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Videocon Industries Ltd - Auditor's Report

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103.85 0.45 (0.44%)
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Code: 511389
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103.90 0.2 (0.19%)
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Code: VIDEOIND
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1 Week : Rs 103.85 (0.00%)
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To,

The Members of VIDEOCON INDUSTRIES LIMITED

1. Report on the Standalone Financial Statements

We have audited the accompanying standalone financial statements of VIDEOCON INDUSTRIES LIMITED ("the Company"), which comprise the Balance Sheet as at 31 st December, 2015, the Statement of Profit and Loss and the Cash Flow Statement for the year ended on that date, and a summary of significant accounting policies and other explanatory information.

2. Management’s Responsibility for the Standalone Financial Statements

The Company’s Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility also includes 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 judgements 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 financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

3. Auditors’ Responsibility

Our responsibility is to express an opinion on these standalone 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 there under.

We conducted our audit 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 financial statements are free from material misstatements.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgement, 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 financial control relevant to the Company’s preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on whether the Company has in place an adequate internal financial controls system over financial reporting and the operating effectiveness of such controls. An audit also includes evaluating the appropriateness of 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 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 financial statements.

4. Basis for Qualified Opinion

As mentioned in Note No. 41, to the Standalone financial statements, the Company has, directly and through its subsidiaries, made investments aggregating to Rs. 75,002.03 Million (As at 31st December, 2014 Rs. 65,002.03 Million) and also given advances of Rs. 1,313.21 Million (As at 31st December, 2014 Rs. 340.46 Million) to Videocon Telecommunications Limited (VTL), the subsidiary. The licenses awarded by the Department of Telecommunications (DoT) to VTL to provide Unified Access Services (UAS) in 21 circles in India w.e.f. 25th January, 2008, were quashed by the Hon’ble Supreme Court of India, vide its order and judgement dated 2nd February, 2012. Subsequently, VTL participated in the auction conducted by DoT and has been awarded the Unified Licenses (Access Services) for 6 circles with effect from 16th February, 2013, which are valid for a period of 20 years. VTL has also been allotted spectrum in these 6 circles. VTL is continuing its commercial operations. VTL has also entered into agreement dated 16th March, 2016 with Bharti Airtel Limited, as mentioned in the said note.

VTL has been continuously incurring losses and has huge accumulated losses as at 31st December, 2015. The ability of VTL to continue as a going concern is substantially dependent on its ability to fund its operating and capital expenditure requirements. The management is confident of mobilizing the necessary resources for continuing the operations of VTL as per the business plan.

However, in view of the huge accumulated losses of the VTL, we are unable to express an opinion on the extent of realisability of aforesaid investments in and advances to VTL. The consequential effect of the above on assets and liabilities as at 31 st December, 2015 and loss for the period ended on that date is not ascertainable.

5. Qualified Opinion

In our opinion and to the best of our information and according to the explanations given to us except for the possible effects of the matters described in the Basis for Qualified Opinion paragraph, the aforesaid standalone financial statements read with the Notes thereon 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:

a) In the case of the Balance Sheet, of the state of affairs of the Company as at 31st December, 2015;

b) In the case of the Statement of Profit and Loss, of the loss for the year ended on that date; and

c) In the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

6. Emphasis of Matter

The standalone financial statements reflect the share of the Company in the assets and the liabilities as well as the income and expenditure of unincorporated joint venture operations on a line by line basis. The Company has participating interest of 25% in Rawa Oil and Gas Field Joint Venture through a Production Sharing Contract (PSC). The Company incorporates its share in the operations of the joint venture based on statement of account received from the Operator. The Company has received the audited financial statements for the period upto 31 st March, 2015 and un-audited financial statements for the period 1 st April, 2015 to 31 st December, 2015 in respect of the said Joint Venture from the Operator, on which we have placed reliance.

Our opinion is not qualified in respect of this matter.

7. Report on Other Legal and Regulatory Requirements

A. As required by the Companies (Auditor`s Report) Order, 2015 ("the Order") issued by the Central Government of India in terms of Section 143(11) of the Act, we give in the Annexure a statement on the matters specified in paragraphs 3 and 4 of the Order.

B. As required by Section 143(3) 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 purpose of our audit;

b) 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 and the Cash Flow Statement dealt with by this Report are in agreement with the books of account;

d) In our opinion, except for the effects of the matter described in the Basis for Qualified Opinion paragraph above, the aforesaid standalone financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014;

e) The matter relating to the extent of realisability of investments in and advances to a subsidiary described in paragraph 4 under basis for qualified opinion 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 31st December, 2015 taken on record by the Board of Directors, none of the directors is disqualified as on 31 st December, 2015 from being appointed as a director in terms of Section 164(2) of the Act;

g) 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 financial statements - Refer Note No. 35 to 40 to the financial statements.

ii) The Company did not have any long term contracts including derivatives contracts for which there were any material foreseeable losses.

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

For KHANDELWAL JAIN & CO. For KADAM & CO.
Chartered Accountants Chartered Accountants
(Firm Registration No. 105049W) (Firm Registration No. 104524W)
BHUPENDRAY. KARKHANIS U. S. KADAM
Partner Partner
Membership No. 108336 Membership No. 31055
Place : Mumbai
Date: 14th May, 2016

ANNEXURE TO THE INDEPENDENT AUDITORS’ REPORT

(Referred to in paragraph 7A of Independent Auditors’ Report of even date to the Members of VIDEOCON INDUSTRIES LIMITED ("the Company") on the Standalone Financial Statements as of and for the year ended 31st December, 2015)

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

(b) As per the information and explanations given to us, physical verification of fixed assets, other than those under joint venture, has been carried out at reasonable intervals in terms of the phased programme of verification adopted by the Company and no material discrepancies were noticed on such verification. In our opinion, the frequency of verification is reasonable, having regard to the size of the Company and the nature of its business.

(ii) (a) As per the information and explanations given to us, the inventories (excluding stock of crude oil lying at extraction site with the

Operator) have been physically verified during the year by the management at reasonable intervals. In our opinion, having regard to the nature and location of stocks, the frequency of the physical verification is reasonable.

(b) In our opinion and according to the information and explanations given to us, 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) The Company is maintaining proper records of inventories. As per the information and explanations given to us, the discrepancies noticed on physical verification of stocks were not material in relation to the operations of the Company and the same have been properly dealt with in the books of account.

(iii) The Company has granted unsecured loans that are repayable on demand to 15 companies covered in the register maintained under section 189 of the Companies Act, 2013. The Company has not granted any secured/unsecured loans to firms or other parties covered in the register maintained under Section 189 of the Companies Act, 2013.

(a) In respect of the aforesaid loans, we are informed that the parties are repaying the loans and interest wherever demanded and thus, there has been no default on the part of these companies to whom the money has been lent.

(b) In respect of the aforesaid loans, there is no overdue amount more than rupee one lakh.

(iv) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchases of inventory and fixed assets and for the sale of goods and services. During the course of our audit, we have not observed any major weakness or continuing failure to correct any major weakness in the internal control system of the Company in respect of these areas.

(v) The Company has not accepted any deposits from the public.

(vi) We have broadly reviewed the books of account maintained by the Company in respect of products where, pursuant to the rules made by the Central Government of India, the maintenance of cost records has been specified under sub-section (1) of Section 148 of the Act, and are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the records with a view to determine whether they are accurate or complete.

(vii) (a) According to the information and explanations given to us and the records examined by us, the Company is regular in depositing with appropriate authorities undisputed statutory dues including Provident Fund, Employees’ State Insurance, Income tax, Sales tax, Wealth tax, Service tax, Custom duty, Excise duty, Value added tax, Cess and other statutory dues applicable to it. According to the information and explanations given to us, no undisputed arrears of statutory dues were outstanding as at 31 st December, 2015 for a period of more than six months from the date they became payable.

(b) According to the records of the Company examined by us and information and explanations given to us, the particulars of dues of Income tax, Sales tax, Wealth tax, Service tax, Customs duty, Excise duty, Value added tax, Cess which have not been deposited on account of any disputes, are given below:

Name of Statute Nature of the Dues Rs. in Million Forum where dispute is pending
1. Customs Act, 1962 Custom Duty and Penalties 5.83 Supreme Court `
185.37 High Court
358.16 CESTAT
0.93 Commissioner (Appeals)
67.74 Commissioner
17.19 Deputy Commissioner
8.85 Asst. Commissioner
0.04 Superintendent
2. Central Excise Act, 1944 Excise Duty and Penalties 1.96 High Court
438.05 CESTAT
3.61 Tribunal
0.85 Deputy Commissioner
5.12 Commissioner (Appeals)
650.32 Commissioner
30.30 Addl. Commissioner
0.76 Asst. Commissioner
59.22 Supreme Court
Name of Statute Nature of the Dues 7 in Million Forum where dispute is pending
3. Finance Act, 1994 (Service Tax Provisions) Service Tax and Penalties 45.04 CESTAT
0.14 Deputy Commissioner
2.25 Addl. Commissioner
0.99 Asst. Commissioner
0.17 Superintendent
4. Central Sales Tax Act, 1956 and Sales Tax Acts of various States Sales Tax 38.24 High Court
10.30 Commissioner
17.65 Joint Commissioner (Appeals)
374.87 Joint Commissioner
370.05 Addl. Commissioner
0.19 Deputy Commissioner (Appeals)
17.16 Deputy Commissioner
24.31 Assistant Commissioner
12.08 Commercial Tax Officer
0.27 Addl. Commercial Tax Officer
131.08 Tribunal
11.25 Commissioner (Appeals)
8.48 Appellate Tribunal
6.43 Sales Tax Officer
24.36 Addl. Commissioner (Appeals)
5. Income Tax Act, 1961 Income Tax 155.23 High Court
925.78 Appellate Tribunal
7.97 Commissioner (Appeals)
6. Navi Mumbai Municipal Corporation Cess 1,012.64 High Court

(c) In our opinion and according to the information and explanations given to us, the amounts required to be transferred to the Investor Education and Protection Fund in accordance with the relevant provisions of the Companies Act, 1956 (1 of 1956) and rules made thereunder has been transferred to such fund within time.

(viii) There are no accumulated losses as at the end of the financial year and the Company has not incurred cash losses during the year covered by our audit and in the immediately preceding financial year.

(ix) Based on our audit procedures and the information and explanations given to us, it is observed that, the Company has defaulted in repayment of dues to financial institutions or banks or debenture holders which are summarized below:

Particulars Principal Amount Interest Amount Delay in Days - Range
(Rs. in Million) (Rs. in Million)
Amount paid during the year 2,160.21 11,625.01 1 to 13 Days
Amount outstanding as at 31 st December, 2015 - - ` _

(x) According to the information and explanations given to us, the terms and conditions of guarantees given by the Company for loans taken by others from banks or financial institutions are prima facie not prejudicial to the interest of the Company.

(xi) According to the information and explanations given to us, the term loans raised during the year were applied, on an overall basis, for the purposes for which the loans were obtained.

(xii) According to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the year.

For KHANDELWAL JAIN & CO. For KADAM & CO.
Chartered Accountants Chartered Accountants
(Firm Registration No. 105049W) (Firm Registration No. 104524W)
BHUPENDRAY. KARKHANIS U. S. KADAM
Partner Partner
Membership No. 108336 Membership No. 31055
Place: Mumbai
Date : 14th May, 20

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