Reliance Communications
BSE: 532712 | NSE: RCOM | ISIN: INE330H01018 | Telecommunications - Service
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| Auditor's Report | Year End : Mar '08 |
We have audited the attached Balance Sheet of Reliance Communications
Limited (‘the Company’) as at 31 March 2008 and also the Profit and
Loss Account and the Cash flow statement for the year ended on that
date, 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.
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 misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for
our opinion.
As required by the Companies (Auditor’s Report) Order, 2003 (‘the
Order’) issued by the Central Government of India in terms of
sub-section (4A) of Section 227 of the Companies Act, 1956 (‘the Act’),
we enclose in the Annexure, a statement on the matters specified in
paragraphs 4 and 5 of the said Order.
Further to our comments in the Annexure referred to in the paragraph
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;
(e) on the basis of written representations received from the directors
of the Company as at 31st March 2008 and taken on record by the Board
of Directors, we report that none of the directors is disqualified as
at 31st March 2008 from being appointed as a director of the Company
under clause (g) of sub-section (1) of Section 274 of the Companies
Act, 1956; and
(f) 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:
(i) in the case of the Balance Sheet, of the state of affairs of the
Company as at 31st March 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 – 31st March 2008
With reference to the Annexure referred to in the Auditors’ Report to
the Members of Reliance Communications Limited (‘the Company’) on the
financial statements for the year ended 31st March 2008, we report the
following:
1. (a) The Company has maintained proper records showing full
particulars, including quantitative details and situation of fixed
assets which are being updated to give effect to the assets transferred
on demerger of the passive infrastructure and the network fiber
undertaking, acquired from a wholly owned subsidiary company during the
year.
(b) We are informed that the Company physically verifies its assets
over a three year period, except for underground fibre infrastructure
and base trans-receiver station towers. We are informed that these
assets are under continuous operational surveillance at National
Network Operating Centre and are therefore not separately physically
verified. In our opinion, this periodicity of physical verification is
reasonable having regard to the size of the Company and the nature of
its assets. In accordance with this policy, the Company has physically
verified certain fixed assets during the year. The Company is in the
process of reconciling the results of such physical verification with
the fixed assets register. Management believes that differences if any,
arising out of such reconciliation are not expected to be material.
(c) Passive infrastructure assets demerged to a subsidiary company
during the year, as per the scheme sanctioned by the High Court, does
not affect the going concern assumption.
2. (a) The inventory has been physically verified by management during
the current year. In our opinion, the frequency of such verification is
reasonable.
(b) The procedures for the physical verification of inventories
followed by management are reasonable and adequate in relation to the
size of the Company and the nature of its business.
(c) The Company is maintaining proper records of inventory.
Discrepancies identified on physical verification of inventories as
compared to book records were not material.
3. The Company has neither granted nor taken any loans, secured or
unsecured, to or from companies, firms or other parties covered in the
register maintained under section 301 of the Companies Act, 1956.
Accordingly, paragraph 4(iii) of the Order is not applicable.
4. In our opinion, and according to the information and explanations
given to us, and having regard to the explanation that purchases of
certain items of inventories and fixed assets are for the Company’s
specialised requirements for which suitable alternative sources are not
available to obtain comparable quotations, there is an adequate
internal control system commensurate with the size of the Company and
nature of its business with regard to the purchase of inventories and
fixed assets and with regard to the sale of services. In our opinion,
and according to the information and explanations given to us, there is
no continuing failure to correct major weaknesses in the internal
control system.
5. In our opinion, and according to the information and explanations
given to us, there are no contracts and arrangements the particulars of
which need to be entered into the register maintained under section 301
of the Companies Act, 1956.
6. The Company has not accepted any deposits from the public.
7. In our opinion, the Company has the 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. (a) According to the information and explanations given to us and
on the basis of our examination of the records of the Company, amounts
deducted/accrued in the books of account in respect of undisputed
statutory dues including Provident Fund, Wealth Tax, Income Tax,
Service Tax, Customs Duty, Sales Tax, Entry Tax, Employees’ State
Insurance and other material statutory dues have been regularly
deposited during the year by the Company with the appropriate
authorities. As explained to us, the Company did not have any dues on
account of Excise duty and Investor Education and Protection Fund.
There were no dues on account of cess under Section 441A of the
Companies Act, 1956 since the date from which the aforesaid section
comes into force has not yet been notified by the Central Government.
According to the information and explanations given to us, no
undisputed amounts payable in respect of Provident Fund, Wealth Tax,
Income Tax, Ser vice Tax, Customs Duty, Sales Tax, Entry Tax,
Employees’ State Insurance and other material statutory dues were in
arrears as at 31st March 2008 for a period of more than six months from
the date they became payable.
(b) According to the information and explanations given to us, there
are no dues of Income Tax, Wealth Tax, Service Tax, Customs duty,
Employees’ State Insurance which have not been deposited on account of
any dispute. The dues of Excise duty, Sales Ta x and Entry Tax as
disclosed below have not been deposited by the Company on account of
disputes.
Name of the Statute Nature of Amount
the Dues (Rs. in crore)
The Central Excise and
Salt Act, 1944 Excise duty 2.08
Entry Tax Act, Uttar Pradesh Entry tax 0.13
Trade Tax Act, Uttar Pradesh Sales tax 1.12
10.53
0.24
Entry Ta x Act, Madhya Pradesh Entry tax 0.36
Entry Tax Act, Chhattisgarh Entry tax 0.12
Sales Tax Act, Orissa Sales tax 4.12
Entry Tax Act, Orissa Entry tax 0.02
Entry tax 0.02
Entry Tax Act, Jharkand Entry tax 4.84
Punjab VAT Act VAT 0.03
VAT 0.01
Entry Tax Act, Madhya Pradesh
(Commercial Taxes) Entry Tax 0.24
Entry Tax Act, Chhattisgarh
(Commercial Taxes) Entry tax 0.03
Period to which Forum where
the amount relates dispute is pending
2002-04 Tribunal
2003-04 Trade Tax Tribunal, Lucknow
2004-05 Trade Tax Tribunal, (Appeals)
2005-06 Joint Commissioner, (Appeals)
2003-04 Trade Tax Tribunal, Lucknow
2002-03 Deputy Commissioner of
Appeals (Commercial Taxes)
2002-03 Deputy Commissioner of
Appeals (Commercial Taxes)
2003-04 Asst. Commissioner of
Commercial Taxes, Bhubaneshwar
2003-04 Asst. Commissioner of
Commercial Taxes, Bhubaneshwar
2004-05 Asst. Commissioner of
Commercial Taxes, Bhubaneshwar
2007-08 Writ petition filed before
High Court of Jharkand
2007-08 Deputy Commissioner, (Appeals)
Deputy Commissioner, (Appeals)
2003-04 Deputy Commissioner (Appeals)
2003-04 Deputy Commissioner (Appeals)
10. The Company does not have any accumulated losses at the end of the
financial year and has not incurred cash losses in the current
financial year and in the immediately preceding financial period.
11. In our opinion and according to the information and explanations
given to us, the Company has not defaulted in repayment of dues to its
bankers or debenture holders or to any financial institutions.
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. In our opinion and according to the information and explanations
given to us, the Company is not a chit fund/ nidhi/ mutual benefit
fund/ society.
14. According to the information and explanations given to us, the
Company is not dealing 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 on which the Company has given
guarantees for loans taken by wholly owned subsidiaries from banks or
financial institutions are not 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.
17. According to the information and explanations given to us and on
an overall examination of the balance sheet of the Company, we are of
the opinion that the funds raised on short-term basis have not been
used for long-term investment.
18. The Company has not made any preferential allotment of shares to
companies/firms/parties covered in the register maintained under
Section 301 of the Companies Act, 1956.
19. The Company has not issued any secured debentures during the year.
20. We have verified the end-use of money remaining unutilised in the
previous period raised by issue of foreign currency convertible bonds
as disclosed in note 2 (iii) of Schedule Q to the financial statements.
21. According to the information and explanations given to us, no
significant fraud on or by the Company, that causes a material
misstatement to the financial statements, has been noticed or reported
during the year.
For Chaturvedi & Shah For BSR & Co.
Chartered Accountants Chartered Accountants
Rajesh D Chaturvedi Natrajan Ramkrishna
Partner Partner
Membership No. 45882 Membership No. 32815
Mumbai
30 April 2008 |
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