| 1 We have audited the attached Balance sheet of Reliance MediaWorks
Limited ('the Company') as at September 30, 2012 and the related
Statement of profit and loss and the Cash flow statement for the
eighteen month period 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.
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
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.
3. Without qualifying our report, we draw attention to note 45 to the
financial statements; the Company's net worth is fully eroded and has a
negative net worth of Rs. 2,023.27 million, the Company has incurred a
loss of Rs. 7.035.63 million for the eighteen month period April 1, 2011
to September 30, 201 2, indicating the existence of uncertainty that
may cast doubt about the Company's ability to continue as a going
concern. Considering the matters set out in the said note, this
financial statement is prepared on a going concern basis.
4. 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 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, the Statement of profit and loss and the Cash
flow statement dealt with by this report are in agreement with the
books of account;
d) in our opinion, the Balance sheet, the Statement of profit and loss
and the 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;
e) on the basis of written representations received from the directors
of the Company as at 30 September 2012 and taken on record by the Board
of Directors, we report that none of the directors is disqualified as
on September 30, 201 2 from being appointed as a director in terms of
clause (g) of sub-section (1) of Section 274 of the Act; and
f) in our opinion, and to the best of our information and according to
the explanations given to us, read with matter stated in paragraph 3
above, the said accounts 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:
(i) in the case of the Balance sheet, of the state of affairs of the
Company as at September 30, 201 2;
(ii) in the case of the Statement of profit and loss, of the loss of
the Company for the eighteen month period ended on that date; and
(iii) in the case of the Cash flow statement, of the cash flows of the
Company for the eighteen month period ended on that date.
(Referred to in our report of even date)
(i) (a) The Company has maintained proper records showing full
particulars including quantitative details and situation of fixed
assets, however management is in the process of updating certain
details in fixed assets register.
(b) The Company has a regular programme of physical verification of its
fixed assets by which all fixed assets are verified in a phased manner
over a period of three years. In our opinion, this periodicity of
physical verification is reasonable having regard to the size of the
Company and the nature of its assets.
(c) Fixed assets disposed off during the period were not substantial
and, therefore, do not affect the going concern assumption.
(ii) (a) The inventory has been physically verified by the management
during the period. In our opinion, the frequency of such verification
is reasonable.
(b) The procedures for the 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) The Company is maintaining proper records of inventory. The
discrepancies noticed on verification between the physical stocks and
the book records were not material.
(iii) 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 Act.
(iv) In our opinion and according to the information and explanations
given to us, and having regard to the explanation that certain services
rendered/ rights and goods sold are of a specialised nature and
rendered/ sold to specific buyers and 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
the nature of its business with regard to purchase of inventory and
fixed assets and with regard to the sale of goods and rendering of
services. We have not observed any major weakness in the internal
control system during the course of the audit.
(v) 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 Act.
(vi) The Company has not accepted any deposits from the public.
(vii) In our opinion, the Company has an internal audit system
commensurate with its size and the nature of its business.
(viii) On the basis of records produced to us, we are of opinion that,
prima facie, the cost records prescribed by the Central Government
under section 209(1)(d) of the Act have been maintained. However, we
are not required to and have not carried out detailed examination of
such accounts and records.
(ix) (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, Employees' State Insurance,
Income-tax, Sales- tax/ VAT, Service Tax, Customs duty, Entertainment
tax, Investor Education & Protection Fund, Wealth tax, and other
material statutory dues have been generally regularly deposited during
the period by the Company with the appropriate authorities. As
explained to us, the Company did not have any dues on account of excise
duty.
According to the information and explanations given to us, no
undisputed amounts payable in respect of Provident fund, Employees'
State Insurance, Income-tax, Sales-tax/ VAT, Service tax, Customs duty,
Entertainment tax, Investor Education & Protection Fund, Wealth tax and
other material statutory dues were in arrears as at September 30, 2012
for a period of more than six months from the date they became payable.
As regards Maharashtra Value Added Tax refer note 27 to the financial
statements
(b) According to the information and explanations given to us, the
following statutory dues have not been deposited by the Company on
account of disputes:
Name of the Nature of the Amount Period to Forum where
statute dues (Rs.
million) which the dispute is
amount pending
relates
Central
Excise Duty and 255.59 1998-2012 Central Excise
Act, 1944 penalty and Service tax
Appellate Tribunal
(CESTAT)
Chapter V of Duty and 20.49 2006-07 Central Excise
the Finance penalty and Service Tax
Act, 1994 Appellate Tribunal
VAT, Madhya Value Added Tax 1.36 2006-09 Deputy
Pradesh commissioner
Appeal
VAT,
Ghaziabad Value Added Tax 0.45 2011-12 Deputy commissioner
Appeal
VAT, Kanpur Value Added Tax 1.51 2007-08 Deputy commissioner
Appeal
VAT, West Value Added Tax 0.52 2009-10 Joint Bengal
commissioner
sales tax
Entertain
ment Entertainment 13.93 2006-2011 Supreme Court
tax tax
Income tax Assessment 119.12 2008-09 Income Tax
Act, 1961 dues 178.72 2009-10 Appellant Tribunal
(ITAT) Commissioner
of Income Tax Appeal
Income tax Tax deducted at 101.71 2007-08 to Commissioner
Act, 1961 source 2008-09 of Income Tax Appeal
(x) The accumulated losses of the Company are more than 50% of its net
worth and it has incurred cash losses in the current financial period
and in the immediately preceding financial year.
(xi) In our opinion and according to the information and explanations
given to us, the Company has not defaulted in repayment of its dues to
bankers or financial institutions or bondholders, however there have
been instances of delays in payment of principal amount which are
subsequently paid.
Nature of Principal Due date Date of payment
default amount
(Rs. million)
Principal Loan 1,250.00 March 28, 2012 May 14, 2012
amount
1,333.33 March 31, 2012 May 11, 2012
125.00 December 16, 2011 December 30, 2011
100.00 May 3, 2012 May 6, 2012
(xii) The Company has not granted any loans and advances on the basis
of security by way of pledge of shares, debentures and other
securities.
(xiii) In our opinion and according to the information and explanations
given to us, the Company is not a chit fund or a nidhi / mutual benefit
fund / society.
(xiv) According to the information and explanations given to us, the
Company is not dealing or trading in shares, securities, debentures and
other investments.
(xv) 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/ credit facilities taken by others from banks /
others are not prejudicial to the interest of the Company
(xvi) 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.
(xvii) According to the information and explanations given to us and on
an overall examination of the Balance sheet of the Company, we report
that the Company has used funds raised on short term basis for long
term investments. The Company has used short term borrowings
aggregating Rs. 5,432 million to fund long term purposes.
(xviii) The Company has not made any preferential allotment of shares
during the period to companies / firms / parties covered in the
register maintained under Section 301 of the Act.
(xix) According to the information and explanations given to us, the
Company has created security in respect of debentures issued during the
period.
(xx) According to the information and explanations given to us, the
Company has not raised any money by public issues during the period.
(xxi) According the information and explanations given to us, no fraud
by the Company has been noticed or reported during the period. Further,
Company has reported a possible misappropriation of provident fund by
the contractor engaged by the Company amounting to approximately Rs.
58.84 million. The Company has filed a criminal complaint against the
Contractor and the matter is currently under investigation..
For B S R & Co. For Chaturvedi & Shah
Chartered Accountants Chartered Accountants
Firm's Registration No: 101248W Firm's Registration No: 101720W
Bhavesh Dhupelia Parag D. Mehta
Partner Partner
Membership No: 042070 Membership No: 113904
Mumbai
November 3, 2012
| 