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Mahanagar Telephone Nigam
BSE: 500108|NSE: MTNL|ISIN: INE153A01019|SECTOR: Telecommunications - Service
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« Mar 13
Auditor's Report (Mahanagar Telephone Nigam) Year End : Mar '14
We have audited the accompanying financial statements of Mahanagar
 Telephone Nigam Limited (the Company), which comprise the Balance
 sheet as at March 31, 2014 and the Statement of Profit and Loss and the
 Cash Flow Statement for the year then ended, and a summary of
 significant accounting policies and other explanatory information.
 
 Managements Responsibility for the Financial Statements
 
 Management is responsible for the preparation of these financial
 statements that give a true and fair view of financial position,
 financial performance and cash flows of the Company in accordance with
 the Accounting Standards notified under the Companies Act, 1956 (the
 Act) read with the General Circular 15/2013 dated 13th September 2013
 of the Ministry of Corporate Affairs in respect of Section 133 of the
 Companies Act, 2013. 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 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 accounting policies used and the reasonableness of the accounting
 estimates made by management, as well as evaluating the overall
 presentation of financial statements.
 
 We believe that the audit evidence we have obtained is sufficient and
 appropriate to provide a basis for our qualified audit opinion.
 
 Basis for Qualified Opinion
 
 (i) The Company has certain balances receivables from and payables to
 BSNL. The net amount recoverable of Rs. 23640.05 million is subject to
 reconciliation and confirmation. In view of non reconciliation/
 confirmation and also in view of various pending disputes regarding
 each other''s claims, we are not in a position to ascertain and comment
 on the correctness of the outstanding balances and resultant impact of
 the same on the financial statements of the Company. (Also refer point
 no. 11 of note no.35 to the financial statements).
 
 (ii) The Company has certain balances receivables from and payables to
 Department of Telecommunication (DOT). The net amount recoverable of
 Rs. 84202.51 million is subject to reconciliation and confirmation. In
 view of non reconciliation and non confirmation, we are not in a
 position to ascertain and comment on the correctness of the outstanding
 balances and resultant impact of the same on the financial statements
 of the Company.. (Also refer point no. 15 of note no.35 to the
 financial statements).
 
 (iii) Upto financial year 2011-12 License Fee payable to the DOT on IUC
 charges to BSNL was worked out on accrual basis as against the terms of
 License agreements requiring deduction for expenditure from the gross
 revenue to be allowed on actual payment basis.  From financial year
 2012-13, the license fee payable to the DOT has been worked out
 strictly in terms of the license agreements. The Company continues to
 reflect the difference in license fee arising from working out the same
 on accrual basis as aforesaid for the period upto financial year
 2011-12 byway of contingent liability of Rs.  1403.63 million instead
 of actual liability resulting in under statement of current liabilities
 and over statement of profit to that extent. (Also refer point no.17 of
 note no.35 to the financial statements).
 
 (iv) The Company continues to allocate the establishment overheads
 towards capital works on estimated basis. In view of the basis being
 not in line with the accepted accounting practices and Accounting
 Standard -10 Accounting for Fixed Assets issued under the Companies
 (Accounting Standards) Rules, 2006, the same results into ove Rs.
 statement of capital work in progress/ fixed assets and overstatement
 of profits.  The actual impact of the same on the financial statements
 for year is not ascertainable and quantifiable. (Also refer note no.25
 and 28 to the financial statements).
 
 (v) No adjustment has been considered on account of impairment loss
 during the year, with reference to AS-28 Impairment of Assets issued
 under Companies (Accounting Standards) Rules, 2006. In view of
 uncertainty in achievement of future projections made by the Company,
 we are unable to ascertain and comment on the provision required in
 respect of impairment in carrying value of cash generating units and
 its consequent impact on the profit for the year, accumulated balance
 of reserve and surplus and also the carrying value of the cash
 generating units. (Also refer point no. 36 of note no.35 to the
 financial statements).
 
 (vi) To work out the liability towards wealth tax, vacant land and
 guest houses/inspection quartetrs are taken at their book values
 instead of valuation the same as per Wealth Tax Act /Rules resulting
 into over statement of profit resulting from lower wealth tax and also
 corresponding understatements of liabilities. In the absence of
 valuation as at the year end, we are not in a position to ascertain and
 quantify the impact thereof on financial statements. (Also refer point
 no. 26 of note no.35 to the financial statements).
 
 (vii) Amount receivables from and payables to the various parties are
 subject to confirmation and reconciliation. Pending such confirmation
 and reconciliations, the impact thereof on the financial statements is
 not ascertainable and quantifiable. (Also refer point no. 23 of note
 no.35 to the financial statements).
 
 (viii) Dues from the operators are not taken into account for making
 provision for doubtful debts.  Also no provision for doubtful debts is
 made for disputed cases outstanding for less than one year in Basic and
 for less than 180 days in GSM/CDMA. In the absence of any working, the
 impact thereof on the financial statements cannot be ascertained and
 quantified. (Also refer point no. 3(b) of note no. 1 to the financial
 statements).
 
 (ix) (a) In Delhi Unit, reconciliation of balances of subscriber''s
 deposits as per subsidiary records with financial books (WFMS) is still
 in progress and the impact, if any, of the differences arising out of
 such reconciliation on financial statements cannot be ascertained and
 quantified at present. (Also refer point no. 16(a) of note no.35 to the
 financial statements).
 
 (b) Unlinked credit of Rs. 212.42 million on account of receipts from
 subscribers against billing by the Company which could not be matched
 with corresponding receivables are appearing as liabilities in the
 balance sheet. To that extent, both assets and liabilities are
 overstated.  (Also refer point no. 16(e) of note no.35 to the financial
 statements).
 
 (c) The aggregate balance of trade receivables as per the ageing
 summary in subsidiary records is lower by Rs. 66.56 million as compared
 to the balance in general ledger and is under reconciliation. The same
 has been provided for Pending reconciliation, the impact of the same on
 the financial statements cannot be ascertained and quantified. (Also
 refer point no. 16(f) of note no.35 to the financial statements).
 
 (x) In the absence of detailed information i.e. break up of amount
 received with relation to the individual invoices raised through MACH,
 invoice wise reconciliation of the roaming debtors is pending. Pending
 such reconciliation, the impact of the same on the financial statements
 can not be ascertained and quantified. (Also refer point no.40 of note
 no.35 to the financial statements).
 
 (xi) Fixed assets are generally capitalized on the basis of completion
 certificates issued by the engineering department. Due to delays in
 issuance of the completion certificates, there are cases where
 capitalization of the fixed assets gets deferred to next year-. The
 resultant impact of the same on the statement of profit and loss by way
 of depreciation and amount of fixed assets capitalized in the balance
 sheet cannot be ascertained.
 
 (xii) Pending reconciliation of income from recharge coupons/ITC
 cards/prepaid calling cards and stock of such coupons/cards, the impact
 thereof on the financial statements cannot be ascertained and
 quantified.
 
 (xiii) The Company had invested Rs. 1000 million in 8.75% Cumulative
 Preference Shares of M/S.  ITI Limited during the year 2001-02. As per
 the terms of allotment, the said preference shares were to be redeemed
 in five equal installments. As per letter no. U-59011-10/2002- FAC
 dated 31.07.2009 issued by DOT, the repayment schedule of the said
 preference shares was deferred to 2012-13 onwards in five equal
 installments. M/s. ITI Ltd. has failed to meet its rescheduled
 obligation in respect of first two installment of Rs. 200 million each
 payable in 2012-13 & 2013-14. Since M/s. ITI Ltd. has not complied with
 even rescheduled commitments, the Company has made a provision for the
 first two installment of Rs. 400 million only instead of providing for
 full investment of Rs. 1000 million. This has resulted into over
 statement of profit by Rs. 600 million and overstatement of non current
 investments by Rs. 400 million and also overstatement of current
 investments by Rs.  200 million. (Also refer point no. 14 of note no.35
 to the financial statements).
 
 (xiv) Certain Land and Buildings transferred to MTNL from DOT in
 earlier years have been reflected as leasehold. In the absence of
 relevant records, we are not in a position to comment on the
 classification of the same as leasehold and also the consequential
 impacts, if any, of such classification not backed by relevant records.
 In the absence of relevant records, impact of such classification on
 the financial statements cannot be ascertained and quantified.
 
 (xv) Department of Telecommunication (DOT) had raised a demand of Rs.
 33131.50 million in 2012-13 on account of one time charges for2G
 spectrum held by the Company for GSM and CDMA for the period of licence
 already elapsed and also for the remaining valid period of licence
 including spectrum given on trial basis.
 
 As explained the demand for spectrum usage for CDMA has been revised by
 Rs. 1074.40 million on account of rectification of actual usage.
 
 Also as explained, pending finality of the issue by the Company
 regarding surrender of a part of the spectrum, crystallization of issue
 by the DOT in view of the claim being contested by the Company and
 because of the matter being sub-judice in the Apex Court on account of
 dispute by other private operators on the similar demands, the amount
 payable, if any, is indeterminate. Accordingly, no liability has been
 created for the demand made by DOT on this account and Rs. 32057.10
 million has been disclosed as contingent liabilityy.
 
 In view of the above we are not in a position to comment on the
 correctness of the stand taken by the Company and the ultimate
 implications of the same on the financial statements of the Company.
 (Also refer point no. 39 of note no.35 to the financial statements).
 
 (xvi)Segment Assets and Segment Liabilities in respect of primary
 segment have not been ascertained and disclosed by the Company. In the
 absence of required information, we are not in a position to ascertain
 and quantify the impact of the same on segment results.  (Also refer
 point no. 33 of note no.35 to the financial statements).
 
 (xvii) Other current assets include claim of Income tax refund for F.Y.
 1999-2000 of Rs. 1015.43 million arising from pending appeal
 effect/rectification under Section 154 of Income Tax Act, 1961 by
 income tax department . This includes tax amount of Rs. 603.03 million
 and interest accrued thereon amounting to Rs. 412.40 million. In the
 absence of complete records, we are not in a position to comment on the
 correctness and recoverability of the same and consequential impact on
 the financial statements of the Company.
 
 (xviii) The balances appearing in the advance tax/income tax receivable
 / tax deducted at source / interest on income tax and provisions for
 taxes are subject to reconciliation with the tax records. Pending
 reconciliations we are not in a position to comment on the
 
 correctness of the same and consequential impact of the same on the
 financial statements of the Company.
 
 (xix)In respect of absorbed combined service pension optee employees of
 MTNL, part of the pensionary benefits paid in the earlier years were
 capitalized along with the capital work in progress. However while
 reversing the same in the current year in view of the same having been
 taken over by Govt. of India as per notification dated March 03,2014,
 capitalized portion of earlier years has also been taken to Statement
 of Profit and Loss and reflected as part of exceptional items without
 decapitalising the portion capitalized in earlier years.  In the
 absence of details pertaining to previous years, we are not in a
 position to comment on the impact of the same on the financial
 statements.
 
 In the absence of information, the effect of which can not be
 quantified, we are unable to comment on the possible impact of the
 items stated in the point nos.(i), (ii), (iv), (v), (vi), (vii),
 (viii), (ix)(a),(ix)(c), (x), (xi), (xii),(xiv), (xv), (xvi), (xvii),
 (xviii) and (xix) on the financial statements of the Company for the
 year ended on 31st March 2014.
 
 We further state that without considering the impact of items stated in
 preceding para, the effect of which could not be determined, had the
 observations made by us in point nos (iii), (ix)(b) and, (xiii) ) been
 considered in the financial statements, profit for the year would have
 been Rs. 76247.68 million as against the reported figure of Rs.
 78251.31 million in the Statement of Profit and Loss and Trade
 receivables under the head Current Assets would have been Rs. 2705.58
 million as against the reported figure of Rs. 2918.00 million, Non
 Current Investments and Current Investments would have been Rs. 1419.79
 million and Rs. nil million as against the reported figures of Rs.
 1819.79 million and Rs.  200 million respectively, Other Current
 Liabilities would have been Rs.  30047.60 million as against the
 reported figure of Rs. 28856.39 million in the Balance Sheet.
 
 Qualified Opinion
 
 In our opinion and to the best of our information and according to the
 explanations given to us, except for the effects of the matters
 described in the Basis for Qualified Opinion paragraph, the financial
 statements give the information required by the Act in the manner so
 required and give a true and fair view in conformity with accounting
 principles generally accepted in India:
 
 a) in the case of Balance Sheet, of the state of affairs of the Company
 as at March 31,2014;
 
 b) in the case of Statement of Profit and Loss, of the profit for the
 year ended that date; and
 
 c) in case of the Cash Flow Statement, of the cash flows for the year
 ended on that date.
 
 Emphasis of Matters
 
 We draw attention to the following notes on the financial statements
 being matters pertaining to Mahanagar Telephone Nigam Limited requiring
 emphasis by us. Our opinion is not qualified in respect of these
 matters:
 
 (i) Point no.4 of note no. 35 to the financial statements regarding non
 provision of pensionary benefits viz. pension and gratuity in respect
 of absorbed combined service pension optees to be paid by the Govt. of
 India vide gazette notification no.GSR 138(E) dated 3rd March 2014.
 
 (ii) Point no.22 of note no.35 to the financial statements regarding
 non provision of diminution in the value of investments in joint
 ventures/subsidiary as these diminutions are considered temporary in
 nature.
 
 (iii) Point no.5(a) of note no.35 to the financial statements regarding
 the adequacy or otherwise of the provision and / or contingency reserve
 held by the Company with reference to pending dispute with the Income
 Tax Department before the Hon''ble Courts regarding deduction claimed by
 the Company u/s 80 IA of the Income Tax Act,1961.
 
 (iv) Point no. 8(b) of note no.35 to the financial statements regarding
 accounting of claims and counter claims of MTNL with M/S M&N
 Publications Ltd., in a dispute over printing, publishing and supply of
 telephone directories for MTNL, in the year when the ultimate
 collection / payment of the same becomes reasonably certain.
 
 (v) Point no. 38 of note no.35 to the financial statements regarding
 non deduction of tax at source for IUC services rendered by BSNL based
 on the expert opinion taken by the Company.
 
 (vi) Classification of trade receivables as unsecured without
 considering the security deposit which the Company has received from
 the subscribers. (Also refer note no.19 to the financial statements).
 
 (vii) Amount receivable from BSNL has been reflected as loans and
 advances instead of bifurcating the same into trade receivables and
 other receivables. (Also refer note no.16 to the financial statements).
 
 (viii) Disclosure of consumption of imported and indigenous stores and
 spares and percentage to the total consumption as required by Schedule
 VI of the Companies Act, 1956 has not been made by the Company in the
 financial statements.
 
 (ix) Point no. 16(b) of note no.35 to the financial statements
 regarding impact if any, arising out of reconciliation of Balances of
 customer''s deposits in the CSMS billing system with financial books
 (WFMS) in Mumbai Unit.
 
 (x) Point no. 16(d) of note no.35 to the financial statements regarding
 impact if any, arising out of reconciliation of Balance outstanding
 under refund due to subscribers account with actual amount due for
 refund in Mumbai Unit.
 
 (xi) Point no. 27 of note no. 35 to the financial statements regarding
 exceptional items to the tune of Rs. 116209.31 million accounted for
 during the year.
 
 Report on Other Legal and Regulatory Requirements
 
 1.  As required by the Companies (Auditors Report) Order, 2003 (the
 Order) issued by the Central Government of India in terms of
 sub-section (4A) of the Section 227 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 purpose of our
 audit except for the matters described in point nos. (i), (ii), (iv),
 (v), (vi), (vii), (viii), (ix)(a), (ix)(c), (x), (xi), (xii), (xiv),
 (xv), (xvi), (xvii), (xviii) and (xix) of paragraph on Basis of
 Qualified Opinion given above;
 
 b.  In our opinion proper books of accounts as required by law have
 been kept by the Company so far as appears from our examination of
 those books;
 
 c.  The Balance Sheet, Statement of Profit and Loss, and Cash Flow
 Statement dealt with by this Report are in agreement with books of
 account;
 
 d.  In our opinion and based on our comments in point nos. (iii), (iv),
 (v), (xi), (xii), (xiii), (xiv), (xv), (xvi) & (xix) of the paragraph
 on Basis for Qualified opinion given above, the Balance Sheet,
 Statement of Profit and Loss, 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 Act read with the General
 Circular 15/2013 dated 13th September, 2013 of the Ministry of
 Corporate Affairs in respect of section 133 of the Companies Act, 2013,
 except AS-2 regarding Valuation of Inventories, AS-6 regarding
 Depreciation Accounting, AS-9 regarding Revenue Recognition, AS-10
 regarding Accounting of Fixed Assets, AS-13 regarding Accounting for
 Investments, AS-17 regarding Segment Reporting, AS-28 regarding
 Impairment of Assets, AS- 29 on Provisions, Contingent Liabilities and
 Contingent Assets;
 
 e.  In view of the Government notification no. GSR 829 (E) dated 21st
 October 2003, Government companies are exempt from the applicability of
 provisions of clause(g) sub-section (1) of Section 274 of the Act;
 
 ANNEXURE TO INDEPENDENT AUDITORS'' REPORT
 
 REFERRED TO IN PARAGRAPH 1 UNDER THE HEADING OF REPORT ON OTHER LEGAL
 AND REGULATORY REQUIREMENTS OF OUR REPORT OF EVEN DATE TO THE MEMBERS
 OF MAHANAGAR TELEPHONE NIGAM LTD SHALL ON THE FINANCIAL STATEMENTS FOR
 THE YEAR ENDED ON 31ST MARCH 2014.
 
 1.  (a) Delhi unit has maintained records of fixed assets. However in
 MS unit- Delhi, identification number is not mentioned. It is noticed
 that records of the Estates Department in respect of Land and Building
 do not match with the records as per financial books. In case of Mumbai
 Unit (both basic and WS unit), fixed assets registers have been
 maintained w.e.f. 01.04.2002. However, the fixed assets records
 maintained by the Mumbai unit are not up dated and reconciled with the
 financial records. Also identification number is not mentioned in
 respect of most of the items. The corporate office has maintained fixed
 assets records showing full particulars including quantitative details
 and situation of fixed assets.
 
 (b) As per the Accounting Policy of the company, Fixed Assets are
 required to be physically verified by the Management on rotation basis,
 once in three years, which in our opinion is reasonable and adequate in
 relation to the size of the Company and the nature of its business. As
 certified by the management, the Electric Appliances (excluding lights
 & fans), Furniture & Fixtures, line & wire and computers were
 physically verified in accordance with programme of verification by the
 management during the year and no material discrepancies were noticed
 on such verification. However no documentary evidence in respect of
 physical verification of lines & wires was made available to us for our
 verification. Therefore we are unable to comment on material
 discrepancies noticed on such verification, if any.
 
 (c) The company has not disposed off any substantial part of its fixed
 assets during the year except surrender of spectrum of BWA services
 which is not effecting the going concern.
 
 2.  (a) In our opinion, physical verification of inventory has been
 conducted by the management at reasonable intervals during the year .
 
 (b) In our opinion, the procedures of physical verification of the
 inventory 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 inventory records, in our
 opinion, the Company is maintaining proper records of inventory. As per
 the information provided to us, discrepancies noticed on physical
 verification of inventory were not material and have been properly
 dealt with in the books of accounts.
 
 3.  As explained to us, the Company has neither taken nor granted any
 loans, secured or unsecured, from/to companies, firms or other parties
 covered in the register maintained under Section 301 of the Companies
 Act, 1956. Accordingly clause 4(iii) of the Companies (Auditors Report)
 Order, 2003 is not applicable to the Company.
 
 4.  In our opinion and according to the information and explanations
 given to us there are internal control procedures which are generally
 adequate and commensurate with the size and the nature of its business
 for the purchase of inventory and fixed assets and for the sale of
 goods and services. However, the same needs to be further strengthened.
 During the course of our audit, we have not observed any continuing
 failure to correct major weaknesses in internal control systems.
 
 5.  Based on the audit procedures applied by us and the information and
 explanations provided by the management, there was no transaction
 during the year ended 31.03.2014 that need to be entered in the
 register maintained under Section 301 of the Companies Act 1956.
 
 6.  As informed to us, the Company has not accepted any deposits from
 the public during the year within the meaning of Section 58 A and 58 AA
 of the Companies Act, 1956 and the rules framed there under.
 
 7.  In our opinion, the Internal Audit System of the company is not
 commensurate with the size of the Company and the nature of its
 business. Moreover, extent of coverage of the areas of operations,
 frequency / quality of reporting/ timeliness of the reporting and the
 follow up of internal audit observations need to be strengthened.
 
 8.  The Central Government has prescribed the maintenance of cost
 records under clause
 
 (d) of sub section (1) of section 209 of Companies Act, 1956 .The
 company has not maintained the required Cost Records for the year
 2013-2014.
 
 9.  (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 undisputed Statutory Dues including
 Contributory Provident Fund, Investor Education and Protection Fund,
 Income Tax, Sales Tax, Wealth Tax, service tax, Custom Duty, Excise
 Duty, Cess and any Other material Statutory Dues as applicable with the
 appropriate authorities. As informed to us, the provisions of Employees
 State Insurance Act are not applicable to the company. According to the
 information and explanation given to us no undisputed amounts payable
 in respect of aforesaid dues were outstanding as at 31.03.2014, for a
 period of more than six months from the date they become payable.
 
 (b) According to the information and explanation given to us, there are
 no dues in respect of Custom Duty, Excise Duty and Cess that have not
 been deposited with the appropriate authorities on account of any
 dispute. However, the Company has not deposited Sales Tax /VAT Dues,
 Service Tax and Income Tax Dues on account of disputes as under:
 
 Local Sales Tax and Central Sales Tax / VAT:
 
 Delhi Unit
 
 (i) Sales Tax
 
 Name of         Amount (Rs. )      Period      Authority where
 the Statute     L.S.T (Net)
 
 Delhi Sales     122100562        2007-08        Addl. Comm. 
 Tax Act                        Sales Tax 
 
 Delhi Sales     625986672  2009-10 & 2010-11  Addl. Comm. Sales 
 Tax Act                                        (CWG 2010)  Tax
 
 TOTAL           748087234 
 
 Name of         Amount (Rs. )      Period     Authority where
 the Statute     L.S.T (Net)
 
 Service tax      79553540        2005-06    Addl. Comm. Service 
                                                   Tax
 Service tax     220288844        2007-08    Addl. Comm. Service 
                                                   Tax
 TOTAL           299842384
 
 Mumbai Unit
 
 Name of       Nature of Dues   Amount under          Year to
 the Statute                     dispute               which
                                (Rs.) Net              amount
                                                      relates
 
 BST ACT      Assessed Amount      672968             1993-94
 BST ACT      Assessed Amount    52693370             1996-97
 BST ACT      Assessed Amount    59424662             1998-99
 BST ACT      Assessed Amount    30201675           1999-2000
 BST ACT      Assessed Amount    54029094             2000-01
 BST ACT      Assessed Amount   101128984             2001-02
 BST ACT      Assessed Amount  2161090302             2003-04
 BST ACT      Assessed Amount  1015717015             2004-05
  
 Total                         3474958070
 
 Name of               Forum where
 the Statute           the dispute
                       is pending
 
 BST ACT               Maharashtra Sales
                       Tax Tribunal, Mumbai
 
 BST ACT               Maharashtra Sales
                       Tax Tribunal, Mumbai
 
 BST ACT               Jt. Commissioner of
                       Sales Tax (Appeal) II
                       Mumbai
 
 BST ACT               Jt. Commissioner of
                       Sales Tax (Appeal) II
                       Mumbai
 
 BST ACT               Maharashtra Sales
                       Tax Tribunal, Mumbai
 
 BST ACT               Maharashtra Sales
                       Tax Tribunal, Mumbai
 
 BST ACT               Maharashtra Sales
                       Tax Tribunal, Mumbai
 
 BST ACT               Maharashtra Sales
                       Tax Tribunal, Mumbai
 
 Statutory dues which have not been deposited in respect of Mumbai MS
 unit as on 31st March, 2014.
 
 Name of      Nature of Dues   Amount under  Year to      Forum where
 the Statute                   dispute         which      the dispute
                               (Rs.) Net       amount     is pending
                                              relates
 
 Central      Installation      2909233       2004-05      CESTAT
 Excise Act   of BTS Site
  
 Central      Installation      2617816       2005-06      CESTAT
 Excise Act   of BTS Site
 
 Central      Installation      3210353       2006-07      CESTAT
 Excise Act   of BTS Site
 
 Total                          8737402
 
 10.  The company does not have any accumulated losses at the end of the
 financial year.  However, it has incurred cash losses during the
 current financial year as well as in the immediately preceding
 financial year.
 
 11.  As per the records of the company and according to the explanation
 provided by the management, we report that there is no default in
 repayment of dues from the loan taken from banks during the year under
 audit
 
 12.  The Company has not granted loans and advances on the basis of
 security by way of pledge of shares, debentures and other securities.
 Accordingly, clause 4 (xii) of the Order is not applicable.
 
 13.  The Company is not a Chit Fund or a Nidhi Mutual Benefit Fund /
 Society. Accordingly, clause 4(xiii) of the Order is not applicable.
 
 14.  The Company is not dealing in or trading in shares, securities,
 debentures and other investments. Accordingly, clause 4(xiv) of the
 Order is not applicable
 
 15.  According to the information and explanation given to us, the
 Company has not given any guarantees for loans taken by others from
 banks or financial institutions. Accordingly, clause 4(xv) of the Order
 is not applicable.
 
 16.  In our opinion, the term loans have been applied for the purpose
 for which they were raised.
 
 17.  In our opinion and according to the information and explanations
 given to us and on the basis of overall examination of the Balance
 Sheet & Cash Flow Statement of the company, we report that the funds
 raised by the company on short term basis have, prima facie, not been
 used for long term investments to the extent of Rs. 888.50 million.
 
 18.  The Company has not made any preferential allotment of shares to
 parties and companies covered in the register maintained under Section
 301 of the Act.
 
 19.  The Company has issued Non Convertible Debentures (in the form of
 bonds) under Sovereign Guarantee on private placement basis. As per
 information and explanation given to us, no charge or security is
 required to be created for the same.
 
 20.  The Company has not raised any money by public issues during the
 year. Accordingly, clause 4(xx) of the Order is not applicable.
 
 21.  According to the information and explanations given to us, no
 major fraud on or by the company has been noticed or reported during
 the year.
 
 For Arun K. Agarwal & Associates              For V.K. Dhingra & Co.
 Chartered Accountants                          Chartered Accountants
 FRN - 003917N                                          FRN - 000250N
 
 sd/-                                                            sd/-
 (Vimal Kumar Jain)                                     (Lalit Ahuja)
 (Partner)                                                  (Partner)
 (Mem. No. 086657)                                  (Mem. No. 085842)
 
 Place: New Delhi
 Date: MAY 30, 2014
Source : Dion Global Solutions Limited
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