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7. As detailed in note 32 to the financial statements, amounts due from and to DoT included in current
assets and current liabilities aggregating to Rs. 173,669 lacs (previous year Rs. 170,985 lacs) and
Rs. 39,109 lacs (previous year Rs. 47,207 lacs) respectively are subject to confirmations and
reconciliation. Consequently, the impact of the adjustments, if any, on the financial statements is presently
not ascertainable. This was also a subject matter of qualification in our previous years audit report on the
audited financial statements for the year ended 31 March 2013.
Fixed Assets
8. As reported by auditors of 25 circles, Capital work-in-progress, inter alia, includes balances pending
capitalisation for long-periods of time owing to pending analysis of status, value and obtaining of
commissioning certificates. The consequential impact on the capital work-in-progress, fixed assets,
depreciation and loss for the year, if any, is presently not ascertainable. This was also a subject matter of
qualification in our previous years audit report on the audited financial statements f or the year ended 31
March 2013.
9. As reported by auditors of 6 circles, in the absence of information in respect of certain items of fixed assets
capitalised, particularly batteries, it could not be established whether assets capitalised were on account of
replacement/extension of an existing asset or additional acquisition of a new asset and hence the
consequential impact of the same on the classification/value of the respective asset, depreciation and
amortisation, expenses and loss for the year is presently not ascertainable. This was also a subject matter
of qualification in our previous years audit report on the audited financial statements for the year ended
31 March 2013.
10. As reported by auditors of 6 circles, the leasehold land as identified and valued by the respective circles
have been incorporated in the books of accounts and amortised with effect from the date of formation of the
Company. Hence, in respect of the lands still not identified and/or duly incorporated in the books of
accounts of the respective circles, the consequential impact on value of fixed assets , amortisation and loss
for the year is presently not ascertainable. This was also a subject matter of qualification in our previous
years audit report on the audited financial statements for the year ended 31 March 2013.
11. As detailed in note 31.2 to the financial statements, auditors of 4 circles have reported on the
expired/non renewal of leases on lands on which the Company had constructed buildings. The
management has not made any provision for the surrender value/written down value of the aforementioned
buildings. The consequential impact of adjustment on fixed assets, depreciation and amortisation and loss
for the year, if any, is presently not ascertainable. This was also a subject matter of qualification in our
previous years audit report on the audited financial statements for the year ended 31 March 2013.
12. As stated in note 13(a) and 31.3 to the financial statements, fixed assets, inter alia, includes land
pertaining to 25 circles, purchased/acquired on leasehold/ freehold basis through various authorities, the
title deeds of which are yet to be executed in the name of the Company . This was also a subject matter of
qualification in our previous years audit report on the audited financial statements for the year ended
31 March 2013.
13. As stated in note 47 to the financial statements, Telegraph and Telex services was discontinued by the
Company with effect from 15 July 2013. However, assets (other than land, building, furnitures and
computers) relating to the aforementioned service have not been identified, classified and valued as
decommissioned asset. In the absence of specific details, the consequential impact of adjustments, if any, on
the financial statements is presently not ascertainable.
14. The accounting policy of the Company as stated in note 2.6 to the financial statements with respect to the
decommissioned assets has not been uniformly applied across all circles. In 15 circles, these are not recorded at
lower of the cost or net realisable value while in certain circles, the decommissioned assets have not been
appropriately adjusted from the block of fixed assets and depreciation is still being charged on such
decommissioned assets. In the absence of sufficient details, we are unable to comment upon the impact of
adjustment on the fixed assets, current assets, depreciation and amortisation and loss for the year, if any, arising
out of the same. This was also a subject matter of qualification in our previous years audit report on the
audited financial statements for the year ended 31 March 2013.
15. The following accounting treatments by the Company in respect of fixed assets and capital works-in-
progress are not in accordance with the provisions of Accounting Standard 6, Depreciation Accounting;
Accounting Standard - 10, Accounting for fixed assets, and Accounting Standard 26, Intangible
Assets notified vide Companies (Accounting Standards) Rules, 2006:
a) As detailed in note 31.6 to the financial statements and as reported by auditors of 21 circles, the
Company has not consistently adhered to capitalizing the overheads expenses specifically
attributable to the capital work in progress but has recorded the same on estimated/fixed
percentage/proportionate/payment basis.
b) The Company capitalises the assets, as reported by auditors of certain circles, on periodic basis
instead of at the ready to use date.
c) Accounting policies regarding capitalization, disposal, depreciation and amortization of fixed
assets are not uniformly applied in case of 21 circles.
The resultant impact of the above non compliance with the standards on the value of fixed assets, capital
work-in-progress, depreciation and amortization and loss for the year is presently not ascertainable. This
was also a subject matter of qualification in our previous years audit report on the audited financial
statements for the year ended 31 March 2013.
17. As detailed in note 18(a) to the financial statements, no adjustment has been recorded for the differences of
Rs. 971 lacs (previous year Rs. 22,917 lacs) in General ledger and Subsidiary ledger in respect of trade
receivables for 7 circles. Further, as reported by auditors of certain circles, there are unquantifiable
differences between the general ledger / trial balance and accounting records pertaining to loans and
advances, current assets and current liabilities. The impact on the financial statements, if any, owing to the
aforementioned non-reconciliations is presently not ascertainable. This was also a subject matter of
qualification in our previous years audit report on the audited financial statements for the year ended
31 March 2013.
18. As reported by auditor of 4 circles, there are differences in the inventory records between stores ledger and
General ledger/Trial balance, the impact of the same is currently not ascertainable. This was also a
subject matter of qualification in our previous years audit report on the audited financial statements for
the year ended 31 March 2013.
19. As reported by auditors of 2 circles, certain units have not applied the Company's policy of valuation of
inventory on weighted average method as stated in note 2.8 to the financial statements. The impact of the
adjustment, if any, on inventory, consumption and loss for the year is presently not ascertainable. This was
also a subject matter of qualification in our previous years audit report on the audited financial
statements for the year ended 31 March 2013.
i) As reported by auditors of 11 circles, in absence of adequate information, details and records of old,
non-moving, damaged and unserviceable inventories could not be identified The adjustment, if any, on
inventories, consumption and loss for the year is presently not ascertainable. This was also a subject
matter of qualification in our previous years audit report on the audited financial statements for the
year ended 31 March 2013.
ii) As detailed in note 35 to the financial statements and as reported by auditors of 13 circles, the
expenses, incomes, assets and liabilities are not properly disclosed under the reportable segment as per
the notified Accounting Standard 17 on Segment Reporting. In our opinion, the same does not give
true and fair disclosure of the segment-wise operations of the Company as required by the
aforementioned accounting standard. This was also a subject matter of qualification in our previous
years audit report on the audited financial statements for the year ended 31 March 2013.
iii) As stated in note 15 to the financial statement, the Company as at 31 March 2014 has deferred
tax assets (net) amounting to Rs. 23,773 lacs. Since the Company has a recent history of losses and
owing to lack of virtual certainty and convincing evidence that sufficient future taxable income will be
available against such deferred tax asset and as stipulated by the notified Accounting Standard-22,
Accounting for taxes on income, the amount of such deferred tax asset should be written off.
Consequent to the above, loss for the year in the statement of profit and loss is under -stated by
Rs. 23,773 lacs and the balance of deferred tax asset included under Non-Current Assets, has been
overstated by the corresponding amount.
iv) The Company has not carried out any Techno-economic assessment during the year ended 31 March 2014
and hence identification of impairment loss and provision thereof, if any, has not been made. The
same is not in accordance with the notified Accounting Standard 28 on Impairment of asset. The
consequential impact of adjustment, if any, on the financial statements is currently not ascertainable.
This was also a subject matter of qualification in our previous years audit report on the audited
financial statements for the year ended 31 March 2013.
v) The accounting for capital and revenue grant in accordance with the notified Accounting Standard 12
on Accounting for grants is not followed consistently as reported by auditors of 16 circles. In the
absence of specific details, the consequential impact of adjustment, if any, on the financial statements
is presently not ascertainable.
vi) The accounting policy as referred to in note 2.10(b) to the financial statements with respect to the
liability on account of post-retirement medical benefits of employees including retired employees, a
defined benefit plan, is recognized on actual basis in respect of bills received by the Company instead
of recognizing the liability for the same as the present value of the defined benefit obligation at the
balance sheet date calculated on the basis of actuarial valuation in accordance with the notified
Accounting Standard 15 on Employee Benefits. The consequential impact of adjustment, if any,
owing to this non compliance on the financial statements is presently not ascertainable.
27. As stated in the note 2.12 of the financial statements, only individual transactions of income/expenditure
exceeding Rs. 5 lacs, are considered for evaluation as prior-period items. In our opinion, the said
accounting policy is not in accordance with the generally accepted accounting principles in India and the
same should be evaluated on aggregation of all prior period transactions of similar nature irrespective of
individual transaction values, for possible adjustment/disclosure in the financial statements. The
consequential impact of the adjustment, if any, on the income, expense and loss for the year is presently not
ascertainable. This was also a subject matter of qualification in our previous years audit report on the
audited financial statements for the year ended 31 March 2013.
28. As reported by 14 circles and detailed in note 10(a) to the financial statements, these circles have not
identified units covered under Micro, Small and Medium Enterprises Development Act, 2006
(MSMED Act, 2006) and hence disclosures as required under the MSMED Act, 2006 is presently
not ascertainable. This was also a subject matter of qualification in our previous years audit report on the
audited financial statements for the year ended 31 March 2013.
29. The disclosure requirements of the Revised Schedule VI of the Companies Act, 1956 has not been
properly adhered to in the presentation and disclosure of financial statements of the Company in respect of
classification of assets/liabilities into current and non-current and secured and unsecured, wherever
applicable; categorisation of assets/liabilities into appropriate accounting captions; changes in inventory;
non-disclosure of consumption of stores and spares; consumption of imported and indigenous stores and spares
parts; capital and other commitments and expenditure and earnings in foreign currency. This was also a
subject matter of qualification in our previous years audit report on the audited financial statements for
the year ended 31 March 2013.
30. As reported by auditors of 10 circles, compliances with regard to deposition, deduction, reconciliation of
service tax and tax deducted at source are pending to be made. In the absence of specific details, we are
unable to comment on its consequential impact, if any, on the financial statements. This was also a subject
matter of qualification in our previous years audit report on the audited financial statements for the year
ended 31 March 2013.
31. As detailed in notes (1) and (2) of the Cash Flow Statement, certain assumptions have been made for the
purpose of preparation of the Cash Flow Statement. In the absence of the appropriate details, we are
presently unable to ascertain the impact, if any, on the adjustments/disclosures in the Cash Flow
Statement. This was also a subject matter of qualification in our previous years audit report on the
audited financial statements for the year ended 31 March 2013.
Qualified Opinion
32. In our opinion and to the best of our information and according to the explanations given
to us and based on the consideration of the reports of the other auditors, except for the
effects/possible effects of the matters described in the Basis for Qualified Opinion paragraph the
financial statements give the information required by the Act in the manner so required
and give a true and fair view in conformity with the accounting principles generally
accepted in India:
i) in the case of the Balance Sheet, of the state of affairs of the Company as at
31 March 2014;
ii) in the case of Statement of Profit and Loss, of loss for the year ended on that date;
and
iii) in the case of the Cash Flow Statement, of the cash flows for the year ended on that
date.
Emphasis of Matter
33. We draw attention to note 14 to the financial statements of the Company regarding
investments in ITI Limited aggregating to Rs. 20,000 lacs as at 31 March 2014. The
management, based on the factors mentioned in the said note, believes that the d iminution
in the value of investments is temporary in nature and hence no provision in respect of
aforementioned amount has been made in the accompanying financial statement. Our
opinion is not qualified in respect of this matter.
Report on Other Legal and Regulatory Requirements
34. As required by the Companies (Auditors Report) Order, 2003 (the Order) issued by the
Central Government of India in terms of sub-section (4A) of Section 227 of the Act, we
give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the
Order.
a. Except for the effects/ possible effects of the matters described in the para 6, 7, 8, 9, 10, 11, 12, 13,
14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 25, 26(i), 26(v) and 30 of Basis of Qualified Opinion
paragraph, we have obtained all the information and explanations which to the best of
our knowledge and belief were necessary for the purpose of our audit;
b. Except for the effects/ possible effects of the matters described in the para 6, 8, 9, 11, 12, 13, 14,
15, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26(i), 26(iii), 26(iv), 26(v), 26(vi), 27 and 29 of Basis
of Qualified Opinion paragraph, 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 and proper returns adequate for the purposes of our audit have been received
from branches not visited by us. The circle Auditors Reports have been forwarded to
us and have been appropriately dealt with;
c. We have received the reports on the accounts of the circle offices audited under
section 228 by other auditors and have appropriately dealt with these while forming
our audit opinion.
d. Except for the effects/ possible effects of the matters described in the Basis of Qualified Opinion
paragraph, the financial statements dealt with by this report are in agreement with the
books of account and with the audited returns received from the Circles;
e. Except for the effects/ possible effects of the matters described in the Basis of Qualified Opinion
paragraph, in our opinion, the financial statements comply with the Accounting
Standards notified under the Companies Act, 1956 read with the General Circular
15/2013 dated 13 September 2013 of the Ministry of Corporate Affairs in respect of
section 133 of the Companies Act, 2013; and
Other Matter
36. We did not audit the financial statements of 47 circles and balances pertaining to the
corporate office, which reflect total assets (including intra/inter circle remittances) of
Rs. 4,999,244 lacs as at 31 March 2014; total revenues of Rs. 2,722,823 lacs and net cash
inflows aggregating to Rs. 5,173 lacs for the year then ended. The financial statements of
the aforementioned 47 circles have been audited by other auditors whose reports have
been furnished to us by the management, and our opinion on the financial statements of
the Company for the year then ended to the extent they relate to the financial statements
not audited by us as stated in this paragraph is based solely on the audit reports of the
other auditors. Our opinion is not qualified in respect of this matter.
37. This report is effective as of 29 August 2014. Certain subsequent events or circumstances
may have occurred between the auditors' report date of the respective circles of the
Company and that of this audit report. Such events or circumstances could significantly
affect the accompanying financial statements or the related disclosures forming part of
these financial statements of the Company. In the absence of sufficient appropriate audit
evidence in respect of the other circles, the impact of adjustments, if any, or disclosures to
be included in these financial statements of the Company cannot be ascertained.