To The Members of
NET 4 INDIA LIMITED
We are pleased to present the 30th Annual Report together with the audited
financial statements of the company for the financial year ended March 31, 2016.
Consolidated performance of the Company and its subsidiaries has been referred to wherever
required.
1. OPERATIONAL RESULTS
The summary of the financial performance of the Company for the financial year ended
March 31, 2016 compared to the previous year ended March 31, 2015 is given below:
|
|
(Rs. In lakhs) |
|
Standalone |
Consolidated |
PARTICULARS |
2015-16 |
2014-2015 |
2015-16 |
2014-2015 |
Net Sales/Income |
3218.91 |
3357.48 |
4935.94 |
5197.18 |
Other Income |
884.87 |
881.26 |
1232.07 |
230.64 |
Gross Loss before interest and depreciation |
(1310.77) |
(3870.16) |
(5694.18) |
(4951.9) |
Finance cost |
24.03 |
422.84 |
82.04 |
560.46 |
Loss before depreciation and amortization - (Cash Loss) |
(1334.8) |
(4293) |
(5776.22) |
(5512.36) |
Depreciation and Amortization |
374.29 |
1767.82 |
899.17 |
2724.53 |
Loss before Tax and before exceptional items |
(1709.08) |
(6060.82) |
(6675.39) |
(8236.89) |
Exceptional items |
|
|
|
|
Loss before Tax (PBT) |
(1709.08) |
(6060.82) |
(6675.39) |
(8236.89) |
Provision for Tax Current |
|
|
|
|
Provision for Tax Deferred |
(149.90) |
(727.50) |
(273.07) |
(917.13) |
Loss after Tax |
(1559.18) |
(5333.32) |
(6402.32) |
(7319.76) |
Earning per share |
(7.77) |
(26.59) |
(31.92) |
(26.59) |
2. PERFORMANCE HIGHLIGHTS & STATE OF COMPANY S AFFAIRS
Your Company focuses on providing services to businesses (small, medium and large) and
its offerings include Data Centre & Cloud Hosting Solutions, Enterprise Internet
Services, Enterprise Messaging &Hosting Solutions and Domain name registration. Since
inception, within a short span of time, your Company has grown multi-folds and became one
of the largest provider of web hosting services and domain name registration in India.
Powered by a pool of talented professionals and equipped with latest Technologies, the
Company caters to the Web and Application services, Data Centre and Cloud Computing
services to its clients. However, the slow down of the world economy has considerably
tapered off the growth momentum in almost all the sectors, including but limited to IT
Sector, on account of rising inflation, depreciating rupee and higher interest costs.
General stress in the Indian economy and an extremely tight liquidity environment since
2012-2013 had also made it difficult for IT Companies like us to sustain and achieve the
desired targets.
Net4 has the distinction of being the first Internet services company in the World to
have achieved the IS0 27001 certified, for Information Security standards adopted at its
Data Centers. It is also a Microsoft Gold Partner and an ICANN & .IN accredited Domain
Name Registrar.
Your Company, following all the necessary applicable ethical considerations and best
sustainability business model under the current legal framework of the country, is well on
its way to revival to past glories. Having had an extremely challenging 3 years, with
reorganising, its business, business lines and worked tirelessly to bring in strategic and
operational efficiencies, your company is beginning to see the fruit of this hard labour.
All its functions are holistically benefitting all the involved stakeholders without
jeopardizing the interests of one at the cost of other. The company s operations are
running to achieve the desirable economic ends with all the socially acceptable means.
This is very much in consonance with the current business needs of the company and
operational efficiency along with future growth.
3. TRANSFER TO RESERVES
The Company has not transferred any amount to the General Reserves as the company has
sustained losses. Therefore the loss of Rs. (1559.18) Lacs has been transferred to Surplus
under the head Reserves & Surplus.
4. DIVIDEND
As the Company has suffered loss in the said reporting period, the Board of Directors
taking this view have decided not to distributed any dividend out of the reserve of the
Company and therefore the Board of Directors of the company has not recommended any
dividend to the shareholders.
5. SHARE CAPITAL
The paid up Equity Share Capital of the Company as on March 31, 2016 was
Rs.200,582,500/-comprising of 20,058,250 equity shares of Rs.10/- each. During the year
under review, the Company has neither issued any kind of shares nor granted any stock
options. Details of Director s shareholding have been stated in the annexure.
6. FINANCE
During the year 2015-16, your company has successfully raised resources in the form of
Long Term and Short term to part finance of the company besides meeting overall working
capital requirements of the company. The details are as follows:
S.NO |
NATURE OF BORROWING |
AMOUNT (IN LAKHS) |
1. |
Long Term Borrowings from Bank (Secured) |
2334.16 |
2. |
From Others & Fixed Deposits (unsecured) |
1271.59 |
DEPOSITS
Due to certain unforeseen circumstances beyond the control of the management, the
Company had suffered massive losses over the last 3 years and has been suffering a severe
financial crunch, for some time. Whilst on its way to revival, the company continues to
face a an extremely tough liquidity position at the moment as well. This all had led the
Company to defaults in the repayment of deposits since August 2013, and the Company had
stopped accepting deposits thereafter.
The company had filed a scheme for repayment of fixed deposits to Company law board on
dd/mm/yy and then continued to follow the direction of the honorable CLB till 31/3/2016.
7. SUBSIDIARIES
The Company has three subsidiaries as on 31st March, 2016. There are no
Associate Company or joint venture Companies within the meaning of section 2(6) of the
Companies Act, 2016.There has been no material change in the nature of the business of the
subsidiaries.
S.NO |
NAME |
DETAIL |
1. |
Net4 Network Services Limited |
CIN: U72200DL2011PLC219357 |
|
|
Date of Incorporation:18/05/2011 |
|
|
Registered office:303A Third Floor, |
|
|
Plot No.-3 Pocket H Market |
|
|
Sarita Vihar, Delhi-110076 |
2. |
Pipetel Communications Private Limited |
CIN: U64200DL2009PTC193950 |
|
|
Date of Incorporation:04/09/2009 |
|
|
Registered office:AB-11, |
|
|
Community Centre, |
|
|
Safdarjung Enclave, New Delhi-110029 |
3. |
Net4 HK Limited |
Certificate of Incorporation:1598959 |
|
|
Date of Incorporation: 11/05/2011 |
|
|
Registered office: Honkong |
Pursuant to the circular dated February 8, 2011 issued by Ministry of Corporate
Affairs, Government of India and Section 136 of the Companies Act, 2013, which has
exempted companies from attaching the financial statements of the subsidiary companies
along with the Annual Report of the Company. The Company will make available the annual
financial statements of the subsidiary company and the related detailed information to any
members of the company on receipt of a written request from them at the Registered Office
of the Company. The annual financial statements of the subsidiary company will also be
kept open for inspection at the Registered Office of the Company on any working day during
business hours. The Consolidated Financial Statements presented by the Company include
financial results of its subsidiary companies, associates etc.Pursuant to provisions of
section 129(3) of the Act, a statement containing salient features of the financial
statements of the Company s subsidiaries in Form AOC-1 is attached to the financial
statements of the Company.The statements are also available on the website of the Company
www.net4.in.
Further, pursuant to the provisions of section 136 of the Act, the financial statements
of the Company, consolidated financial statements along with relevant documents and
separate audited accounts in respect of subsidiaries, are available on the website of the
Company.
8. CONSOLIDATED FINANCIAL STATEMENTS
Your Directors have pleasure in attaching the Consolidated Financial Statements as per
the LODR, 2015 and prepared in accordance with Accounting Standard on Consolidated
Financial Statements issued by the Institute of Chartered Accountants of India, for
financial year ended March 31, 2016.
9. MANAGEMENT DISCUSSION AND ANALYSIS
The detailed review of the operations, performance and future outlook of the Company
and its business is given in the Management s Discussion and Analysis Report which forms
part of this Annual Report. The report on Management s Discussion and Analysis is annexed
with the Report.
10. CORPORATE GOVERNANCE
Pursuant to corporate governance requirements as prescribed by Securities and Exchange
Board of India (Listing Obligations and Disclosure Requirements), Regulations 2015 with
the Stock Exchanges, a compliance report on Corporate Governance has been annexed as part
of the Annual Report along with Auditor s certificate for the compliance.
11. SECRETARIAL AUDIT REPORT
In line with the requirement of Section 204 of the Companies Act, 2013 and the
Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 read with
other applicable provisions, if any; the Board of Directors of the Company had appointed
M/s Abnish Kumar & Associates, Practicing Company Secretary to conduct Secretarial
Audit of the Company for the financial year 2015-16. The Secretarial Audit Report for the
financial year ended March 31, 2016 is annexed with the Board s report and formed as part
of the Annual Report.
The Secretarial Auditors remarks along with the Directors Comment s are as follows:-
S.NO |
REMARKS |
DIRECTORS COMMENT S |
1. |
The Composition of Board is not as per the Act and SEBI(LODR) Regulations, 2015 |
All independent directors had resigned from Net4india Ltd (due to the financial
problems and ensuing legal issues faced by the company) in and since 2013. In spite of the
companys best efforts (including advertising the position multiple times in leading
newspapers), new independent directors were not forthcoming Therefore it was not possible
to appoint the independent director/s on the Board. |
2. |
There is no Independent Director on the Board of Company. |
The company has been trying to find independent directors and has advertised
position multiple times. However, nobody forthcoming due to the problems being faced by
company. |
3. |
The Company has not constituted the Audit Committee, Nomination and Remuneration
Committee, Risk Management Committee, Corporate Social Responsibility Committee. |
Since this committee compulsorily requires having independent Director, it could
not be formed. The company has been trying to independent directors and has advertised
position multiple times. However, nobody forthcoming due to the problems being faced by
the company. |
4. |
The separate meeting of the Independent Directors of the Company was not held during
year |
Please refer Point 2 above |
5. |
There is no woman director on the Board. |
The company has been trying to find Woman director but, nobody is forthcoming due
to problems being faced by the company. |
6. |
The Company has not appointed Compliance officer as per SEBI(LODR) Regulation, 2015 |
Due to the financial crunch and other legal issues in the company, company could
not find any suitable candidature for being appointed on the same position however the
company is making all its efforts to appoint same. |
7. |
There is non-compliance of Regulation 24 of SEBI (LODR) Regulation, 2015 |
All independent directors had resigned from Net4india Ltd (due to the
financial problems faced by the company) in 2013. In spite of best efforts, new
independent directors were not forthcoming. Therefore it was not possible to
appoint the independent director of Net4 India on subsidiaries. |
8. |
The appointment of Internal Auditor is not made by the Company during the FY 2015 16.
Therefore the Internal Audit was not conducted for the year. |
The company had previously (for more than 10 years)consistently had an internal
auditor and received the relevant reports. However, with the escalation of the financial
problems being faced by the company they had resigned and the company was not able to appoint
somebody to replace them in time, in spite of best efforts. The company endeavours
to have the same in place on high priority |
9. |
Non-Compliance of provisions relating to deposit as per the Act and the Companies Act,
1956 and the Rules made thereunder. |
The company has been facing a challenging tough financial position since 2013, as a
result of acute liquidity environment recessionary conditions, prevailing for some time
before and during that period. The Company has filed a Fixed Deposit Repayment
Scheme with the Hon'ble Company Board in December 2014 and was following the
directions of the honourable CLB from time to time. However, subsequent to the order of
Honble Company Law Board, wherein further time to deposit the balance amount could
not be granted. company is all prepared to file an appeal in respect of the said order. |
10. |
The Company has litigations filed against it under various counts like under section
138 of Negotiable Instrument Act, Arbitration, Petition filed by Ex-Employee for recovery
of dues, winding up petition etc. |
The Company is making all its efforts to make Settlement with the genuine Debt
holders and ensuring it is fighting all unjustified and fraudulent claims. |
11. |
The Companies had received winding up orderfrom the Court on the basis of a petition
filed by 2 Companies due to non-repayment of loans. However, the Company has obtained stay
order from the Court on the basis of repayment schedule submitted before the Court. |
The matter is pending Before the High Court and the company has already repaid the
amount as directed by the court. In fact subsequent reconciliations show that the company
has over paid approx.Rs. 9lakhs |
The Company has taken note of and the Company were trying to come out of this hardships
and will try to adopt reasonable steps for proper compliance of all the laws, committees
applicable on our Company.
Further the remarks given by the Secretarial Auditor which is based on the Statutory
Auditors report were appropriately answered by Directors in point 28 below
12. LISTING / DELISTING OF THE EQUITY SHARES
The equity shares of your Company are listed at the National Stock Exchange (NET4) the
Bombay Stock Exchange (Scrip Code: 532912) and Delhi Stock Exchange (Scrip Code:
113089).The annual listing fees for the year 2015-16 have not yet been paid to all these
Stock Exchanges due to the financial crunches however the company is in the process of
making the payment of the same.
13. DIRECTORS
Mr. Jasjit Singh Sawhney, Mr. Amarjit Singh Sawhney and Mr. Surya S. Chadha continue to
act as the directors of the Company.
Resignation of Company Secretary:-
Ms. Nidhi, Company Secretary and the Compliance Officer of the company appointed with
effect from December 17, 2014 had resigned from the position as such with effect from 5th
June, 2015.
14. MEETING OF THE BOARD
During the financial year 2015-16, 04 (Four) meetings i.e. 02.06.2015; 31.08.2015;
18.11.2015; and 29.02.2016 of Board of Directors of the Company were held andthe
intervening gap between the Meetings was within the period prescribed under the Companies
Act, 2013 (i.e., the maximum interval between any two board meeting did not exceed 120
Days). Details of the Meetings (Number of the Director present etc) is mention in
Corporate Governance Report a part of Annual Report.
15. BOARD EVALUATION
As per the provisions of Section 149 read with Schedule IV of the Companies Act, 2013
read with Securities and Exchange Board of India (Listing Obligations and Disclosure
Requirements), Regulations 2015 ("SEBI Listing Regulations"),the Independent
Directors shall conduct a separate meeting to review the performance of Non-Independent
Directors. But the Company has not complied with the above said provisions as the Company
does not have independent Directors at their Board due to the immediate and consecutive
resignation of all the independent directors, the Composition of Board has been
traumatized. However, the management is concerning the issue and is taking appropriate
steps to revive the Board s Composition.
16. NOMINATION AND REMUNERATION COMMITTEE AND REMUNERATION POLICY
The Board does not have a Nomination & Remuneration Committee for selection and
appointment of Directors, Senior Management and their remuneration as per Section 178 of
the Companies Act, 2013 and rule 6 of the Companies (Meetings of Board and its Powers)
Rules, 2014 due to non availability of independent directors.
17. EXTRACTS OF ANNUAL RETURN
The Extract of Annual Return in Form MGT-9 pursuant to Section 92(3) of the
Companies Act, 2013 and Rule 12 of the Companies (Management and Administration) Rules,
2014 for the financial year 2015-16 has been enclosed with this report in ANNEXURE- 1
18. CORPORATE SOCIAL RESPONSIBILITY (CSR)
Section 135 of the Companies Act, 2013 is not applicable on your Company as the company
has suffered Losses
19. BUSINESS RESPONSIBILITY REPORTING
As per Regulation 34 of the SEBI Listing Regulations, a business responsibility report
is not applicable to your company.
20. AUDIT COMMITTEE
Audit Committee of the Board has not been constituted as per Section 177 of the
Companies Act, 2013 and rule 6 of the Companies (Meetings of Board and its Powers) Rules,
2014 and read with SEBI, LODR, 2015 due to the immediate and consecutive resignation of
all the independent directors, the Composition of Committee cannot be made However, the
management is concerning the issue and is taking appropriate steps to revive the Board s
Composition so that the Company can make the appropriate Committees as per the provisions
of the Companies Act 2013.
21. STAKEHOLDERS RELATIONSHIPCOMMITTEE AND VIGIL MECHANISM / WHISTLE BLOWER POLICY
The Stakeholders Relationship Committee has not been constituted as per section 178 (5)
of the Companies Act, 2013. The reasons for non-composition of stakeholders relationship
committee as same as mentioned under the above head of Audit Committee. Further the Vigil
Mechanism / Whistle Blower Policy was also not formulated by the Company but the Company
will soon appoint the Independent director and Constitute committees.
22. RELATED PARTY TRANSACTIONS
During the year, the Company has entered into transactions with related parties as
defined under Section 2(76) of the Companies Act, 2013 which were in the ordinary course
of business and on arm s length basis and in accordance with the provisions of the
Companies Act, 2013, Rules issued thereunder and SEBI, LODR, 2015. During the year, there
were no transactions with related parties which qualify as material transactions under the
Listing Agreement.
The details of the related party transactions as required under Accounting Standard -18
are set out in Notes to the financial statements forming part of this Annual Report.
The Disclosure required in Form AOC-2 pursuant to Section 134 (3)(h) read with Rule
8(2) of the Companies (Accounts) Rules, 2014 is NIL.
23. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
Details of Loans, Guarantees and Investments covered under the provisions of Section
186 of the Companies Act, 2013 are given in the notes to the Financial Statements.
24. RISK MANAGEMENT
The board of directors of the Company has formed a risk management committee to frame,
implement and monitor the risk management plan for the Company. The committee is
responsible for reviewing the risk management plan and ensuring its effectiveness. The
development and implementation of risk management policy has been covered in the
management discussion and analysis, which forms part of this report. However the committee
is not as per the provisions of the Companies Act, 2013 and rules made there under due to
the unavailability of Independent directors.
25. ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS &
OUTGO The information on conservation of energy, technology absorption and foreign
exchange earnings and outgo stipulated under Section 134 (3)(m) of the Companies Act, 2013
read with Rule 8 of the Companies (Accounts) Rules, 2014 are given in Annexure forming
part of this Report.
26. MANAGERIAL REMUNERATION & PARTICULARS OF EMPLOYEES
The information required pursuant to Section 197 read with Rule 5 of The Companies
(Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees
of the Company, will be provided upon request. In terms of Section 136 of the Act, the
Report and financial statements are being sent to the members and others entitled thereto,
excluding the information on employees particulars which is available for inspection by
the members at the Registered Office of the Company during business hours on working days
of the Company up to the date of the ensuing Annual General Meeting. If any Member is
interested in obtaining a copy thereof, such Member may write to the Company in this
regard.The information required under section 197 of the Act read with rule 5(1) of the
Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are given
below:
a. The ratio of the remuneration of each director to the median remuneration of the
employees of the Company for the financial year:
Name of the Directors |
Ratio to Median Remuneration |
Directors |
|
Amarjit Singh Sawhney |
NA |
Jasjit Singh Sawhney |
NA |
Surya Chadha |
NA |
b. The percentage increase in remuneration of each director, chief executive officer,
chief financial officer, company secretary in the financial year:
Directors, Chief Executive Officer, Chief Financial Officer and Company Secretary |
% increase in remuneration in the financial Year |
Nidhi singh |
NA |
c. The percentage increase in the median remuneration of employees in the financial
year: 12 percent
d. The number of permanent employees on the rolls of Company: 152
e. The explanation on the relationship between average increase in remuneration and
Company performance: On an average, employees received an increment of 12%. In the
past few years, due to the financial instability, the company had seen huge chrn/exits
from employees. Hence to keep salaries even somewhat in line with market trends, these
increments were essential.
f. Comparison of the remuneration of the key managerial personnel against the
performance of the Company:
Aggregate remuneration of key managerial personnel (KMP) in FY 16 |
75375 |
Revenue (Rs. Lakhs) |
41,03,78,000 |
Remuneration of KMPs (as a % of revenue) |
0.018% |
Profit before Tax (PBT) (Rs. Lakhs) |
(17,09,08,000) |
Remuneration of KMP (as a % of PBT) |
(0.044)% |
g. Variations in the market capitalization of the Company, price earnings ratio as at
the closing date of the current financial year and previous financial year:
Particulars |
March 31,2016 |
March 31,2015 |
Change % |
Market Capitalisation(Rs.Lakhs) |
4693.64 |
7822.73 |
40 |
Price Earnings Ratio (standalone) |
.30 |
.146 |
105.48 |
Price Earnings Ratio (consolidated) |
.073 |
-.107 |
31.77 |
h. Percentage increase over decrease in the market quotations of the shares of the
Company in comparison to the rate at which the Company came out with the last public
offer:
Particulars |
March 31,2016 (Rs) |
(Date of Listing) |
%Change |
|
|
BSE - 02.11.2007 |
|
|
|
NSE - 10.12.2010 |
|
Market price (NSE) |
1.95 |
100 |
98.05 % |
Market Price (BSE) |
2.34 |
77.25 |
96.97 % |
i. Average percentile increase already made in the salaries of employees other than the
managerial personnel in the last financial year and its comparison with the percentile
increase in the managerial remuneration and justification thereof and point out if there
are any exceptional circumstances for increase in the managerial remuneration: There
was no increase in the managerial Remuneration
j. Comparison of each remuneration of the key managerial personnel against the
performance of the Company:
|
Mr. Amarjit Singh Sawhney |
Mr. Jasjit Singh Sawhney |
Mr. Surya Chadha |
Ms. Nidhi singh |
Remuneration in FY16 |
Nil |
Nil |
Nil |
75375 |
Revenue |
41,03,78,000 |
41,03,78,000 |
41,03,78,000 |
41,03,78,000 |
Remuneration as % of revenue |
- |
- |
- |
0.018% |
Profit before Tax (PBT) |
(17,09,08,000) |
(17,09,08,000) |
(17,09,08,000) |
(17,09,08,000) |
Remuneration (as % of PBT) |
- |
- |
- |
(0.044)% |
k. The key parameters for any variable component of remuneration availed by the
directors: NA
l. The ratio of the remuneration of the highest paid director to that of the employees
who are not directors but receive remuneration in excess of the highest paid director
during the year: NA
m. Affirmation that the remuneration is as per the remuneration policy of the Company:
The Company affirms remuneration is as per the remuneration policy of the Company.
27. DISCLOSURES UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION
& REDRESSAL) ACT 2013
Your Company is committed to creating and maintaining a secure work environment where
its employees, agents, vendors and partners can work and pursue business together in an
atmosphere free of harassment, exploitation and intimidation. To empower women and protect
women against sexual harassment, a policy for prevention of sexual harassment has been
rolled out and Internal Complaints Committee as per legal guidelines has been set up. This
policy allows employees to report sexual harassment at the workplace. The Internal
Committee is empowered to look into all complaints of sexual harassment and facilitate
free and fair enquiry process with clear timelines.
28. AUDITORS AND AUDITORS REPORT
Your Company s auditors, M/s Laxmi Tripti & Associates, Statutory Auditors of the
Company was appointed for the period of one year in the Extra ordinary general Meeting of
the Company due to casual vacancy. The Board of Directors has approached M/s Laxmi Tripti
& Associates, chartered Accountants, New Delhi to appoint them as statutory auditor of
the Company for the period of 4 years subject to the annual ratification by the
shareholders in the Annual General Meeting. They have confirmed their eligibility under
Section 141 of the Companies Act, 2013 and the Rules framed thereunder for their
appointment as Auditors of the Company. As required under SEBI, LODR, 2015, the auditors
have also confirmed that they hold a valid certificate issued by the Peer Review Board of
the Institute of Chartered Accountants of India. The Board recommends their Appointment.
DIRECTORS REPLY ON AUDITORS REMARKS (STANDALONE)
S.No |
Remarks |
Directors Comment s |
1. |
During the financial year 2013-14, the Company had defaulted in repayment of principle
and interest thereon of Term Loan taken from State Bank of India (SBI). The amount
outstanding as on 31st Mar, 2016 is Rs. 2,334.16 Lacs. This loan had been
classified as Non performing Assets (NPA) by the Bank. There is no provision made during
the current year for interest against such loans. The status of this loan has remained the
same during the current financial year. State Bank of India (SBI) has also filed legal
case before the P.O. (Presiding Officer) and Registrar against the Company. The above
figure has been taken on the basis of audited financial statements for the year ended on
31st March, 2015. There is no communication received from bank in this regard. |
There are various disputes involved with relation to the claim of the bank,
including but not limited to: incorrect date of NPA, mishandling of the account and non
adherence to disbursal of sanctioned amounts, etc. |
2. |
During the financial year 2013-14, the Company had defaulted in repayment of principle
and interest thereon of Working Capital Loan taken from State Bank of India (SBI) and
State Bank Travancore (SBT). The amount outstanding as on 31st Mar, 2016 is Rs.
11,378.73 Lacs. There is no provision made during the current year for interest against
such loans. This loan had been classified as Non performing Assets (NPA) by the Bank. The
status of this Credit facility has remained the same during the current financial year.
State Bank Travancore (SBT) has also filed legal case before the P.O. (Presiding Officer)
against the Company. The above figure has been taken on the basis of audited financial
statements for the year ended on 31st March, 2015. There is no communication
received from bank in this regard. |
There are various disputes involved with relation to the claim of the bank, include
but not limited to: incorrect date of NPA, mishandling of the account and non adherence to
disbursal sanctioned amounts, etc |
3. |
Unsecured loan has been taken from one of the Shareholders i.e. Ms. Suzanne Surendra
Pal of Rs. 205 Lacs from Sep, 2013 by the Company. But the same has not been repaid during
the current financial year. There is no provision made during the current year for
interest against such loans. Further, it is a contravention of Section 74 of the Companies
Act, 2013. |
|
4. |
Unsecured Loan taken from IBM India Pvt. Ltd. is Rs. 39.23 Lacs as per the books of
accounts as on 31st March, 2016. There is no repayment of the same during the
current financial year. There is no provision made during the current year for interest
against such loans. The above figure has been taken on the basis of audited financial
statements for the year ended on 31st March, 2015. There is no communication
received from IBM India Pvt. Ltd. in this regard. |
There are various disputes involved, including but not limited to the amounts due,
the usability and inadequacy of the equipment provided, etc. |
5. |
Fixed Deposit amounting to Rs. 1,066.59 Lacs were due for repayment as on 31st
March, 2016. There is no provision in the books during the year for penalty and damages
for contravention of provision of fixed deposits as laid down in Companies Act, 2013. The
company had applied for a scheme of reschedulement to the H ble company laws board in Dec
2014 and has been following instructions for repayment of the company law board from time
to time. Further, the management has indicated further substantial payment has been made
subsequent to 31st Mar, 2016 till date of this report |
As per the scheme filed with the Company Law Board, the company had to repay all
FDs over a five year period. However, the company has managed to clear FD payments
amounting to over 30% of the total dues within less than a year of CLBs directions
to start paying and depositing the monies. |
6. |
In respect of various loans as stated above, there is interest payable of Rs. 1,251.71
Lacs for the previous years outstanding in the books as on 31.03.2016 |
As you are aware, the company has been suffering various problems since the past 2
and half years. The problems for the Company started in 2013 and the Company has suffered
severe losses over the last 2-3 financial years on account of the prior downturn in the
economy and the tight liquidity environment and highly geared debt position. The company
was no able to service its debt interest liabilities on time. The delayed receipt of
payments from the customers caused severe liquidity crunch and shortage of working
capital. In spite of providing the best in class service in the industry it became
difficult for the company to maintain the financial discipline which resulted in
irregularities in our accounts with banks and delayed payments of statutory liabilities. |
|
|
The company declared a loss of Rs. 199.98 Cr in 2013-14 and further in the 9 months
ended 31-12-15, the company has further suffered a loss of Rs. 30.77 Cr. The company has,
however, put in plan a well worked out revival plan that envisages clearing/settling all
liabilities, which include statutory liabilities, over the next few years. The fact that
the company is moving towards revival is clearly evidenced from the figure of loss which
is brought to approx 54 Cr on March 31st, 2015.Further this loss is almost
entirely attributable to previous write offs and not indicative of the benefits of the
various structural and operational changes that have been and are being put into place.
The company is in negotiations with all lenders to arrive at an amicable settlement and is
also in advanced stages to raise capital, as per its revival plan, to settle these debts. |
|
|
There are certain demands from the income tax department, pertaining to different
financial years, that the company and its tax consultants feel are unjustified and bad in
law. The company has filed the appropriate appeals and intends to fight the same to a
positive conclusion. However, in the interim these unjustified demands have further
stressed the cash position of the company. |
|
|
The company defaulted in payment of service tax also and Notices have been received
from the Service Tax Department in this regard and the company has started depositing
amounts every month as per the directions. The company has deposited service tax to the
tune of about Rs 9, 79, 83,558/- since September 2013 to July 31st 2015 itself. |
|
|
In respect of the TDS amount The company has deposited the complete TDS for the
financial year 2013-2014 and has also deposited TDS for financial year 2014-15 and 2015-
16 as well. |
|
|
The deposit of taxes and the part payment of fixed deposits and interest on fixed
deposits has been possible due to the cost savings and efficiencies that have been
generated out of the implementation of the companys revival plan. |
|
|
However, as already explained, the company remains severely short staffed and to
that extent handicapped to be able to deal with other issues in a timely manner |
|
|
As enumerated above, the losses the company suffered were mainly caused due to
acute recession/down turn in the market and liquidity environment starting 2012-2013. The
difficulties were further complicated by slow/non recovery of the dues from the customers.
A large number of customers also refused to pay on account of some or the other product
and service deficiency or non conformity with the order. Some of these were due to the
service and implementation deficiencies caused by the acute shortage of manpower and the
company has had to consequently book these and other non recoverable amounts as bad debts. |
|
|
In the surroundings of the above issues in spite of having intentions to repay the
Company was also unable to make repayment of fixed Deposits, in a timely manner. |
7. |
Income Tax demand of Rs. 1,286.98 Lacs from A.Y. 2004-05 to A.Y. 2011-12 not deposited
and appeals has been filed against this demand or in the process of filing. Income Tax
Return from A.Y. 2012-13 to A.Y. 2014-15 has also not been filed by the Company. |
We have already filed the appeal and produced all the evidences and waiting for the
final argument in which we are confident of winning the appeal. |
8. |
Service Tax amounting to Rs.1,170 Lacs (approx) up to 31st March, 2016 not
deposited by the Company but further reconciliation is required on account of cenvat
credit, sales return etc to arrive at the correct amounts and Service Tax Return has also
not been filed by the Company during the year. |
Please refer to detailed reply of point No. 6 |
9. |
As per Books of accounts, Tax deduction at source (TDS) amounting to Rs. 109.60 Lacs
as on 31st March, 2016 not deposited by the Company. TDS Return has also not
been filed by the Company during the year except the first quarter in respect of Section
194I of the Income Tax Act, 1961. In some cases TDS has also not been deducted. |
Please refer to detailed reply of point No. 6 |
10. |
As per books of accounts, Provident Fund amounting to Rs. 6.75 lacs as on 31st
March, 2016 not deposited by the Company. PF Challan till Oct, 2015 has been filed by the
Company |
Please refer to detailed reply of point No. 6 |
11. |
Employees State Insurance (ESI) amounting to Rs. 3.16 Lacs as per Books as on 31st
March, 2016 not deposited by the Company. Consequently challan and return in respect of
this has also not been filed by the Company during the year |
Please refer to detailed reply of point No. 6 |
12. |
As per the information and explanation received from the Management, the Company is
registered under the Delhi VAT, UP VAT, Maharastra VAT, Karnatka VAT, Tamil Nadu VAT and
Andhra Pradesh VAT but during the year, no transactions were made by the company and
accordingly no VAT Liability has been arised during the year. However, the company has not
filed VAT Return in any of the above VAT authorities during the year |
Please refer to detailed reply of point No. 6 |
13. |
Professional Tax amounting to Rs. 0.72 Lacs as per Books as on 31st March,
2016 not deposited by the Company. Consequently challan and return in respect of this has
also not been filed by the Company during the year. |
Please refer to detailed reply of point No. 6 |
14. |
Company has not made any provisions for the employee s benefits i.e. for Gratuity or
Leave Encasement etc. during the year of audit. |
Please refer to detailed reply of point No. 6 |
15. |
The Company has not provided bank accounts balance confirmation as on 31st
March, 2016, in respect of some bank accounts. |
Some banks Accounts have become dormant; hence no communication could be made from
them |
16. |
The Company has written off bad debts amounting to Rs. 708.24 Lacs during the year and
makes provision for bad and doubt full debts amounting to Rs. 146.32 Lacs during the year.
Due to the written off bad debts or provision of bad debts, the profit for the year at 31st
March, 2016 has been reduced by that amounts. Accordingly the net assets at 31st
March, 2016 have also been reduced by the bad debts amounts. |
There are numerous reasons for the provisions and write offs, however the main
reason has been inadequacy of service provided(due to the financial crunch being faced by
the company) and inability to complete the whole order due to non availability of adequate
working capital |
17. |
The Company has booked Loss on Redundant Assets of Rs. 968.40 Lacs during the year |
This happens due to massive flood & natural calamity that happened in Chennai
when one of our shed/store at Chennai address collapsed and was washed away. This
shed/store was containing various new and used computer and network equipment along with
certain materials for the completion of the building. Whilst some equipment was also
washed away from the shed, almost all the equipment and materials were either completely
destroyed or washed away due to the flood. |
18. |
As per AS-29 "Provisions, Contingent Liabilities and Contingent Assets" the
Company is mandatorily required to make provisions for Audit Fee but the same has not
provided in the books of accounts for the year ended 31st March, 2016 |
The Company has taken the note of the Company |
19. |
The Composition of Board of Directors is not in terms of SEBI (Listing Obligations and
Listing Requirements) Regulations, 2015 |
All independent directors had resigned from Net4india Ltd (due to the financial
problems and ensuing legal issues faced by the company) in and since 2013. In spite of the
companys best efforts (including advertising the position multiple times in leading
newspapers), new independent directors were not forthcoming. Therefore it was not possible
to appoint the independent director/s on the Board. |
20. |
There was no Independent Directors in the company leading to non-compliance of the
provisions of the SEBI (Listing Obligations and Listing Requirements) Regulations, 2015 as
well as section 149 of the Companies Act, 2013 |
The company has been trying to find independent directors and has advertised the
position multiple times. However, nobody is forthcoming due to the problems being faced by
the company. |
21. |
There was no Internal Auditor s as required under section 138 of the Companies Act,
2013 |
The company had previously (for more than 10 years)consistently had an internal
auditor and received the relevant reports. However, with the escalation of the financial
problems being faced by the company they had resigned and the company was not able to
appoint somebody to replace them in time, in spite of best efforts. The company endeavours
to have the same in place on high priority. |
22. |
There was no Women director in the Board of the Company, leading to non-compliance of
the applicable provisions. However, the Company has women director from 02nd
Nov, 2014 to 05th Dec, 2015 |
The company earlier had a woman director, however, since her resignation,the
company has been trying to find Woman director but, nobody is forthcoming due to the
problems being faced by the company |
23. |
There was no Audit Committee as required under section 177 of the Companies Act, 2013
and in terms of SEBI (Listing Obligations and Listing Requirements) Regulations, 2015 |
Since this committee compulsorily requires having independent Director, it could
not be formed. The company has been trying to find independent directors and has
advertised the position multiple times. However, nobody is forthcoming due to the problems
being faced by the company |
24. |
There was no Nomination and Remuneration Committee as required under section 178 of
the Companies Act, 2013 and in terms of SEBI (Listing Obligations and Listing
Requirements) Regulations, 2015 |
Since this committee compulsorily requires having independent Director, it could
not be formed. The company has been trying to find independent directors and has
advertised the position multiple times. However, nobody is forthcoming due to the problems
being faced by the company |
25. |
There was no Shareholder s and Investor Grievance Committee for the year in the
Company |
Since this committee compulsorily requires having independent Director, it could
not be formed. The company has been trying to find independent directors and has
advertised the position multiple times. However, nobody is forthcoming due to the problems
being faced by the company |
26. |
There was no compliance as required by the Regulation 24 of the SEBI (Listing
Obligations and Listing Requirements) Regulations, 2015 i.e. corporate governance
requirements with respect to subsidiaries companies |
All independent directors had resigned from Net4india Ltd (due to the financial
problems faced by the company) in 2013. In spite of best efforts, new independent
directors were not forthcoming. Therefore it was not possible to appoint the independent
director of Net4 India on the subsidiaries. |
27. |
Non Compliance of provisions relating to public deposit i.e. repayment of deposits
accepted before commencement of this act i.e. 01.04.2014 as per section 74 of the
Companies Act, 2013. Since the company has accepted public deposit before 01.04.2014,
which were due for repayment as on 31st Mar, 2016. However the company has
filed scheme of reschedulement of fixed deposits in Dec 2014 and has been repaying fixed
deposit to the holders as per the directions of the Company Law board from time to time |
The company has been facing a challenging and tough financial position since 2013,
as a result of acute liquidity environment and recessionary conditions, prevailing for
some time before and during that period. The Company has filed a Fixed Deposit Repayment
Scheme with the Hon'ble Company law Board in December 2014 and has been following the
directions of the honourable CLB from time to time. |
28. |
The company has litigations filed against it under various courts or authorities like
Delhi High Court, Arbitration, and Registrar for various matters like recovery of debts,
winding up petition, etc. As per available information & explanation provided by the
management, the exact quantum of amount on these cases cannot be ascertained. However,
almost all the cases involve disputed amounts and have been adequately challenged |
The Company is making all its efforts to make the Settlement with the genuine Debt
holders and is ensuring it is fighting all unjustified and fraudulent claims. |
29. |
Sundry Debtors and Sundry Creditors are subject to balance confirmation |
Since we are short staffed, therefore it cannot be done on the regular basis but it
is done where significant amount is involved |
30. |
As per Para 17 of the AS-22, "Accounting for Taxes on Income", where as
enterprises has carry forward of losses under tax laws, deferred tax assets should be
recognized only to the extent that there is a reasonable certainty that sufficient future
taxable income will be available against which such deferred tax assets can be realized.
The company has amounting to Rs. 1,287.20 Lacs deferred tax assets as per books, but we
are unable to find the convincing evidence that in future sufficient future taxable income
will be available |
It has been calculated as per methods specified in AS 22. |
31. |
A per our observation during audit, Directors residing out of India have been
incurring expenses through Credit Card for which part payment is being made by the
Company. As per board resolution dated 23rd Aug, 2013, the Company is
maintaining the office at London, United Kingdom. For the part payment made by the
company, these expenses have been further booked in the Company s books of accounts but we
have not received all the supporting documents for the same |
The Company has taken the note of the same |
32. |
We are unable to find the status of the Micro and Small Enterprises, to whom the
company owes, which are outstanding more than 45 days at 31st March, 2016. This
information as required to be disclosed under the Micro, small and Medium Enterprises
Development Act, 2006. |
The Company has taken the note of the same |
DIRECTORS REPLY ON AUDITORS REMARKS (CONSOLIDATED)
S.No |
Remarks |
Directors Comment s |
1. |
During the financial year 2013-14, the Company had defaulted in repayment of principle
and interest thereon of Term Loan taken from State Bank of India (SBI). The amount
outstanding as on 31st Mar, 2016 is Rs. 2,334.16 Lacs. This loan had been
classified as Non performing Assets (NPA) by the Bank. There is no provision made during
the current year for interest against such loans. The status of this loan has remained the
same during the current financial year. State Bank of India (SBI) has also filed legal
case before the Debt Recovery Tribunal) and Registrar against the Company. The above
figure has been taken on the basis of audited financial statements for the year ended on
31st March, 2015. There is no communication received from bank in this regard. |
There are various disputes involved with relation to the claim of the bank,
including but not limited to: incorrect date of NPA, mishandling of the account and non
adherence to disbursal of sanctioned amounts, etc. |
2. |
During the financial year 2013-14, the Company had defaulted in repayment of principle
and interest thereon of Working Capital Loan taken from State Bank of India (SBI) and
State Bank Travancore (SBT). The amount outstanding as on 31st Mar, 2016 is Rs.
11,378.73 Lacs. There is no provision made during the current year for interest against
such loans. This loan had been classified as Non performing Assets (NPA) by the Bank. The
status of this Credit facility has remained the same during the current financial year.
State Bank Travancore (SBT) has also filed legal case before the P.O. (Presiding Officer)
against the Company. The above figure has been taken on the basis of audited financial
statements for the year ended on 31st March, 2015. There is no communication
received from bank in this regard |
There are various disputes involved with relation to the claim of the bank, include
but not limited to: incorrect date of NPA, mishandling of the account and non adherence to
disbursal of sanctioned amounts, etc |
3. |
Unsecured Loan taken from IBM India Pvt. Ltd. is Rs. 39.23 Lacs as per the books of
accounts as on 31st March, 2016. There is no repayment of the same during the
current financial year. There is no provision made during the current year for interest
against such loans. The above figure has been taken on the basis of audited financial
statements for the year ended on 31st March, 2015. There is no communication
received from IBM India Pvt. Ltd. in this regard |
There are various disputes involved, including but not limited to the amounts due,
the usability and inadequacy of the equipment provided, etc. |
4. |
Fixed Deposit amounting to Rs. 1,066.59 Lacs were due for repayment as on 31st
March, 2016. There is no provision in the books during the year for penalty and damages
for contravention of provision of fixed deposits as laid down in Companies Act, 2013. The
company had applied for a scheme of reschedulement to the H ble company laws board in Dec
2014 and has been following instructions for repayment of the company law board from time
to time. Further, the management has indicated further substantial payment has been made
subsequent to 31st Mar, 2016 till date of this report. |
As per the scheme filed with the Company Law Board, the company had to repay all
FDs over a five year period. However, the company has managed to clear FD payments
amounting to over 30% of the total dues within less than a year of CLBs directions
to start paying and depositing the monies |
5. |
In respect of various loans as stated above, there is interest payable of Rs. 1,251.71
Lacs for the previous year outstanding in the books as on 31.03.2016 |
As you are aware, the company has been suffering various problems since the past
2-3 and half years. The problems for the Company started in 2013 and the Company has
suffered severe losses over the last 2-3 financial years on account of the prior downturn
in the economy and the tight liquidity environment and highly geared debt position. The
company was no able to service its debt interest liabilities on time. The delayed receipt
of payments from the customers caused severe liquidity crunch and shortage of working
capital. In spite of providing the best in class service in the industry it became
difficult for the company to maintain the financial discipline which resulted in
irregularities in our accounts with banks and delayed payments of statutory liabilities. |
|
|
The company declared a loss of Rs. 199.98 Cr in 2013-14 and further in the 9 months
ended 31-12-15, the company has further suffered a loss of Rs. 30.77 Cr. The company has,
however, put in plan a well worked out revival plan that envisages clearing/settling all
liabilities, which include statutory liabilities, over the next few years. The fact that
the company is moving towards revival is clearly evidenced from the figure of loss which
is brought to approx 54 Cr on March 31st, 2015.Further this loss is almost
entirely attributable to previous write offs and not indicative of the benefits of the
various structural and operational changes that have been and are being put into place.
The company is in negotiations with all lenders to arrive at an amicable settlement and is
also in advanced stages to raise capital, as per its revival plan, to settle these debts. |
|
|
There are certain demands from the income tax department, pertaining to different
financial years, that the company and its tax consultants feel are unjustified and bad in
law. The company has filed the appropriate appeals and intends to fight the same to a
positive conclusion. However, in the interim these unjustified demands have further
stressed the cash position of the company. |
|
|
The company defaulted in payment of service tax also and Notices have been received
from the Service Tax Department in this regard and the company has started depositing
amounts every month as per the directions. The company has deposited service tax to the
tune of about Rs 9, 79, 83,558/- since September 2013 to July 31st 2015 itself. |
|
|
In respect of the TDS amount The company has deposited the complete TDS for the
financial year 2013-2014 and has also deposited TDS for financial year 2014-15 and 2015-
16 as well. |
|
|
The deposit of taxes and the part payment of fixed deposits and interest on fixed
deposits has been possible due to the cost savings and efficiencies that have been
generated out of the implementation of the companys revival plan. However, as
already explained, the company remains severely short staffed and to that extent
handicapped to be able to deal with other issues in a timely manner |
|
|
As enumerated above, the losses the company suffered were mainly caused due to
acute recession/down turn in the market and liquidity environment starting 2012-2013. The
difficulties were further complicated by slow/non recovery of the dues from the customers.
A large number of customers also refused to pay on account of some or the other product
and service deficiency or non conformity with the order. Some of these were due to the
service and implementation deficiencies caused by the acute shortage of manpower and the
company has had to consequently book these and other non recoverable amounts as bad debts. |
|
|
In the surroundings of the above issues in spite of having intentions to repay the
Company was also unable to make repayment of fixed Deposits, in a timely manner |
6. |
Income Tax demand of Rs. 1,286.98 Lacs from A.Y. 2004-05 to A.Y. 2011-12 not deposited
and appeals has been filed against this demand or in the process of filing. Income Tax
Return from A.Y. 2012-13 to A.Y. 2014-15 has also not been filed by the Company. |
We have already filed the appeal and produced all the evidences and waiting for the
final argument in which we are confident of winning the appeal |
7. |
Service Tax amounting to Rs.1, 170 Lacs (approx) up to 31st March, 2016 not deposited
by the Company but further reconciliation is required on account of cenvat credit, sales
return etc to arrive at the correct amounts and Service Tax Return has also not been filed
by the Company during the year. |
Please refer point 5 above |
8. |
As per Books of accounts, Tax deduction at source (TDS) amounting to Rs. 109.60 Lacs
as on 31st March, 2016 not deposited by the Company. TDS Return has also not been filed by
the Company during the year except the first quarter in respect of Section 194I of the
Income Tax Act, 1961. In some cases TDS has also not been deducted |
Please refer point 5 above |
9. |
As per books of accounts, Provident Fund amounting to Rs. 6.75 lacs as on 31st
March, 2016 not deposited by the Company. PF Challan till Oct, 2015 has been filed by the
Company |
Please refer point 5 above |
10. |
Employees State Insurance (ESI) amounting to Rs. 3.16 Lacs as per Books as on 31st
March, 2016 not deposited by the Company. Consequently challan and return in respect of
this has also not been filed by the Company during the year |
Please refer point 5 above |
11. |
Professional Tax amounting to Rs. 0.72 Lacs as per Books as on 31st March,
2016 not deposited by the Company. Consequently challan and return in respect of this has
also not been filed by the Company during the year. |
Please refer point 5 above |
12. |
The Company has not provided bank accounts balance confirmation as on 31st
March, 2016, in respect of some bank accounts |
Some banks Accounts have become dormant; hence no communication could be made from
them |
13. |
The Company has written off bad debts amounting to Rs. 708.24 Lacs during the year and
makes provision for bad and doubt full debts amounting to Rs. 146.32 Lacs during the year.
Due to the written off bad debts or provision of bad debts, the profit for the year at 31st
March, 2016 has been reduced by that amounts. Accordingly the net assets at 31st
March, 2016 have also been reduced by the bad debts amounts |
There are numerous reasons for the provisions and write offs, however the main
reason has been inadequacy of service provided(due to the financial crunch being faced by
the company) and inability to complete the whole order due to non availability of adequate
working capital |
15. |
The Company has booked Loss on Redundant Assets of Rs. 968.40 Lacs during the year. |
This happened due to massive flood & natural calamity that happened in Chennai
when one of our store/shed at Chennai address collapsed and was washed away. This shed was
containing various new and used computer and network equipment along with certain
materials for the completion of the building. Whilst some equipment was also washed away
from the shed, almost all the equipment and materials were either completely destroyed or
washed away due to the flood |
16. |
In case of Net 4 Communications Limited, one of the subsidiaries of the Holding
Company is not audited by us. The other auditor who has audited the subsidiary has
reported the followings:- |
|
|
a. Service Tax amounting to approx. Rs. 25 Lacs for FY 11-12, Rs. 390 Lacs for 2012-
13, Rs. 33 Lacs for 2013-14 and Rs. 0.08 Lacs for 2015-16 not deposited but further
reconciliation is required on account of cenvat credit, sales returns, etc. to arrive at
the correct amount |
Due to the heavy losses suffered by the company subsequent to which winding up
order was passed against the company and the company is in liquidation . |
|
b. ESI of Rs. 0.43 Lacs for FY 2014-15 not deposited. |
|
|
c. TDS amounting to Rs. 65.75 Lacs for the year 2012-13, Rs. 32.59 Lacs for the for
the year 2013-14, Rs.9.04Lacs for the year 2014-15 and Rs.4.26 Lacs for the year 2015-16
not deposited |
|
|
d. The company has written off bad debts amounting to Rs. 45.69 Crore. The company has
no security for these debts. On the basis that no security has been obtained and no cash
has been received on these debts, the company has written off bad debts, thereby reducing
profit before taxation for the year (if any) and net assets at 31st March by
that amount. |
|
|
e. The company does not follow a system of obtaining confirmation of balances in
respect of Trade receivables. Due to non- availability of confirmations of aforesaid
balances, we are unable to quantify the impact of the adjustments, if any, arising from
reconciliation, settlement of account and writing off bad debts on the financial
statements for the year ended 31st March, 2016. |
There are numerous reasons for the provisions and write offs, however the main
reason has been inadequacy of service provided (due to the financial crunch being faced by
the company) and inability to complete the whole order due to non availability of adequate
working capital. |
|
|
Winding up order was passed against the company and the company is in liquidation
therefore the receivables from the parties could not be recovered. |
17. |
In case of Pipetel Communications Private Limited, one of the subsidiaries of
the Holding Company is not audited by us. The other auditor who has audited the subsidiary
has reported the followings:- |
|
|
a. The company has written off an amount of Rs.9.90 Lacs as bad debts. The company has
not security for these debts. On the basis that no security has been obtained and no cash
has been received on these debts, the company has written off this amount as bad debts
thereby reducing profit before taxation for the year (if any) and net assets at 31stMarch,
2016 by that amount |
Subsequent to the Invoices raised to the client, the dispute arise between the
parties with regard to the services; consequently the balance amount of the invoice could
not be recovered from the client. |
|
b. The company does not follow a system of obtaining confirmation of balances in
respect of Trade receivables. Due to non- availability of confirmations of aforesaid
balances, we are unable to quantify the impact of the adjustments, if any, arising from
reconciliation, settlement of account and writing off bad debts on the financial
statements for the year ended 31st March, 2016. |
Due to the acute short staff; the same is not possible to be done on the regular
basis. |
|
c. Reconciliation statements of State Bank of Travancore (A/c no 67250208799), State
Bank of Travancore (WCTL no 9613) and Term Loan statement of State |
|
|
Bank of Travancore (A/c no 8814) were not available. Due to non-availability of these
reconciliations, we are unable to quantify the impact of the adjustments, if any, arising
from reconciliation on the financial statements for the year ended 31st March, 2016. |
There are various disputes involved with relation to the claim of the bank,
including but not limited to: incorrect date of NPA, mishandling of the account and non
adherence to sanctioned amounts, etc. |
29. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS
There are no significant material orders passed by the Regulators / Courts which would
impact the going concern status of the Company and its future operations. However, in line
with the requirement of SEBI, LODR, 2015 read with guidance note issued by the stock
exchanges, the company has reported all the major cases/litigation matters etc. from time
to time to the Stock Exchanges.
30. INTERNAL FINANCIAL CONTROL SYSTEMS AND THEIR ADEQUACY
The details in respect of internal financial control and their adequacy are included in
the management discussion& analysis, which forms part of this report.
31. DIRECTORS RESPONSIBILITY STATEMENT
To the best of their knowledge and belief and according to the information and
explanations obtained by them and also based on the representations received from the
Operating Management, your directors make the following statement in terms of Section 134
(3) (c) of the Companies Act, 2013 that:
a. in the preparation of the annual accounts for the financial year ended March 31,
2016, the applicable accounting standards have been followed along with proper explanation
relating to material departures, if any;
b. such accounting policies as mentioned in the Notes to the Financial Statements have
been selected and applied them consistently and made judgments and estimates that are
reasonable and prudent so as to give a true and fair view of the state of affairs of the
Company as at March 31, 2016 and of the profit and loss of the Company for the financial
year ended March 31, 2016;
c. the proper and sufficient care has been taken by them for the maintenance of
adequate accounting records in accordance with the provisions of the Companies Act, 2013
for safeguarding the assets of the Company and for preventing and detecting fraud and
other irregularities;
d. the annual accounts for the financial year ended March 31, 2016 have been prepared
by them on a going concern basis;
e. proper Internal financial controls have been followed by the company and that such
internal financial controls are adequate and were operating effectively; and
f. proper systems to ensure compliance with the provisions of all applicable laws and
that such systems were adequate and operating effectively.
32. ACKNOWLEDGEMENT
The Directors express their gratitude to Financial Institutions, Banks, and various
other agencies for the co-operation extended to the Company. The Directors also take this
opportunity to thank the shareholders, customers, suppliers, lenders, distributors and
other stakeholders for the confidence reposed by them in the Company. The employees of the
Company contributed significantly in achieving the results. The Directors take this
opportunity of thanking them and hope that they will maintain their commitment to
excellence in the years to come.
By Order of the Board
Sd/-
AMARJIT SINGH SAWHNEY
Director
DIN 00110823
Address: 70, Poorvi Marg, Vasant Vihar,
New Delhi-110057
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