosed the end use of money raised by public
 issue and the same has been verified by us.
 
 21.  During the course of our examination of the books of account,
 carried out in accordance with generally accepted auditing practices in
 India, and according to the information and explanations given to us,
 we have neither come across any incidence of material fraud on or by
 the Company, noticed or reported during the year, nor have we been
 informed of any such case by the management.
 
 
                                 For Deloitte Haskins & Sells
                                 Chartered Accountants
 
                                 Hemant M. Joshi
 
                                 Partner
                                 Membership No.: 38019
 
 Date : April 24, 2008
 Place: Mumbai
Source : Religare Technova

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