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Reliance Communications Ltd.

BSE: 532712 | NSE: RCOM |

Represents Equity.Intra - day transactions are permissible and normal trading is done in this category
Series: EQ | ISIN: INE330H01018 | SECTOR: Telecommunications - Service

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6,730,399
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30-Day
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4,974,695
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Nov 26, 15:57
1.65 0.00 (0.00%)
Volume
AVERAGE VOLUME
5-Day
10,379,612
10-Day
9,116,620
30-Day
6,074,123
7,924,334
  • Prev. Close

    1.65

  • Open Price

    1.65

  • Bid Price (Qty.)

    0.00 (0)

  • Offer Price (Qty.)

    1.65 (1257013)

Annual Report

For Year :
2018 2017 2016 2015 2014 2013 2012 2011 2010

Auditor's Report

1. Report on the Standalone Ind AS Financial Statements

We have audited the accompanying standalone Ind AS financial statements of Reliance Communications Limited (‘the Company’), which comprise the Balance Sheet as at 31 March 2018, the Statement of Profit and Loss (including other comprehensive income), the Statement of Cash Flows and the Statement of changes in Equity for the year then ended and a summary of significant accounting policies and other explanatory information (hereinafter referred to as ‘standalone Ind AS financial statements’).

2. Management’s Responsibility for the Standalone Ind AS Financial Statements

The Company’s Board of Directors is responsible for the matters stated in sub-section 5 of Section 134 of the Companies Act, 2013 (‘the Act’) with respect to the preparation of these standalone Ind AS financial statements that give a true and fair view of the financial position, financial performance including other comprehensive income, cash flows and changes in equity of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) specified under Section 133 of the Act read with relevant rules issued there under.

This responsibility also includes the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies, making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the standalone Ind AS financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

3. Auditor’s Responsibility

Our responsibility is to express an opinion on these standalone Ind AS financial statements based on our audit. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder.

We conducted our audit of the standalone Ind AS financial statements in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the standalone Ind AS financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the standalone Ind AS financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the standalone Ind AS financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company’s preparation of the standalone Ind AS financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company’s Directors, as well as evaluating the overall presentation of the standalone Ind AS financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the standalone Ind AS financial statements.

4. Basis for Qualified Opinion

We draw attention to note 2.50 of the standalone Ind AS financial statements regarding non provision of interest on borrowings amounting to Rs.3,055 crore for the year ended 31 March 2018 for the reason provided by the management therein. Had such interest been provided then the reported loss for the year ended 31st March, 2018 would have been Rs.12,925 crore and networth of the Company would have been Rs.6,261 crore.

5. Qualified Opinion

In our opinion and to the best of our information and according to the explanations given to us, except for the matters described in Basis for Qualified Opinion paragraph above, the aforesaid standalone Ind AS 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 including the Ind AS, of the state of affairs (financial position) of the Company as at 31 March 2018 and it’s loss (financial performance including other comprehensive income), its cash flows and the changes in equity for the year ended on that date.

6. Emphasis of Matters

a. We draw your attention to Note 2.34.1 (vi) of the standalone Ind AS financial statements regarding the Scheme of Arrangement (‘the Scheme’) sanctioned on 03 July 2009 by the Hon’ble High Court of Judicature at Mumbai. The Company is permitted to adjust additional depreciation and amortisation, expenses and/or losses, which have been or are required to be debited to the Statement of profit and loss by a corresponding withdrawal or credit from/to General Reserve, as determined by the Board of Directors. During the year ended the company has withdrawn Rs.280 crore (previous year Rs.1 205 crore) to offset additional depreciation/ amortisation on account of fair valuation of certain assets which may be considered to override the relevant provisions of Schedule II of the Act and Ind AS 8 ‘Accounting Policies, Changes in Accounting Estimates and Errors’. Our opinion is not qualified in respect of this matter

b. We further draw attention to Note 2.41 of the standalone Ind AS financial statements regarding the Scheme of Arrangements (‘the Scheme’) sanctioned by the Hon’ble High Court of Judicature at Mumbai and Gujarat. These schemes permit the Company to adjust expenses and/or losses identified by the Board of Directors, which are required to be debited to the Statement of profit and loss by a corresponding withdrawal from General Reserve and Reserve for Business Restructuring, which is considered to be an override to the relevant provisions of Ind AS 8. The Company has identified net foreign exchange gain of Rs.25 crore (previous year net foreign exchange Rs.8 crore), amortisation of Foreign Currency Monetary Items Translation Account (FCMITDA) Rs.252 crore (previous year Rs.238 crore), depreciation on exchange losses capitalised of Rs.221 crore (previous year Rs.433 crore) and impairment charge arising on account of asset held for sale and dimunition in the value of investments Rs.5,948 crore (previous year Rs. Nil crore), as in the opinion of the Board, such exchange variations are considered to be of an exceptional nature and accordingly, these expenses have been met by corresponding withdrawal from General Reserve and Reserve for Business Restructuring. Our opinion is not qualified in respect of this matter Had the effect of paragraphs (a) and (b) above, not been met from General Reserve and Reserve for Business Restructuring, the Company would have reflected a loss after tax for the year of Rs.16,546 crore (previous year Rs.3,680 crore).

c. We draw attention to Note 2.50 of the Standalone Ind AS financial statement, regarding the Definitive Binding Agreement for monetization of assets of the company and its subsidiaries and National Company Law Appellate Tribunal (NCLAT) order dated 30 May 2018 staying NCLT order dated 15 May 2018 admitting the Company under Insolvency and Bankruptcy Code (IBC), 2016. The Company is confident that suitable resolution plan would be formulated by lenders in view of order admitting the Company under IBC proceedings is vacated/stayed, accordingly financial statements of the Company have been prepared on going concern basis.

Our opinion is not modified in respect of above matters.

7. Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor’s Report) Order, 2016 (‘the Order’), issued by the Central Government of India in terms of sub-section (11) of Section 143 of the Act, we enclose in ‘Annexure A’ a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.

2. As required by sub-section 3 of Section 143 of the Act, we report that:

(a) we have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit;

(b) except for the possible effects of the matters described in the Basis of Qualified opinion paragraph above, 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, the Statement of Cash Flows and Statement of Changes in Equity dealt with by this Report are in agreement with the books of account;

(d) in our opinion, the aforesaid standalone Ind AS financial statements comply with the Indian Accounting Standards prescribed under Section 133 of the Act read with relevant rules issued thereunder, except requirement of Ind AS 23 on Borrowing Cost with regard to matters described in the Basis of Qualified Opinion paragraph above and read with Emphasis of Matter paragraph above, regarding exercise of option available as per the Court Order which overrides the requirement of Ind AS 8;

(e) The going concern matter described in paragraph 6 (c) under Emphasis of Matter paragraph above, in our opinion, may have an adverse effect on the functioning of the Company;

(f) on the basis of the written representations received from the directors as on 31 March 2018 taken on record by the Board of Directors, none of the directors is disqualified as on 31 March 2018 from being appointed as a director in terms of subsection 2 of Section 164 of the Act;

(g) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate report in “Annexure B”; and

(h) with respect to the other matters to be included in the Auditor’s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014 in our opinion and to the best of our information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations on its financial position in its standalone Ind AS financial statements -Refer Note 2.37 to the standalone Ind AS financial statements;

ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses; and

iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.

With reference to the Annexure A referred to in the Independent Auditors’ Report to the Members of Reliance Communications Limited (‘the Company’) on the standalone Ind AS financial statements for the year ended 31 March 2018, we report the following:

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

(b) We are informed that the Company physically verifies its assets over a three year period. 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 and no material discrepancies were identified on such physical verification.

(c) According to the information and explanations given to us, the title deeds of immovable properties, as disclosed in Note 2.01 to the standalone Ind AS financial statements, are held in the name of the Company, except for the following where the Company is in the process of transferring the title deeds in it’s name as these were acquired through various schemes of arrangement entered in the earlier years:

Particulars

Freehold land

Building

No of cases

18

4

Gross block as at 31 (Rs. in crores)

March 2018

3

4

Net block as at 31 (Rs. in crores)

March 2018

3

3

(ii) The inventory has been physically verified by the management during the year. In our opinion, the frequency of such verification is reasonable. The discrepancies noticed on verification between the physical stocks and the book records were not material and have been dealt with in books of account.

(iii) The Company has not granted any loans, secured or unsecured, to companies, firms, Limited liability Partnerships or other parties covered in the register maintained under Section 189 of the Act. Accordingly, paragraph (iii) of the Order is not applicable to the Company.

(iv) The Company has not granted any loans or provided any guarantees or security to the parties covered under Section 185 of the Act. The Company has complied with the applicable provisions of Section 186 of the Act.

(v) In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from the public in accordance with relevant provisions of Sections 73 to 76 or any other relevant provisions of the Act and the rules framed there under. Accordingly, paragraph (v) of the Order is not applicable to the Company.

(vi) 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 sub-section 1 of Section 148 of the Act, 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.

(vii) (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, income tax, service tax, goods and services tax, duty of customs, sales tax, value added tax (VAT), entry tax, employees’ state insurance, cess and other material statutory dues have been generally regularly deposited during the year by the Company with the appropriate authorities though there has been delay in certain cases. As explained to us, the Company did not have any dues on account of duty of excise.

According to the information and explanations given to us, undisputed amounts payable in respect of provident fund, income tax, service tax, goods and services tax, duty of customs, sales tax, value added tax, entry tax, employees’ state insurance, cess and other material statutory dues which were in arrears as at 31 March 2018 for a period of more than six months from the date they became payable are as under:

Name of Statute

Nature of Dues

Amount (Rs. In Crore)

Period to which the amount relates

Due Date

Date of Payment

Goods and Service Tax Act, 2017

Goods and Service Tax Payable

78.59

Jul-17

20-Aug-17

Unpaid

Goods and Service Tax Act, 2017

Goods and Service Tax Payable

62.41

Aug-17

20-Sep-17

Unpaid

Maharastra Value Added Tax Act, 2002

Value Added Tax Payable

0.36

FY 2017-18

Various Dates

Unpaid

Delhi Value Added Tax Act, 2004

Value Added Tax Payable

0.04

FY 2017-18

Various Dates

Unpaid

Karnataka Value Added Tax Act, 2003

Value Added Tax Payable

0.05

FY 2017-18

Various Dates

Unpaid

Orissa Value Added Tax Act, 2004

Value Added Tax Payable

0.00

FY 2017-18

Various Dates

Unpaid

West Bengal Added Tax Act,

Value Added Tax

0.01

FY 2017-18

Various Dates

Unpaid

2003

Payable

Maharastra Value Added Tax Act,

Works Contract Tax

0.01

FY 2017-18

Various Dates

Unpaid

2002

Payable

Rajasthan Value Added Tax Act,

Works Contract Tax

0.03

FY 2017-18

Various Dates

Unpaid

2003

Payable

Income Tax Act, 1961

Tax Deducted at source

18.88

Jul-17

7-Aug-17

Unpaid

Income Tax Act, 1961

Tax Deducted at source

0.03

Aug-17

7-Sep-17

Unpaid

(b) According to the information and explanations given to us, there are no dues of cess which have not been deposited on account of any dispute. The dues of income tax, duty of customs, service tax, sales tax, value added tax and entry tax as disclosed below have not been deposited by the Company on account of disputes:

Name of Statue

Nature of Dues

Amount* (Rs. In Crore)

Period

Forum

Central Sales Tax, Bihar

Central Sales Tax

0.04

2005-06

Appellate Tribunal

0.43

2011-12

Asst. Commissioner of Commercial Taxes

Central Sales Tax, Chattisgarh

Central Sales Tax

0.00

2011-12

Dy. Commissioner (Appeals)

Central Sales Tax, Madhya Pradesh

Central Sales Tax

0.03

2011-12 to 2013-14

Dy. Commissioner (Appeals)

Central Sales Tax, Maharashtra

Central Sales Tax

0.27

2011-12

Dy. Commissioner of Sales Tax

0.35

2013-14

Dy. Commissioner of Sales Tax

Central Sales Tax, Orissa

Central Sales Tax

0.00

2009-10

Addl. Commisoner (Appeals)

0.02

Oct ‘06 to March ‘09

Sales Tax Appellate Tribunal

Central Sales Tax, Uttar Pradesh

Central Sales Tax

0.07

2006-07

High Court

0.08

2010-11

Additional Commissioner (Appeals)

0.50

2013-14

Dy. Commisioner of Commercial Taxes

1.25

2014-15

Dy. Commisioner of Commercial Taxes

Central Sales Tax, Uttarakhand

Central Sales Tax

0.12

2009-10 to

2010-11

Dy. Commissioner of Commercial Taxes

0.14

2012-13

Jt. Commisioner of Commercial Taxes (Appeals)

Central Sales Tax, West Bengal

Central Sales Tax

0.34

2007-08

Tax Revision Board

0.36

2014-15

Jt.Commisioner Commercial Taxes

Central Sales Tax, Punjab

Central Sales Tax

0.05

2010-11

Dy. Excise and Taxation Commissioner (Appeals)

Entry Tax, Bihar

Entry Tax

0.38

2007-08 to

2008-09

Commercial Tax Tribunal

0.25

2011-12

Asst. Commissioner of Commercial Taxes

Entry Tax, Chattisgarh

Entry Tax

0.63

2006-07 to

2007-08

Dy. Commissioner (Appeals)

0.25

2010-11 to

2011-12

Dy. Commissioner (Appeals)

Entry Tax, Himachal Pradesh

Entry Tax

1.01

2011-11 to 2013-14

High Court

Entry Tax, Madhya Pradesh

Entry Tax

0.48

2002-03 to

2003-04

Asst. Commissioner of Commercial Taxes

1.58

2005-06 to 2008-09 & 2010-11

MP Taxation Board

0.21

2011-12

Dy. Commissioner (Appeals)

Entry Tax, Orissa

Entry Tax

0.08

2009-10

Addl. Commisoner (Appeals)

0.05

Oct

06-March

09

Sales Tax Appellate Tribunal

Entry Tax, Uttar Pradesh

Entry Tax

0.13

2003-04

Commercial Tax Tribunal

0.02

2013-14

Dy. Commisioner of Commercial Taxes

0.02

2014-15

Dy. Commisioner of Commercial Taxes

Entry Tax, West Bengal

Entry Tax

0.17

2014-15

Jt.Commisioner Commercial Taxes

Entry Tax, Rajasthan

Entry Tax

1.70

2013-14 to

2014-15

Appellate Authority

14.73

2005-06, 2007-08 to 2012-13

Supreme Court

Entry Tax, Jammu & Kashmir

Entry Tax

9.69

2008-09 to 2011-12

High Court

Entry Tax, Punjab

Entry Tax

0.01

Oct 2012 to Dec 2012

High Court

VAT, Bihar

VAT

0.24

2005-06

Commercial Tax Tribunal

8.33

2011-12

High Court

VAT, Haryana

VAT

1.15

2011-12

Commercial Tax Tribunal

VAT, Kerala

VAT

0.01

2006-07

Deputy Commisoner (Appeals)

2.79

2010-11

High Court

0.02

2011-12

Deputy Commisoner (Appeals)

0.32

2012-13

High Court

2.80

2013-14

High Court

2.15

2014-15

High Court

VAT, Punjab

VAT

0.05

2010-11

Deputy Commisoner (Appeals)

VAT, Uttarakhand

VAT

0.78

2009-10 to

2010-11

Dy. Commissoner of Commercial Taxes

0.03

2007-08

Jt. Commisioner (Appeals)

0.41

2012-13

Jt. Commissioner of Commercial Taxes (Appeals)

VAT, West Bengal

VAT

4.17

200506,2007-08 to 2008-09

Tax Revision Board

0.03

2012-13

Jt. Commisioner of Commercial Taxes (Appeals)

0.02

2014-15

Jt. Commisioner Commercial Taxes

VAT/Sales Tax, Uttar Pradesh

VAT/Sales Tax

0.24

2003-04

UP Trade Tax Tribunal

0.93

2004-05

High Court

0.52

2005-06, Jan 08 to March 08

Dy. Commissioner of Commercial Taxes

0.20

2010-11

Addl. Commisoner (Appeals)

2.38

2013-14

Dy. Commissioner of Commercial Taxes

1.83

2014-15

Dy. Commisioner of Commercial Taxes

VAT, Chattisgarh

VAT

0.02

2011-12

Dy. Commisooner (Appeals)

Finance Act, 1994

CENVAT Credit

2.60

01.04.2004 to 31.03.2015

Commisoner, CGST & Central Excise

3.33

01.4.2010 to 31.03.2014

Commisoner, CGST & Central Excise

1.32

2014-15

CESTAT

Income Tax Act, 1961

Income Tax

2.76

2009-10

Commissioner of Income Tax (Appeals)

Income Tax Act, 1961

Income Tax

2.52

2010-11

Commissioner of Income Tax (Appeals)

Income Tax Act, 1961

Income Tax

1.34

2011-12

Joint Commissioner of Income Tax

*Net of amounts paid under protest.

(viii) (a) The Company has defaulted in repayment of following dues to the financial institution, banks and debentures, which were paid on or before the Balance Sheet date:

Name of Lender

Amount (Rs. in crore) Borrowings

Amount (Rs. in crore) Interest

Period (Maximum days) Borrowings

Period (Maximum days) Interest

Loan from Banks

Axis Bank

100

5

87

80

Bank of Baroda

-

24

-

87

Bank of India

-

16

-

87

Bank of Maharashtra

27

-

85

-

Canara Bank

59

8

25

25

Central Bank of India

-

6

-

87

Corporation Bank

-

5

-

87

Credit Agricole Corporate & Investment Bank

-

1

-

14

DBS Bank

112

4

60

7

Deutsche Bank

180

4

82

7

HDFC Bank

56

18

-

China Development Bank

768

7

305

197

Industrial and Commercial Bank of China

130

7

305

197

Export Import Bank of China

264

7

305

197

IDBI Bank

-

18

-

87

Indian Overeseas Bank

-

3

-

87

IndusInd Bank

1,500

26

59

61

Oriental Bank of Commerce

-

4

-

87

Punjab National Bank

70

-

169

-

Standard Chartered Bank

293

3

111

56

State Bank of India

-

40

-

87

Syndicate Bank

-

9

-

87

UCO Bank

-

17

-

87

Union Bank of India

-

5

-

3

United Bank of India

13

4

147

87

Yes Bank

71

6

92

112

Debenture

Life Insurance Corporation of India

375

72

62

40

Other Loans

India Infrastructure Finance Corporation Limited

-

2

-

88

Reliance Cleangen Limited

9

21

Total

4,018

312

(b) The Company has defaulted in repayment of following dues to the financials institution, banks and debenture holders during the year, which were not paid as at Balance Sheet date:

Name of Lender

Amount (Rs. in crore) Borrowings

Amount (Rs. in crore) Interest

Period (Maximum days) Borrowings

Period (Maximum days) Interest

Loan from Banks

Ahli United Bank B.S.C.

98

111

Bank of Baroda

802

11

389

366

Bank of India

280

9

366

366

Bank of Maharashtra

473

-

318

-

Canara Bank

237

-

275

-

Central Bank of India

112

3

366

366

Corporation Bank

266

8

388

366

Credit Agricole Corporate & Investment Bank

192

-

377

-

DBS Bank

300

-

185

-

Dena Bank

250

-

53

-

Deutsche Bank

391

1

111

284

China Development Bank

2,185

128

398

398

Industrial and Commercial Bank of China

551

33

398

398

Export Import Bank of China

814

47

398

398

IDBI Bank

331

9

370

366

Indian Overeseas Bank

52

1

366

366

Oriental Bank of Commerce

91

2

366

366

Punjab National Bank

593

-

367

-

Standard Chartered Bank

1,072

-

355

-

State Bank of India

1,258

21

366

366

Syndicate Bank

423

5

389

366

UCO Bank

296

9

366

366

Union Bank of India

599

3

366

366

United Bank of India

341

2

366

366

Debenture

Life Insurance Corporation of India

375

-

53

-

Other Loans

Industrial Finance Corporation of India

125

4

382

382

Limited

India Infrastructure Finance

4

4

183

397

Corporation Limited Reliance Capital Limited

-

3

-

366

Reliance Unicorn Enterprise Private Limited

-

53

-

366

Reliance Cleangen Limited

-

14

-

366

Kunjbihari Developers Private Limited

-

1

-

366

Total

12,511

371

c) During the year, there was a delay of 11days in case of installment payment of Rs.22 crore to Department of Telecommunications. Further, as at March 31, 2018, Rs.281 crore was outstanding, delayed by 10 days which was subsequently paid.

(ix) During the year, the Company has not raised any money by way of initial public offer or further public offer (including debt instruments). The term loans, prima facie, have been utilized for the purpose for which these were raised.

(x) According to the information and explanations given to us, no material fraud by the Company or on the Company by its officers or employees has been noticed or reported during the course of our audit.

(xi) According to the information and explanations given to us and based on our examination of the records, the Company has paid/provided total managerial remuneration amounting to Rs.2 crore to the managerial person of the company for which the company is in the process of getting requisite approval of shareholders in ensuing annual general meeting.

(xii) In our opinion and according to the information and explanations given to us, the Company is not a nidhi company. Accordingly, paragraph (xii) of the Order is not applicable to the Company.

(xiii) According to the information and explanations given to us and based on our examination of the records of the Company, transactions with the related parties are in compliance with Sections 177 and 188 of the Act, where applicable. The details of such related party transactions have been disclosed in the standalone Ind AS financial statements as required by the applicable accounting standards.

(xiv) According to the information and explanations given to us and based on our examination of the records, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year, however the company has issued equity shares to Sistema Shyam Teleservices Limited in terms of Scheme of Demerger sanctioned by the Hon’ble High Court of Judicature of Bombay and Jaipur.

(xv) According to the information and explanations given to us and based on our examination of the records, the Company has not entered into non-cash transactions with directors or persons connected with him. Accordingly, paragraph (xv) of the Order is not applicable to the Company.

(xvi) The Company is not required to be registered under Section 45-IA of the Reserve Bank of India Act, 1934. Accordingly, the provisions of Clause (xvi) of the Order are not applicable to the Company.

Report on the Internal Financial Controls under Clause (i) of Subsection 3 of Section 143 of the Companies Act, 2013 (“the Act”).

We have audited the internal financial controls over financial reporting of Reliance Communications Limited (“the Company”) as of 31 March 2018 in conjunction with our audit of the standalone Ind AS financial statements of the Company for the year ended on that date.

Management’s Responsibility for Internal Financial Controls

The Company’s management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India (ICAI). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to company’s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Act.

Auditor’s Responsibility

Our responsibility is to express an opinion on the Company’s internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the “Guidance Note”) and the Standards on Auditing issued by ICAI and deemed to be prescribed under Section 143

(10) of the Act, to the extent applicable to an audit of internal financial controls, both applicable to an audit of Internal Financial Controls and both issued by the ICAI. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the standalone Ind AS financial statements, whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company’s internal financial controls system over financial reporting.

A company’s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and that receipts and expenditures of the company are being made only in accordance with authorisations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls Over Financial Reporting

Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at 31 March 2018, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the ICAI.

For Pathak H.D. & Associates

Chartered Accountants

Firm’s Registration No: 107783W

Parimal Kumar Jha

Partner

Membership No: 124262

Mumbai

30 May 2018