To
The Members of
Mahanagar Telephone Nigam Limited
Report on the Audit of the Standalone Financial Statements Adverse Opinion
We have audited the accompanying standalone financial statements of MAHANAGAR TELEPHONE NIGAM LIMITED (the Company), which comprise the Balance Sheet as at March 31 st , 2026, the Statement of Profit and Loss (including Other Comprehensive Loss), the
Statement of Changes in Equity and the Statement of Cash Flows for the year then ended, and notes to financial statements, including a summary of the material accounting policies and other explanatory information (hereinafter referred to as the standalone financial tatements) . In our opinion, because of the significance of the matters mentioned in the Basis for Adverse opinion paragraph hereunder, the aforesaid standalone financial statements do not give the information required by the Companies Act, 2013 (the Act) in the manner so required and do not give a true and fair view in conformity with the Indian Accounting Standards prescribed under Section 133 of the Act read with the Companies (Indian Accounting Standards) Rules,
2015, as amended, (Ind AS) and other accounting principles generally accepted in India, of the state of affairs of the Company as at March 31 st , 2026, its loss (including other comprehensive income), changes in equity and its cash flows for the year ended on that date.
Basis for Adverse Opinion
(i) The Net Worth of the Company has been fully eroded; The Company has incurred net cash loss during the year ended March 31st, 2026, as well as in the previous year and the current liabilities exceeded the current assets substantially. Further, during the year under audit, the Company has also defaulted in repayment of bank installments/interest of term loan amounting to Rs. 9,262.53 crores.
Furthermore, MemorandumDepartment No.of Public Office Enterprises vide its
DPE/5(1)/2014-Fin. (Part-IX-A) has classified the status of the Company as Incipient Sick CPSE. Department of Telecommunication (DOT) has also confirmed the status vide its issue no. I/3000697/ 2017 through file no. 19-17/2017 SU-II.
Further, Union Cabinet has also approved the Revival plan of BSNL and MTNL by reducing employee costs, administrative allotment of spectrum for 4G services, debt restructuring by raising of sovereign guarantee bonds, monetization of assets and in principle approval for merger of BSNL and MTNL. Further, the Company implemented the Voluntary Retirement Scheme in FY 2019-20 resulted into reduction in Employees Cost and also raised funds by issuing Bonds for Rs. 6,500 Crore in FY 2020-21 in line with cabinet note.
As per F.NO.20-28/2022-PR dated 2nd August 2022, the Union Cabinet in its meeting held on July 27, 2022 has approved the raising of Sovereign guaranteed bonds for MTNL with a tenure of 10 years or more for an amount of Rs. 17,571 crores with waiver of guaranteed fee to repay its high-cost debt and restructure it with new sustainable loan. Further, in view of unsustainable debts of MTNL, a Committee of Secretaries (COS) was constituted by Government of India to examine matters such as asset monetization, AGR dues, debt restructuring etc. for further course of action for merger of MTNL and BSNL. However, COS is reviewing various options submitted to them for solution of various issues related to MTNL which is under process.
However, the standalone financial statements of the Company have been prepared going concern basis keeping in view the majority stake of the Government of India.
(ii) Service Level Agreement with BSNL (Refer Note 74)
Pursuant to the Service Level Agreement (SLA) dated 22 November 2024, between MTNL and Bharat Sanchar Nigam Limited (BSNL), certain revenue of the company has been transferred to BSNL, the amount of which is not quantifiable. As a result of this transfer, MTNL has ceased to conduct direct billing and customer account management for its core telecom operations in these circles.
Pursuant to the Service Level Agreement (SLA) effectivefrom 01 st January 2025, revenue from telecom operations was being recognized by BSNL. Upon deliberation by the managements of both companies regarding the reasonableness and provisions of the
SLA, a decision was taken to implement a revenue-sharing model on a mutually agreed basis. Consequent to the said decision, MTNL has recognized revenue computed on the basis of collections made by BSNL; however, the data and methodology underlying such computation are not independently verifiable by us. Further, revenue ought to be recognized by MTNL on accrual basis in accordance with applicable Ind AS, and requisite formalities pertaining to issuance of tax invoices and recognition of corresponding GST liability are also required to be complied with. Merely recognizing revenue on the basis of BSNLs collections cannot be considered as proper implementation of the revenue-sharing arrangement. Since operational costs continue to be borne by MTNL, we are unable to comment on the matching of revenues with costs in the absence of a properly documented and implemented revenue-sharing framework.
(iii) Dues to/Receivable from Bharat Sanchar Nigam Limited (BSNL):
The Company has certain balances receivable from and payables to Bharat
Nigam Limited (BSNL). The net amount recoverable of Rs.4109.51 Crores are subject to reconciliation and confirmation. The said amount includes Service Tax recoverable amounting to Rs.2.03 Crores which has been clubbed under BSNL receivable. In view of non-reconciliation and non-confirmation and in view of various pending disputes regarding claims and counter claims we are not in a position to ascertain and comment on the recoverability and the correctness of the outstanding balances and resultant impact of the same on the standalone financial result for the year ended March 31st, 2026 of the Company. (Also refer note no. 65 to the standalone financial statements).
(iv) The Company has certain balances receivable from and payable to the Department of Telecommunication (DOT). The net amount payable of Rs.430.24 Crores subject to reconciliation and confirmation. In view of non-reconciliation are not in a position to ascertain and comment on the recoverability and correctness of the outstanding balances and resultant impact of the same on the standalone financial results for the year ended March 31st, 2026 of the Company. (Also refer point no. (a) of note no. 70 to the standalone financial statements).
(v) During audit, it was noted that the Company has recognised accrued income aggregating to Rs. 26.53 Crores comprising unbilled revenue under GSM services and amounts recoverable on account of Interconnect Usage Charges (IUC) from other telecom operators.
The corresponding GST liability on the aforesaid accrued income has not been discharged as at the balance sheet date.
(vi) Up to the financial year 2011-12, License Fee payable to the DOT on IUC charges to BSNL was worked out on an accrual basis as against the terms of License agreements requiring deduction for expenditure from the gross revenue to be allowed on actual payment basis.
From the financial year 2012-13 onwards, the license fee payable to the DOT has been worked out strictly in terms of the license agreements. (Refer note no. 85 to the standalone financial statements).
(vii) Apart from impairment losses previously recognized for CDMA assets, no further impairment has been accounted for under Ind AS 36 during the year ended 31 st March
2026. Due to uncertainties in achieving the Companys future projections, we are unable to determine the adequacy of impairment provisions and their impact on the current years loss. (Refer note no. 72 to the standalone financial statements).
(viii) The Company has developed a system of obtaining confirmations and performing reconciliation of balances in respect of amount receivables from trade receivables, deposits with Government Departments and others, claim recoverable from operators and other parties and amount payable to trade payables, claim payable to operators and amount payable to other parties, however complete balance confirmations and reconciliations are not yet obtained.
Accordingly, certain amounts receivable from and payable to the various parties are still subject to confirmation and reconciliation. Pending such confirmation and reconciliation, the impact thereof on the standalone financial results for the year ended 31st March 2026, are not ascertainable and quantifiable. (Refer note no. 67 to the standalone financial statements).
(ix) The company does not follow a system of reconciliation of the difference between TDS balance as per book andasperTDScertificateand form 26AS under Income-tax Act as applicable. Pending such reconciliation, the impact thereof if any on the standalone financial statement is not ascertainable and quantifiable.
(x) Unlinked credit of Rs. 52.56 Crores on account of receipts from subscribers against billing by the Company which could not be matched with corresponding receivables is appearing as liabilities in the balance sheet. To that extent, trade receivables and current liabilities are overstated. Pending reconciliations, the impact thereof on the standalone financial results for the year ended 31 st March 2026 are not ascertainable and quantifiable. (Refer note no. 66 to the standalone financial statements).
(xi) Property, Plant and Equipment are generally capitalized on the basisofcompletioncertificates issued by the engineering department or bills received by the finance department in respect of bought out capital items or inventory issued from the Stores. Due to delay in issuance of the completion certificates/ receipt of the bills/ receipt of inventory issue slips, there are cases where capitalization of the Property, Plant and Equipment gets deferred to next year.
We are unable to comment whether the Capital Work- in-progress (CWIP) shown in books in the current financial year are actually part of CWIP or have already been commissioned. The resultant impact of the same on the standalone financial results for the financial year ended March 31 st , 2026 by way of depreciation cannot be ascertained and quantified.
(xii) Department of Telecommunication (DOT) had raised a demand of Rs.3,313.15 crores in
2012-13 on account of one-time charges for 2G spectrum held by the Company for GSM and
CDMA for the period of license already elapsed and also for the remaining valid period of license including spectrum given on trial basis.
As explained by the Management,theCompany finaliseits position on surrenderyetto of a part of its allocated spectrum. The DOT demand on this account is contested by the Company and other private operators and is sub-judice before the Honble Court. Since the matterremains unresolved and the amount payable, if any, is indeterminate, no provision has been recognised. An amount of Rs. 3,205.71 Crores stands disclosed as contingent liability up to FY 2018 19; no further demand has been raised by DOT thereafter. Further, the TDSAT, while setting aside the levy of One-Time Charge (OTC) on spectrum beyond 6.2 MHz, directed the Government to review the demand for spectrum allotted
July 1, 2008, with such review applying from January 1, 2013 where the spectrum beyond
6.2 MHz was allotted prior to that date. No further demand has been raised pursuant to the said direction. Based on managements assessment, the demand, if any, shall not exceed Rs. 455.15 Crores, which has accordingly been disclosed as a contingent liability.
In view of the above, we are not in a position to comment on the correctness of the stand taken by the Company and the ultimate implications of thesameonthestandalonefinancial results for the financial year ended March 31st, 2026 of the Company. (Refer note no. 61 to the standalone financial statements).
(xiii) The Company has recovered Electricity Charges from the tenants on which liability for Goods and Services Tax (GST) has not been considered as the expenses have been recovered without installing sub-meter in some of the cases. The actual impact of the same on the standalone financial results for the financial year ended March 31 st , 2026 has not been ascertained and quantified.
(xiv) The TDS on provision for Expenses (Accrued Liability) has not been deducted under chapter XVII-B of Income Tax Act, 1961. The actual impact of the same on the standalone financial statements for the year ended March 31 st , 2026, has not been ascertained and quantified. (xv) The Company is making the provision for interest for late/non-payment to MSME vendors, but such interest is not being paid to the vendors. The interest provision is further subject to deduction of tax under section 194A of Income Tax Act, 1961. The actual impact of the same on the standalone financial statements for the year ended March 31, 2026, has not been . ascertainedandquantified (xvi) The Company has defaulted in repayment of bank borrowings. In respect of term loans, defaults amounting to Rs.2,145.73 Crores towards principal repayment and Rs. 501.45
Crores towards interest repayment have occurred, and the related loan accounts have been classified as Non-Performing Assets (NPA) by the respective banks. The total outstanding amount in respect of such term loans is Rs.3,045.77 Crores. Further, overdraft facilities aggregating to Rs.6,217.49 Crores are also outstanding. Accordingly, the total amount outstanding in respect of such borrowing aggregates to Rs.9,262.53 Crores. Penal interest charged by few banks has been accounted for by the Company; however, penal interest, is not charged by other banks has not been accounted for by the company, as the same has not been ascertained and not quantified by the Company. The company has initiated with the lender banks for possible resolution and settlement of such items. Finance cost & corresponding interest liability is understated by the penal interest amount figure of which is not quantifiable in absence of bank statements.
(xvii) (Refer note no. 24 to the standalone financial statements).
(xviii) Till 30.06.2025, the Company followed the practice of recognizing Expected Credit Loss (ECL) only on Trade Receivables and not on other financial assets, specifically claim recoverable. This accounting treatment was not in compliance with Ind AS 109 Financial Instruments, which mandates that ECL should be recognized on all financial assets measured at amortized cost or at fair value through other comprehensive income, including claim recoverable.
During the year, the company has recognized a provision of Rs. 200 Crores, on amount recoverable for more than three years; out of the total recoverable from IUC Operators and Others of Rs. 709.09 Crores. The ECL model adopted by the Company requires a comprehensive review to ensure full compliance with Ind AS 109.
(xix) The Company has not complied with the requirements of Ind AS 116 Leases, as with adequate supporting documents and relevant records were not made available for accounting entries have been made based on old data which is not ourverification updated with new leases, old leases expired and revision on lease rent. Consequently, we were unable to ascertain and quantify the impact of such non-compliance on the financial statements as at 31 March 2026.
(xx) As per LetterNo. F.No. 6-2/2023-PSF issued by the Ministry of Telecommunications,
Government of India, dated 09th September 2024, failure to pay Guarantee Fees by 30th
April entails levy of Penal Guarantee Fees for the period of default on a pro-rata basis. While the Company has duly provided for the principal Guarantee Fees of Rs. 352.30 Crore, it has classifiedthe resultant Penal Guarantee Fees of Rs. 352.30 Crore (Rupees Three Hundred and Fifty-Two Crore) merely as a Contingent Liability in the Notes to the Financial Statements, instead of recognizing a provision thereof.
In our opinion, since the due date of 30th April has elapsed without payment, the obligation to pay Penal Guarantee Fees has already crystallized by operation of an explicit Government directive, the outflow of economic resources is certain is reliably determinable on a pro-rata basis as prescribed — thereby satisfying all three recognition criteria under Ind AS 37 Provisions, Contingent Liabilities and Contingent Assets.
Accordingly, the classification of Penal Guarantee Fees as a Contingent Liability is, in our opinion, incorrect, resulting in understatement of liabilities and expenses by Rs. 352.30 Crore and corresponding overstatement of profit by bearing on the true and fair view presented by the financial statements.
(xxi) The Company has been following the practice of manual billing on an average basis in certain units of Mumbai and Delhi due to downtime of software. The details of such units are as under:
| Mumbai | Delhi |
| Wireless | IUC |
| IUC | - |
In the absence of a system-driven, actual billing, we are unable to comment on the accuracy and completeness of revenue and related receivables of these units. Accordingly, the actual impact of the same on the standalone financial results for year ended 31st March 2026, have not been ascertained and quantified.
In the absence of information, the effect of whichcantbequantified,we are unable to comment on the possible impact of the items stated in the point nos. (i), (ii), (iii), (iv), (v),
(vi), (vii), (viii), (ix), (x), (xi), (xii), (xiii), (xiv), (xv), (xvi), (xvii), (xviii), (xix) and (xx) on the standalone financial result of the Company for the year ended March 31st 2026.
W e conducted our audit of the standalone financial statements in accordance with Standards on Auditing specified under section 143(10) of the Act (SAs). Our responsibilities under those Standards are further described in the Auditors Responsibilities for the Audit of the standalone Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India (ICAI) together with the ethical requirements that are relevant to our audit of the standalone financial statements under the provisions of the Act and the Rules made there under, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ICAIs Code of Ethics. We believe that the audit evidence for our adverse audit wehaveobtainedis opinion on the standalone financial statements.
Emphasis of Matters:
We draw attention to the following notes on the standalone financial statements being matters pertaining to Mahanagar Telephone Nigam Limited requiring emphasis by us.
(i) Note no. 9 of standalone financial statements, The share certificates of the subsidiary companies, namely Millennium Telecom Limited and Mahanagar Telephone Mauritius Limited, have not been provided to us for verification. Additionally, there is a discrepancy between the number of shares of United Telecom Limited (referred as Associate Company) as per the share certificates and the number of shares recorded in the books.
(ii) Note no. 29 of standalone financial statements regarding Loan given by Government of India amounting to Rs. 2,980.92 crore for payment of Interest on Sovereign bonds does not stipulate terms regarding interest thereon. Therefore, the company has not provided any interest as aforesaid.
(iii) Note no. 63 of standalone financial statements regarding pending dispute with the Income Tax Department before the Honble Courts regarding deduction claimed by the Company u/s 80IA of the Income Tax Act, 1961, the company has created the Contingency reserve of
Rs. 243.22 Crores in this regard.
(iv) Note no. 78 pursuant to the service agreement entered on 22.11.2024 (superseding the earlier agreement dated 18.08.2021) with BSNL, the entire telecom operations of the company in Delhi and Mumbai shall be run by BSNL w.e.f 01.01.2025. BSNL shall also take care of CAPEX and OPEX for the smooth running of operations and ensure EBIDTA neutral operations of the company.
(v) Note no. 15 & 19 Amount receivable from BSNL & Other Operators have been reflected as loans and other financial assets instead of bifurcating the same into trade receivables and other financial assets.
(vi) Note no. 70(d) regarding the amount recoverable from Department of Telecommunications (DOT) in respect of settlement crores of Combined Service Optees absorbed employees in MTNL and the matter under review with DOT and the full amount of GPF including interest thereon, is continued to be shown as recoverable from DOT and payable to GPF.
(vii) Note no. 85 stating that the payables towards license fees and spectrum usage charges have been adjusted with excess pension payouts to Combined Pensioners Optees recoverable from DOT in respect of which matter is under consideration and correspondence is going on between the Company and DOT.
(viii) Note no. 85 stating that the License agreement between Company and DOT does not have any guidance on change in method of calculation of Adjusted Gross Revenue (AGR) due to migration to Ind-AS from i-GAAP. Provisioning and payment of liability in respect of license fees and spectrum usage charges payable to DOT have been done on the basis of Ind- of difference in computation of Adjusted Gross ASbasedfinancial Revenue (AGR) is under consideration of DOT.
(ix) Note 58(A) Certain immovable properties transferred from Department of Telecommunications (DoT) to MTNL in earlier years, which were taken on lease by DoT prior to incorporation of MTNL. On March 30, 1987, both DoT and MTNL entered into a sale deed for transfer of the several movable and immovable assets from DoT to MTNL. The said transfer includes the leasehold lands and buildings which are now in possession of
MTNL since the execution of the sale deed. These leasehold immovable properties have not been mutated or renewed in the name of MTNL till date. However, considering MTNL is a Public Sector Undertaking (PSU), the sale deed not registered at that time and executed by DOT is deemed to have been registered for the purpose of transfer of all such assets in terms of section 90 of the Indian registration act, 1908 as considered by the MTNL and stamp duty payable, if any, will be borne and paid by Government as and when any such occasion arises as per sale deed. Accordingly, these leasehold immovable properties have been classified by the management under the heading Right of Use assets.
(x) Note no. 80 Regarding amount payable to GPF trust is currently in the process of reconciling its liabilities to determine the provident fund payables to employees. The adjustment if any resulting from this re-computation/ reconciliation will be recognized once the reconciliation process is completed.
(xi) Note no. 60 In certain cases of freehold and leasehold land the company is having title deeds which are in the name of the Company but the value of which are not lying in the books of accounts of the Company.
(xii) Provisional income being booked under Revenue from Operations due to non-functioning of the billing software in some areas in the Delhi Unit and Mumbai Unit
(xiii) In accordance with the requirement of section 149 of the Companies Act, the company does not have requisite number of independent directors.
Our opinion is not modified in respect of the aforesaid matters.
Material uncertainty related to going concern
We draw attention to Note no. 78 in the Ind-AS financial statements, which indicates that the
Company has accumulated losses and its net worth has been fully eroded, the Company has incurred net loss/net cash loss during the current and previous year(s) and the companys current liabilities exceeded its current assets as at the balance date. These events or conditions, along with other matters as set forth in Note 78, indicate that a material uncertainty exists that may cast significant doubt on the Companys ability to continue as a going concern.
Further, Union Cabinet has also approved the Revival plan of BSNL and MTNL by reducing employee costs, administrative allotment of spectrum for 4G services, debt restructuring by raising of sovereign guarantee bonds, monetization of assets and in principle approval for merger of BSNL and MTNL. Further, the Company implemented the Voluntary Retirement Scheme in FY 2019-20 resulted into reduction in Employees Cost and also raised funds by issuing Bonds for Rs.6,500 crore in FY 2020-21 in line with cabinet note.
As per F.NO.20-28/2022-PR dated August 2nd, 2022, the Union Cabinet in its meeting held on July 27th, 2022 had approved the raising of Sovereign Guarantee bonds for MTNL with a tenure of 10 years or more for an amount of Rs. 17,571 crores with waiver of guarantee fee to repay its high-cost debt and restructure it with new sustainable loan.
Further, in view of unsustainable debts of MTNL, a Committee constituted by Government of India to examine matters such as asset monetization, AGR dues, debt restructuring etc. for further course of action for merger of MTNL and BSNL. However, COS is reviewing various options submitted to them for solution of various issues related to MTNL which is under process.
Our opinion is not modified in respect of this matter.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the standalone financial statements of the current period. These matterswere addressed in the context of our audit of the standalone financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
In addition to the matters described in the basis of adverse opinion section, we have determined the matters described below to be the key audit matters to be communicated in our report.
| Sr. No. | Key Audit Matter | How our audit Addressed the key Audit Matter |
| 1 | Revenue Recognition: | Our audit approach included control testing and substantive procedures covering in particular: |
| There is an inherent risk around the accuracy of revenue recorded given the complexity of systems and the impact of changing pricing models to revenue recognition (tariff structures, incentive arrangements, discounts etc.) | ||
| \u2022 Testing the IT environment (i.e., IT general controls) in which billing, rating and other relevant support systems reside, including the change control procedures in place around systems that bill material revenue streams. | ||
| Refer Notes no. 57 to the standalone Ind- AS financial statements. | \u2022 Testing the end-to-end reconciliation from business support systems to billing and rating systems to the general ledger. This testing includes validating material journals processed between the billing system and general ledger. | |
| \u2022 Performing tests on the accuracy of customer bill generation on sample basis and testing of a sample of the credits and discounts applied to customer bills: and testing receipts for a sample of customers back to customer invoice. | ||
| 2 | Uncertain Taxation Matters: | We have obtained details of completed tax assessments and demand up to March 31 st , 2026, from the management. |
| The Company has material uncertain tax matters under dispute which involves significant judgment to determine the possible outcome of these disputes. | ||
| We assessed the managements underlying assumptions in estimating the tax provisions and the possible out- come of the disputes. | ||
| Refer Note no. 50 and 63 to the standalone financial statements. | ||
| We also considered legal precedence and other rulings, including in the Companys own cases, in evaluating managements position on these uncertain tax positions. | ||
| 3 | The Company has significant receivables and payables balances, including long- outstanding balances government of India, Department of Telecom and other private telecom operators etc. The assessment of the recoverability of receivables and completeness of payables is considered a key audit matter due to: | Our audit procedures included, among others: |
| - Understanding the Companys processes and internal controls over the recording, monitoring, and reconciliation of receivables and payables. | ||
| - Performing substantive testing on a sample of receivables and payables by examining underlying invoices, contracts, and correspondences. | ||
| - The materiality of these balances to the financial statements. | ||
| - Significant judgment involved in assessing the recoverability of receivables, especially those pending resolution due to contractual disputes, reconciliation issues, or administrative delays\u2014common in dealings with government entities. | - Reviewing ageing reports and assessing subsequent receipts and settlements to evaluate recoverability and completeness. | |
| - Evaluating the methodology used by management in determining Expected Credit Loss (ECL) under Ind AS 109, including assumptions regarding risk of default, segmentation of customers, and historical loss experience. | ||
| - Complexity in assessing the aging, confirmation status, and settlement patterns of receivables and payables, particularly where balances are netted off under bilateral arrangements or interconnect agreements. | - Assessing managements estimates for provisioning, particularly for receivables from government departments and inter-operator settlements. | |
| - Preforming test regarding any claims lodged by any of the party and the disclosure thereof in the financial statement. | ||
| Application of Ind AS 109 Financial Instruments in determining Expected Credit Losses (ECL) requires management estimates around default risk, historical loss trends, and macroeconomic conditions. | ||
| Reviewing disclosures made in the financial statements to ensure compliance with Ind AS requirements. | ||
| 4 | Contingent liabilities | We have obtained an understanding of the Companys internal instructions and procedures in respect of estimation and disclosure of contingent liabilities and ad- opted the following audit procedures. |
| There are numbers of litigations pending before various forums against the Company and the managements judgement is required for estimating the amount to be disclosed as contingent liability. | ||
| - understood and tested the design and operating effectiveness of controls as established by the management for obtaining all relevant information for pending litigation cases. | ||
| We identified this as a key audit matter because the estimates on which these amounts are based involve a significant degree of management judgement in interpreting the cases and it may be subject to management bias. | ||
| - discussed with the management any material developments and latest status of legal matters. | ||
| (Refer to Note no. 50 of standalone Ind- AS Financial statements.) | - read various correspondences and related documents pertaining to litigation cases and relevant external legal opinions obtained by the management and performed substantive procedures on calculations supporting the disclosures of contingent liabilities. | |
| - examined managements judgements and assessment whether provisions are required. | ||
| - considered the management assessments of those matters that are not disclosed as the probability of material outflow is considered to be remote. | ||
| - reviewed the adequacy and completeness of disclosures. |
Information Other than the Standalone financial Statements andAuditors Report Thereon
The Companys Board of Directors are responsible for the preparation of the other information. The other information comprises the information included in the Boards Report including Annexures to Boards report, Management Discussion and analysis and report on Corporate Governance but does not include the standalone financial statements and our auditors report there on. The above mentioned other information is expected to be made available to us after the date of this auditors report.
Our opinion on the standalone financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the standalone financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the standalone financial statements or our knowledge obtained during the course of our audit or otherwise appears to be materially misstated.
When we read the other information, if we conclude that there is material misstatement therein, we are required to communicate the matter to those charged with governance.
Responsibilities of the Management and those charged with governance for the Standalone financial Statements
The Companys Board of Directors is responsible for the matters stated in Section Act with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position, financial performance, changes in equity 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. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating and completeness of the accounting records, relevant to the preparation and presentation of the standalone financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
In preparing the standalone financial statements, management is responsible for assessing the Companys ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so. Those Board of Directors are also responsible for overseeing the Companys financial reporting process.
Auditors Responsibilities for the Audit of the Standalone financial Statements
Our objectives are to obtain reasonable assurance about whether the standalone financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these standalone financial statements.
As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the standalone financial statements, whether due to fraud or error, design and perform audit procedures responsive to those to provide a basis for our risks,andobtainauditevidencethatis opinion.
The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal financial controls relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)
(i) of the Act, we are also responsible for expressing our opinion on whether the Company has an adequate internal financial controls system with reference to standalone financial statements in place and the operating effectiveness of such controls.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of managements use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions thatmaycastsignificantdoubt on the Companys ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors report to the related disclosures in the standalone financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors report.
However, future events or conditions may cause the Company to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the standalone financial statements, including the disclosures, and whether the standalone financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the significantaudit findings, including any significant and deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditors Report) Order, 2020 (the Order), issued by the
Central Government of India in term of sub section (11) of section 143 of the Act, we give in the Annexure A astatementonthemattersspecified in paragraph 3 and 4 of the Order, to the extent applicable.
2. As required by section 143(5) of the Act, we give in Annexure B a statement on the matters specified by the Comptroller and Auditor General of India for the Company.
3. As per the Notification No. GSR 463(E) dated 5th June 2015 issued by the Ministry of Corporate Affairs, Government of India, Section 197 is not applicable to the Government Companies. Accordingly, reporting in accordance with the requirement of provisions of section 197(16) of the Act is not applicable on the Company.
4. As required by Section 143(3) of the Act, based on our audit we report that: a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit except for the matters described in the Basis for Adverse Opinion Paragraph above. b) Except for the possible effects of the matters described in the Basis for Adverse Opinion Paragraph above, in our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books. c) The Balance Sheet, the Statement of Profit and Loss including Other Comprehensive
Income, Statement of Changes in Equity and the Statement of Cash Flows dealt with by this Report are in agreement with the relevant books of account. d) In our opinion, except for the matters described in the Basis of Adverse Opinion Paragraph above, the aforesaid standalone financial statements comply with the Ind AS specified under Section 133 of the Act, read with relevant rules issued thereunder. e) Being the Government Company pursuant to the Notification No. GSR 463(E) dated 5 June 2015 issued by the Ministry of Corporate Affairs, Government of India, provisions of sub-section (2) of section 164 of the Act, are not applicable to the Company.
Paragraph above, in our opinion, f) Thematters may have an adverse effect on the functioning of the Company g) With respect to the adequacy of the internal financial controls with reference to standalone financial statements of the Company and the operating effectiveness of such controls, refer to our separate Report in Annexure C wherein we have expressed a modified opinion.
h) The modification relating to the maintenance of accounts and other matter connected there with are as stated in the Basis of Adverse Opinion Paragraph above. i) With respect to the other matters to be included in the Auditors Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, as amended in our opinion and to the best of our information and according to the explanations given to us: i. The Company has disclosed the impact of pending litigations on its financial position in its standalone financial statements. (Refer note no. 50 of the Standalone financial statements). ii. The Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long-term contracts including derivative contracts; iii. There is no amount which is required to be transferred to Investor Education and Protection Fund by the Company. Accordingly, reporting under this clause is not applicable. iv. (a) The Management has represented that, to the best of its knowledge and belief, no funds (which are material either individually or in the aggregate) have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person or entity, including foreign entity (Intermediaries), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, whether, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (Ultimate Beneficiaries) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries; (b) The Management has represented, that, to the best of its knowledge and belief, no funds (which are material either individually or in the aggregate) have been received by the Company from any person or entity, including foreign entity (Funding Parties), with the understanding, whether recorded in writing or otherwise, that the Company shall directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
(c) Based on the audit procedures performed as considered reasonable and appropriate in the circumstances, nothing has come to our notice that has caused us to believe that the representations under sub-clause (i) and (ii) of Rule 11(e), as provided under (a) and (b) above, contain any material misstatement.
v. The company has not declared or paid any dividend during the year. Accordingly, the provision of Section 123 of the Act is not applicable. vi. Based on our examination, which included test checks, the Company has used accounting software/s for maintaining its books of account for the financial year ended March 31st, 2026 which has a feature of recording audit trail (Edit log) facility. However, The Audit Trail functionality within the WFMS has not been enabled uniformly across all functions and modules. The activation of audit trail features has been left to the discretion of management, resulting in selective and inconsistent logging of system activities. This is not in compliance with the requirements of the Companies Act, 2013 read with Rule 3 of the Companies (Accounts) Rules, 2014 (as amended), which mandates that accounting software used by companies shall have a feature of recording an audit trail of every transaction and creating an edit log of each change made in the books of account.
As Proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 is applicable from April 1, 2023, reporting under Rule 11(g) of Companies (Audit & Auditors) Rules, 2014 on preservation of audit trail as per the statutory requirements for record retention has been maintained by the company for the financial year ended March 31, 2026.
| For O P Bagla & Co LLP | For S.L. Chhajed & Co. LLP |
| Chartered Accountants | Chartered Accountants |
| Firm Registration No.: 000018N/N500091 | Firm Registration No.: 000709C/C400277 |
| CA Nitin Jain | CA Vijit Baidmutha |
| Partner | Partner |
| Membership No.: 510841 | Membership No.: 406044 |
| UDIN: 26510841BBUEQY2654 | UDIN: 26406044NGNRFC7902 |
| Place: Delhi | |
| Date: 21 st May 2026 |
ANNEXURE-A ANNEXURE-A TO THE INDEPENDENT AUDITORS REPORT
Referred to in our Independent Auditors Report of even date to the members our Independent Auditors Report of even date to the members of Mahanagar Telephone Nigam Limited on the
Standalone financial Statements for the year ended March 31 st , 2026.
(i) (a) (A) Delhi unit (Both basic and Wireless) has maintained records of Property, Plant and Equipment. However, identification numbers, cost of acquisition and location of the Property, Plant and Equipment are not mentioned.
In case of Mumbai units (both basic and WS), Property, Plant and
Equipment Registers have been maintained w.e.f. 01.04.2002. However, location of property, Plant and Equipment has not been mentioned in the
Property, Plant and Equipment Registers.
The Corporate office has maintained Property, Plant and Equipment; however, identification numbers and location of Property, Plant and Equipment are not mentioned.
(B) The Company has maintained proper records showing particulars of of intangible assets,intangible assets, however identification numbers and location of intangible assets are not maintained.
(b) As per the policy of the Company, Property, Plant and Equipment are required to be physically verified by the management on rotation basis, once in three years, which in our opinion is reasonable and adequate in relation to the size of the Company and the nature of its business.Physicalverificationof Property, Plant and Equipment was conducted by the management during the year ended on March 31 st , 2026, except corporate office and RF feeder cables in Delhi Wireless unit. As per Management, it is not practically feasible to verify/measure the length of RF feeder cables in wireless as the cables are underground. According to the information and explanation given to us, no material discrepancies were noticed in respect of Asset verified by the management. The accuracy, reliability and completeness of the fixed assets verification procedure could not be verified by us.
(c) According to the information and explanations given to us and on the basis of our examination of the records of the Company, the title deeds of immovable properties (other than immovable properties where the Company is the lessee and the leases agreements are duly executed in favor of the lessee) disclosed in the standalone Ind- AS financial statements are held in the name of the Company, except for the following which are not held in the name of the Company:
In respect of Delhi Units:
The value of the immovable properties as per title deeds are subject to reconciliation with books of accounts.
| Description of property | Type of Properties | Gross Carrying value | Held in name of | Whether promoter, director or their relative or employee | Period held - indicate range, where appropriate | Reason for not being held in name of company* | Remarks |
| CGO Complex | Leasehold | 0.10 | DOT | No | L&DO | ||
| Lodhi Road | |||||||
| Kidwai Bhawan | Leasehold | - | DOT | No | L&DO | ||
| (Janpath) | |||||||
| Minto Road JLN | Leasehold | 0.12 | DOT | No | L&DO | ||
| Marg | |||||||
| Idgah | Leasehold | 0.01 | DOT | No | L&DO | ||
| Lothian Road | Leasehold | 0.08 | DOT | No | (PWD) | ||
| Delhi | |||||||
| Admn. | |||||||
| Bhikaiji Cama | Leasehold | 0.66 | DOT | No | DDA | ||
| Place (R. K. | |||||||
| Puram) | |||||||
| Chankya Puri | Leasehold | 0.00 | DOT | No | L&DO | ||
| Hauz Khas | Leasehold | 0.04 | DOT | No | DDA | ||
| Nehru Place | Leasehold | 0.18 | DOT | No | DDA | ||
| Okhla | Leasehold | 0.07 | DOT | No | DDA | ||
| Laxmi Nagar/ | Leasehold | 0.12 | DOT | No | DDA | ||
| Shahdara South | |||||||
| Shahdara/ | Leasehold | 0.04 | DOT | No | DUSIB | ||
| Adjoining 21 | |||||||
| Exch | |||||||
| Keshav Puram | Leasehold | 0.02 | DOT | No | DDA | ||
| Badli | Leasehold | 0.01 | DOT | No | Directorate | ||
| of Indus- | |||||||
| tries (Delhi | |||||||
| Adminis- | |||||||
| tration) |
| Rohini Sect 3 | Leasehold | 0.15 | DOT | No | DDA |
| Pocket 31 | |||||
| Rohini Sect 3 | Leasehold | 0.15 | DOT | No | DDA |
| Pocket 4 | |||||
| Rohini Sect. 5 | Leasehold | 0.15 | DOT | No | DDA |
| Pocket 4 | |||||
| Rohini Sect. 5 | Leasehold | 0.15 | DOT | No | DDA |
| Pocket 10 | |||||
| Rohini Sect. 3 | Leasehold | 0.15 | DOT | No | DDA |
| Rohini Sect. 6 | Leasehold | 0.18 | DOT | No | DDA |
| Rohini Sect. 9 | Leasehold | 0.15 | DOT | No | DDA |
| Rohini Sect. 14 | Leasehold | 0.04 | DOT | No | DDA |
| Shakti Nagar | Leasehold | 0.02 | DOT | No | DDA |
| Paschim Vihar | Leasehold | 1.33 | DOT | No | DDA |
| G-17 TE | |||||
| Rajouri Garden | Leasehold | 0.03 | DOT | No | MCD |
| Janakpuri | Leasehold | 0.07 | DOT | No | DDA |
| Pankha Road | Leasehold | 0.30 | DOT | No | DDA |
| Plot I | |||||
| Pankha Road | Leasehold | 0.10 | DOT | No | DDA |
| Plot 2 | |||||
| Pankha Road | Leasehold | - | DOT | No | DDA |
| Plot 3 | |||||
| Shadipur | Leasehold | 0.19 | DOT | No | DUSIB |
In respect to the following properties no title deeds were made available to us:
| Description of property | Type of Properties | Gross Carrying value | Held in name of | Whether promoter, director or their relative or employee | Period held - indicate range, where appropriate | Reason for not being held in name of company* |
| Documents | ||||||
| Jor Bagh | Leasehold | - | DOT | No | ||
| not available | ||||||
| Documents | ||||||
| Delhi Gate | Leasehold | - | DOT | No | ||
| not available | ||||||
| Documents | ||||||
| Karol Bagh | Leasehold | - | DOT | No | ||
| not available | ||||||
| Documents | ||||||
| Tis Hazari | Leasehold | - | DOT | No | ||
| not available | ||||||
| Documents | ||||||
| Delhi Cantt | Leasehold | - | DOT | No | ||
| not available | ||||||
| Documents | ||||||
| Eastern Court | Leasehold | - | DOT | No | ||
| not available | ||||||
| Documents | ||||||
| Shahdara | Leasehold | - | DOT | No | ||
| not available | ||||||
| Documents | ||||||
| Tehkhand | Leasehold | - | DOT | No | ||
| not available |
According to the information and explanations given by the company in Note No. 58A (1) and 58A (3) of the notes to accounts of the standalone financial statement to us and on the basis of our examination of the records of the Company, we express no opinion on the validity of the title of the company of immovable properties disclosed in the financial statements and held as Property, Plant and Equipment or as investment property.
Further, according to the information and explanations given to us, in Delhi one leasehold property has been encroached.
In respect of Mumbai Units:
| Description of Property | Type of properties | Gross carrying value (Amount in Cr)* | Held in the name of | Whether promoter, director or their relative or employee | Period held \u2013 Range (In Years) | Reason for not being held in name of company/ Remarks |
| Plot No. 11. Near | Leasehold | 0.64 | MHADA | No | More | MHADA |
| Lokha- ndwala, | Land | than 20 | Allotment letter | |||
| Complex, Akurli | years | is available | ||||
| on records for | ||||||
| Road, Kandivali | ||||||
| allotment of land. | ||||||
| (E), Mumbai-400 | No sale/ lease | |||||
| 101 | deed is available | |||||
| . forverification | ||||||
| Description of Property | Type of properties | Gross carrying value (Amount in Cr)* | Held in the name of | Whether promoter, director or their relative or employee | Period held \u2013 Range (In Years) | Reason for not being held in name of company/ Remarks | |||||||
| Plot -1, MIDC, | Leasehold | 0.02 | President of | Yes | More | Lease Agreement | |||||||
| Taloja, Navi | Land | India | than 30 | executed by | |||||||||
| Mumbai-400 218 | years | MTNL on behalf | |||||||||||
| of President of | |||||||||||||
| India is available | |||||||||||||
| on record. | |||||||||||||
| Panvel Tel | Leasehold | Nil | President of | Yes | More | Permission letter | |||||||
| Exchange, | Land | India (P&T) | than 30 | from Panvel | |||||||||
| Plot No.- | years | Municipal | |||||||||||
| 229B, Panvel, | Corporation | ||||||||||||
| Mumbai | is available on | ||||||||||||
| records. | |||||||||||||
| Lease agreement | |||||||||||||
| executed between | |||||||||||||
| president of | |||||||||||||
| india and City | |||||||||||||
| and Industrial | |||||||||||||
| development | |||||||||||||
| corporation of | |||||||||||||
| Maharashtra | |||||||||||||
| Limited is also | |||||||||||||
| available in | |||||||||||||
| records. | |||||||||||||
| Juhu Danda | Freehold | Nil | GOI/P&T | Yes | More | Letter of DOT | |||||||
| Complex, Santa | Land | than 20 | is available on | ||||||||||
| Cruz - West, | years | records for use of | |||||||||||
| Mumbai | plot in favour of | ||||||||||||
| MTNL. No sale | |||||||||||||
| deed is available | |||||||||||||
| . forverification | |||||||||||||
| Bandra | Freehold | 1.10 | Bombay | No | More | MHADA | |||||||
| Reclamation, | Building | Housing | than 30 | Allotment letter | |||||||||
| Oppo- site | and Area | years | is available on | ||||||||||
| Leelavati | Developme | records for | |||||||||||
| Hospital, | nt Board | allotment. No sale | |||||||||||
| Bandra(W), | deed is available | ||||||||||||
| Mumbai-400 050 | . forverification | ||||||||||||
| Magathane, | Freehold | 0.43 | Bombay | No | More | MHADA | |||||||
| Borivali(E), | Building | Housing | than 30 | Allotment letter | |||||||||
| HIG Colony, | and Area | years | is available | ||||||||||
| Magathane, | Develop- | on records for | |||||||||||
| Borivali(E), | ment Board | allotment. No sale | |||||||||||
| Mumbai-400 066 | deed is available | ||||||||||||
| for verification | |||||||||||||
| Andheri Tele | Freehold | 0.01 | Post and | ||||||||||
| Exch Bldg OPP. | Building | telegraph | |||||||||||
| No | |||||||||||||
| Lalubhai Park | department | ||||||||||||
| by 58 | |||||||||||||
| Andheri Old | Freehold | 0.00 | President of | ||||||||||
| Tele Exch Bldg | Building | india | |||||||||||
| No | |||||||||||||
| CSNO 684 BY | |||||||||||||
| 58 | |||||||||||||
| Tele Bhavan | Leasehold | 0.07 | President of | ||||||||||
| No | |||||||||||||
| Colaba | india | ||||||||||||
| Compensation | Freehold | 0.58 | President | ||||||||||
| on Cumbala Hill | of india | ||||||||||||
| No | |||||||||||||
| (Bombay | |||||||||||||
| telephone) | |||||||||||||
| Curry Road | Freehold | 0.39 | President of | ||||||||||
| CSNO 79 (PT) | India | No | |||||||||||
| and 82 | |||||||||||||
| Fountain Tele | Freehold | 0.06 | Central Post | ||||||||||
| Bldg CSNO 708 | and telegrah | No | |||||||||||
| Gamdevi Tele | Freehold | 0.05 | It is in the | ||||||||||
| Exchange bldg. | name of | ||||||||||||
| No | |||||||||||||
| by 7 | President of | ||||||||||||
| India | |||||||||||||
| Malbar Hill Tele | Freehold | 0.33 | President of | ||||||||||
| Exch AG Bell | India | No | |||||||||||
| Marg | |||||||||||||
| Mandvi Tele | Freehold | 0.11 | President of | ||||||||||
| Exch MA Road | India | ||||||||||||
| No | |||||||||||||
| by BY 7 Plot no. | |||||||||||||
| to 12 | |||||||||||||
| Matunga Tele | Leasehold | 0.01 | it is in the | |||||
| Exch Bldg | name of | |||||||
| Plot no. 143 | President | |||||||
| No | ||||||||
| Ambedkar | of INDIA | |||||||
| Marg by 14 | it is under | |||||||
| mutation | ||||||||
| Mazgaon Tele | Freehold | 0.05 | President of | |||||
| Bldg Seth Moti | India | No | ||||||
| Shah Lane by 10 | ||||||||
| Parel tele | Freehold | 0.51 | President of | |||||
| Complex CSNO | India | No | ||||||
| 85(PT) | ||||||||
| Powai Tele | Freehold | 0.00 | Government | |||||
| Exch Bldg S.no | of India | |||||||
| No | ||||||||
| 103/B1 Vikroli | ||||||||
| by 83 | ||||||||
| PBD Tele Bldg | Freehold | 0.13 | POI In- | |||||
| CSNO 90,91 and | charge | |||||||
| 105 BY 28 | Bombay | |||||||
| telephone | No | |||||||
| exchange | ||||||||
| under | ||||||||
| mutation | ||||||||
| SPK Tele | Freehold | 0.02 | President of | |||||
| Exchange Bldg | India | |||||||
| No | ||||||||
| Plot No. 709 | ||||||||
| TPS IV/B by 28 | ||||||||
| Sion Tele Exch | Freehold | 0.16 | President of | |||||
| Bldg Plot No. | India | |||||||
| No | ||||||||
| 105A and 105 | ||||||||
| by 22 | ||||||||
| ST. George | Leasehold | 0.40 | President of | |||||
| Hospital, | India | No | ||||||
| PLNO.2 | ||||||||
| Ville Parle Tele | Freehold | 0.14 | Bombay | |||||
| Exch Bld Fp No. | telephone | |||||||
| 330,308,309,310 | post & | |||||||
| by 57 All Land | telegraph | No | ||||||
| Cost for land | limited | |||||||
| at Vile Parle for | ||||||||
| Staff Quarters 76 | ||||||||
| Wadala Tele | Freehold | 0.14 | President of | |||||
| Exch. Plot No | India | |||||||
| No | ||||||||
| 40(PT) CS No 236 | ||||||||
| & 41(PT) By 14 | ||||||||
| Wadby Road HS | Freehold | 0.01 | Central | |||||
| Marg Bombay 1 | post and | No | ||||||
| Possession 30 | telegraph | |||||||
| Worli Tele | Freehold | 0.06 | President | |||||
| Exch Bldg | of India | |||||||
| CSNO 469, | (in-charge | No | ||||||
| S.No 1624 by | post master | |||||||
| 18 | general) | |||||||
| Byculla | Leasehold | - | President of | |||||
| No | ||||||||
| India | ||||||||
| Cooperage | Leasehold | - | President of | |||||
| No | ||||||||
| India | ||||||||
| South Colaba | Leasehold | - | President of | |||||
| No | ||||||||
| India | ||||||||
| Naigaon | Freehold | - | Bombay | |||||
| No | ||||||||
| Telephone | ||||||||
| Colaba | Leasehold | - | President | |||||
| of India, | ||||||||
| No | ||||||||
| Bombay | ||||||||
| telephone | ||||||||
| Prabhadevi | Freehold | - | Bombay | |||||
| No | ||||||||
| Telephone | ||||||||
| Description of Property | Type of properties | Gross carrying value (Amount in Cr)* | Held in the name of | Whether promoter, director or their relative or employee | Period held \u2013 Range (In Years) | Reason for not being held in name of company/ Remarks |
| Vashi Sec 15A | Leasehold | - | Bombay | |||
| No | ||||||
| Telephone | ||||||
| *Tilak Nagar, | Leasehold | 0.20 | Details not | |||
| Tribhuvan CHS, | available | |||||
| Sahakar Nagar, | No | |||||
| Chembur, | ||||||
| Mumbai |
*Not reflected in the documents produced before us. In Mumbai, the Title Deeds of 3 properties are not traceable.
The value of the immovable properties as per title deeds are subject to reconciliation with books of accounts.
Furthermore, in respect of 9 cases pertaining to freehold and leasehold land, encroachments by various persons have been identified, for which the matters are either pending before the courts or are being pursued with the relevant authorities for removal of such encroachments. (Refer Note 58 A (3)).
According to the information and explanations given by the company in Note No. 58 A (1) of the notes to accounts of the standalone financial statements to us and on the records of the Company, we do not express opinion on the validity of the title of the company of said immovable properties disclosed in the financial statements and held as Property, Plant and Equipment or as investment property.
(d) According to the information and explanations given to us and on the basis of our examination of the records of the Company, the Company has not revalued any of its Property, Plant and Equipment (including right of use assets) or intangible assets or both during the year.
(e) According to the information and explanations given to us and on the basis of our examination of the records of the Company, no proceedings have been initiated during the year or are pending against the Company as at March 31, 2026 for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 (as amended in 2016) and rules made thereunder.
(ii) (a) In respect of Delhi Units:
In our opinion,physicalverificationof inventory has been conducted by the management at reasonable intervals.
In respect of Mumbai Units:
In our opinion,physicalverificationof inventory has been conducted by the management at reasonable intervals.
In our opinion, the frequencyofsuchverificationis reasonable, and procedures and coverage as followed by management needs to be strengthened. No discrepancies were noticed on verification between the physical stocks and the book records that were 10% or more in the aggregate for each class of inventory.
(b) According to the information and explanations given to us and on the basis of our examination of the records of the Company, the Company has been sanctioned working capital limits in excess of five crore rupees, in aggregate, from banks which is not on the basis of security of current assets. Thus, clause 3(iii) of the Order is not applicable.
(iii) (a) According to the information and explanations given to us and on the basis of our examination of the records of the Company, the Company has not made any investments, provided guarantee or security or granted any advances in the nature of loans, secured or unsecured, to companies, firms, limited liability partnerships or any other parties during the year. Thus 3(iii) of the Order is not applicable.
(iv) According to the information and explanations given to us and on the basis of our examination of the records, the Company has not given any loans, or provided any guarantee or security as specified under Section 185 of the Companies Act, 2013 and the Company has not provided any guarantee or security as specified under Section 186 of the Companies Act, 2013. Thus, clause 3(iv) of the Order is not applicable.
(v) The Company has not accepted any deposits from the public within the meaning of Section 73 to Section 76 or any other relevant provisions of the Companies Act, 2013 or rules framed there under. Accordingly, clause 3(v) of the Order is not applicable.
(vi) As per the information and explanation given to us, Company is required to maintain the cost records under Section 148(1) of the Companies Act 2013. As explained the Company has not yet maintained the required cost records for the year ended March 31 st , 2026.
(vii) a) According to the information and explanations given to us, no undisputed amounts payable in respect of Goods and Services Tax, provident fund, employees state insurance, income-tax, sales-tax, service tax, duty of customs, duty of excise, value added tax, cess or other statutory dues were in arrears as at March 31 st, 2026 for a period of more than six months from the date they became payable except the following.
(i) GST
| Statute | Nature of dues | Amount (In crores) | Period to which the dues relate | Due Date | Date of payment | Remarks, if any |
| Central Goods & Service Act, 2017 | Goods & Service Tax | 1.76 | 2024-25 | For the specified period | - | Bsnl, Afnet, MCS |
| Central Goods & Service Act, 2017 | Goods & Service Tax | 15.14 | 2017 to 2023 | For the specified period | - | BSNL |
| Central Goods & Service Act, 2017 | Goods & Ser- vice Tax | 0.54 | 2023-24 | For the specified period | - | AFNET |
| Central Goods & Service Act, 2017 | Goods & Ser- vice Tax | 2.85 | 2023-24 | For the specified period | - | BSNL |
| Central Goods & Service Act, 2017 | Goods & Ser- vice Tax | 2.12 | 2023-24 | For the specified period | - | MCS |
(ii) License Fee & Spectrum Charges
| Statute | Nature of dues | Amount (In Crores) | Period to which the dues relate | Due Date | Date of payment | Remarks, if any |
| Indian Telegraph Act, 1985 & Telecom Regulatory Authority of India | License Fee | 143.98 | 2019-20 | For FY 2019-20 | - | |
| Indian Telegraph Act, 1985 & Telecom Regulatory Authority of India | License Fee | 106.99 | 2020-21 | For FY 2020-21 | - | |
| Indian Telegraph Act, 1985 & Telecom Regulatory Authority of India | License Fee | 95.88 | 2021-22 | For FY 2021-22 | - | |
| Indian Telegraph Act, 1985 & Telecom Regulatory Authority of India | License Fee | 72.54 | 2022-23 | For FY 2022-23 | - | |
| Indian Telegraph Act, 1985 & Telecom Regulatory Authority of India | License Fee | 57.85 | 2023-24 | For FY 2023-24 | - |
| Indian Telegraph Act, 1985 & Telecom Regulatory Authority of India | License Fee | 53.46 | 2024-25 | For FY 2024-25 | - | |
| Indian Telegraph Act, 1985 & Telecom Regulatory Authority of India | Spectrum Charges | 14.77 | 2019-20 | For FY 2019-20 | - | |
| Indian Telegraph Act, 1985 & Telecom Regulatory Authority of India | Spectrum Charges | 10.97 | 2020-21 | For FY 2020-21 | - | |
| Indian Telegraph Act, 1985 & Telecom Regulatory Authority of India | Spectrum Charges | 5.82 | 2021-22 | For FY 2021-22 | - | |
| Indian Telegraph Act, 1985 & Telecom Regulatory Authority of India | Spectrum Charges | 4.92 | 2022-23 | For FY 2022-23 | - | |
| Indian Telegraph Act, 1985 & Telecom Regulatory Authority of India | Spectrum Charges | 2.09 | 2023-24 | For FY 2023-24 | - | |
| Indian Telegraph Act, 1985 & Telecom Regulatory Authority of India | Spectrum Charges | 2.61 | 2024-25 | For FY 2024-25 | - |
b) According to the information and explanations given to us, there are no dues of Goods and Services Tax, provident fund, employees state insurance, income-tax, sales-tax, service tax, duty of customs, duty of excise, value added tax, cess or other material statutory dues which have not been deposited with the appropriate authorities on account of any dispute except for the following dues:
In respect of Delhi Units:
i. Service Tax:
| Name of the Statute | Total Liabilities (Rs. in Cr.) | Deposit Amount (Rs. in Cr.) | O/S Liabilities (Rs. in Cr.) | Period to which amount relates | Forum where the dispute is pending |
| Finance Act, 1994 | 66.71 | 5.00 | 61.71 | 2014-15 to June-17 | |
| Finance Act, 1994 | 4.22 | 0.32 | 3.90 | 2005-06 | Commissioner of Central Excise and Service Tax |
| Finance Act, 1994 | 0.08 | 0.04 | 0.04 | 2000-03 | |
| Total | 71.01 | 5.36 | 65.65 |
ii. GST:
| Name of the Statute | Total Liabilities (Rs. in Cr.) | Deposit Amount (Rs. in Cr.) | O/S Liabilities (Rs. in Cr.) | Period to which amount relates | Forum where the dispute is pending |
| 30.30 | 1.52 | 20.78 | 2017-18 | ||
| 16.15 | 0.86 | 15.29 | 2018-19 | Special | |
| Goods & Services | |||||
| Tax Act, 2017 | 152.92 | 6.95 | 145.96 | 2018-19 | Commissioner of GST |
| 88.52 | 4.58 | 83.94 | 2019-20 | ||
| 0.63 | - | 0.63 | 2020-21 | ||
| Total | 288.51 | 13.91 | 274.60 |
iii. Labour Cess:
| Name of the Statute | Total Liabilities (Rs. in Cr.) | Deposit Amount (Rs. in Cr.) | O/S Liabilities (Rs. in Cr.) | Period to which amount relates | Forum where the dispute is pending |
| Building and other Construction Workers Welfare Cess Act, 1996. | 9.14 | 0.09 | 9.05 | 1996 to 2001 | Deputy Labour Commissioner |
In respect of Mumbai Basic Units-
i. Sales Tax:
| Name of the Statute | Amount (Rs. in Cr.) (Net) | Period to which amount relates | Forum where the dispute is pending |
| Bombay Sales Tax Act, 1959 | 5.32 | 1996-97 | Hon\u2019ble High Court of Bombay |
| Bombay Sales Tax Act, 1959 | 216.11 | 2003-04 | Maharashtra Sales Tax Tribunal, Mumbai |
| Bombay Sales Tax Act, 1959 | 101.57 | 2004-05 | Maharashtra Sales Tax Tribunal, Mumbai |
| Bombay Sales Tax Act, 1959 | 14.97 | 2009-10 | Maharashtra Sales Tax Tribunal, Mumbai |
| Bombay Sales Tax Act, 1959 | 6.11 | 2011-12 | Maharashtra Sales Tax Tribunal, Mumbai |
| Bombay Sales Tax Act, 1959 | 26.47 | 2012-13 | Hon\u2019ble High Court of Bombay |
| Bombay Sales Tax Act, 1959 | 2.40 | 2014-15 | Deputy Commissioner of Sales tax |
| TOTAL | 372.94 |
ii. Service Tax:
| Name of the Statute | Amount (Rs. in Cr.) (Net) | Period to which amount relates | Forum where the dispute is pending |
| Finance Act, 1994 | 2.91 | 2012-13 to 2016-17 | Custom Excise and Service Tax Appellate Tribunal |
| Total | 2.91 |
Off InrespectofCorporate
v. Income Tax:
| Name of the Statute | Amount (Rs. in Cr.) (Net) | Period to which amount relates | Forum where the dispute is pending | Remarks |
| Income Tax Act, 1961 | Nil | A.Y 1998-99 to A.Y 2006-07 | Hon\u2019ble High Court of Delhi | Total disputed demand of Rs. 639.75 Crore either paid by the Company or deducted by the Income Tax Department from refund due to the Company |
| Income Tax Act, 1961 | Nil | A.Y 2007-08 to A.Y 2009-10 | Hon\u2019ble Income Tax Appellant Tribunal and Commissioner of Income Tax (Appeal) | Total disputed demand of Rs. 19.90 Crore either paid by the Company or deducted by the Income Tax Department from refund due to the Company |
(viii) According to the information and explanations given to us and on the basis of our examination of the records of the Company, the Company has not surrendered or disclosed any transactions, previously unrecorded as income in the books of account, in the tax assessments under the Income-tax Act, 1961 as income during the year.
(ix) (a) In our opinion and according to the information and explanations given to us, the
Company has defaulted in repayment of loans or other borrowings or in the payment of interest thereon to the following lenders during the year.
| Nature of borrowing including debt securities | Name of lender | Amount not paid on due date (Rs. in Cr.) | Whether principal or interest | No. of days delay or unpaid | Remarks, if any |
| Term Loan and | Union Bank of | 4,042.97 | Principal and | 641 | |
| Overdraft | India | Interest | |||
| Term Loan and | Bank of India | 1,216.37 | Principal and | 641 | |
| Overdraft | Interest | ||||
| Term Loan and | Punjab National | 508.53 | Principal and | 641 | |
| Overdraft | Bank | Interest | |||
| Term Loan | State Bank of India | 378.74 | Principal and | 641 | |
| Interest | |||||
| Term Loan | UCO Bank | 291.51 | Principal and | 641 | |
| Interest | |||||
| Overdraft | Indian Overseas | 2625.03 | Principal and | 455 | |
| Bank | Interest | ||||
| Term Loan | Punjab and Sindh | 199.38 | Principal and | 641 | |
| Bank | Interest |
(b) According to the information and explanations given to us and on the basis of our examination of the records of the Company, the Company has not been declared a willful defaulter by any bank or financial institution or other lender.
(c) According to the information and explanations given to us and on the basis of our examination of the records of the Company, term loans have been generally applied for the purposes for which they were raised.
(d) According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, funds raised on short term basis have not been utilized for long-term purposes.
(e) Accordingtotheinformationandexplanationsgiventousandonanoverallexamination of the financial statements of the Company, we report that the Company has not taken any funds from any entity or person on account of or to meet the obligations of its subsidiaries as defined under the Companies Act, 2013. Accordingly, clause 3(ix)(e) of the Order is not applicable.
(f) According to the information and explanations given to us and procedures performed by us, we report that the Company has not raised loans during the year on the pledge of securities held in its subsidiaries as defined under the Companies Act, 2013.
Accordingly, clause 3(ix)(f) of the Order is not applicable.
(x) (a) The Company has not raised any money by way of initial public offer or further public offer (including debt instruments) during the year. Accordingly, clause 3(x)(a) of the Order is not applicable.
(b) According to the information and explanations given to us and on the basis of our examination of the records of the Company, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year. Accordingly, clause 3(x)(b) of the Order is not applicable.
(xi) (a) According to the information and explanations given to us and on the basis of our examination of the records of the Company carried out in accordance with the generally accepted auditing practices in India, we have neither come across any instance of fraud by the Company or on the Company, noticed or reported during the year, nor have been informed of such case by the Management.
(b) According to the information and explanations given to us and on the basis of our examination of the records of the Company carried out in accordance with the generally accepted auditing practices in India, a report under Section 143(12) of the Act, in Form
ADT-4 as prescribed under Rule 13 of Companies (Audit & Auditors) Rules, 2014 was not required to be filed by us with the Central Government, during the year and up to the date of this Report. Further, as informed by the Company, the Cost Auditor as well as the Secretarial Auditor of the Company have not filed any report under Section 143(12) of the Act with the Central Government in Form ADT-4 as prescribed under
Rule 13 of Companies (Audit and Auditors) Rules, 2014 during the year and up to the date of this Report. Accordingly, reporting under Clause 3(xi)(b) of the Order is not applicable to the Company.
(c) According to the information and explanations given to us, no whistle blower complaints has been received by the Company during the year.
(xii) According to the information and explanations given to us, the Company is not a Nidhi Company. Accordingly, clause 3(xii) of the Order is not applicable.
(xiii) In our opinion and as per the information and explanation given to us, the Company has complied with the Provision of Section 177 of the Act and has not entered into any transaction requiring compliance with Section 188 of the Act.
(xiv) (a) In our opinion, the Internal Audit System of the Company is not commensurate with the size of the Company and the nature of its business. Moreover, extent of coverage of the areas of operations, frequency/ quality of reporting/ timeliness of the reporting and the follow up of internal audit observations need to be strengthened.
(b) We have considered the internal audit reports of the Company issued till date for the period under audit. However, the Internal Audit Reports of some of the units/zones of the Company were not provided.
(xv) In our opinion and according to the information and explanations given to us, the Company has not entered into any non-cash transactions with its directors or persons connected to its directors and hence, provisions of Section 192 of the Companies Act, 2013 are not applicable to the Company.
(xvi) (a) I n our opinion, the Company is not required to be registered under section 45-IA of the
Reserve Bank of India Act, 1934. Hence, reporting under clause 3(xvi)(a), (b) and (c) of the Order is not applicable.
(b) In our opinion, there is no core investment company within the Group (as defined in the Core Investment Companies (Reserve Bank) Directions, 2016) and accordingly reporting under clause 3(xvi)(d) of the Order is not applicable.
(xvii) The Company has incurred cash losses of Rs. 2538.50 Crore and Rs. 2807.11 Crore in the current and in the immediately preceding financial year respectively.
(xviii) There has been no resignation of the statutory auditors during the year. Accordingly, clause 3(xviii) of the Order is not applicable.
(xix) The Company has accumulated losses and its net worth has been fully/ substantially eroded, the Company has incurred net loss/net cash loss during the current year and the companys current liabilities exceeded its current assets as at the balance sheet date. According to the information and explanations given to us and on the basis of the financial ratios, ageing and expected dates of realization of financial assets and payment of financial liabilities, other information accompanying the financial statements, our knowledge of the Board of Directors and management plans and based on our examination of the evidence supporting the assumption in our opinion, these events or conditions, along with other matter, indicate that a material uncertainty exists as on the date of the audit report and the Company is not capable of meeting its liabilities existing at the date of balance sheet as and when they fall due within a period of one year from the balance sheet date.
(Also refer Adverse opinion paragraph (i) of our Independent Auditors Report and Note no. 78 to the standalone financial statements.).
(xx) In our opinion and according to the information and explanations given to us, there is no amount required to be spent by the company in accordance with section 135 of the companies act 2013. Accordingly, clause 3 (xx) of the Order is not applicable to the Company.
(xxi) The reporting under Clause 3(xxi) of the Order is not applicable in respect of audit of standalone financial statements. Accordingly, no comment in respect of the said clause has been included in this report.
| For O P Bagla & Co LLP | For S.L. Chhajed & Co. LLP |
| Chartered Accountants | Chartered Accountants |
| Firm Registration No.: 000018N/N500091 | Firm Registration No.: 000709C/C400277 |
| CA Nitin Jain | CA Vijit Baidmutha |
| Partner | Partner |
| Membership No.: 510841 | Membership No.: 406044 |
| UDIN: 26510841BBUEQY2654 | UDIN: 26406044NGNRFC7902 |
| Place: Delhi | Place: Delhi |
| Date: 21 st May 2026 | Date: 21 st May 2026 |
ANNEXURE-B ANNEXURE B TO THE INDEPENDENT AUDITORS REPORT
Referred to in our Independent Auditors Report of even date to the members of Mahanagar
Telephone Nigam Limited on the Standalone financial Statements for the year ended March 31 st , 2026.
Directions indicating the areas to be examined by the Statutory Auditors during the course of audit of annual accounts of Mahanagar Telephone Nigam Limited (Standalone) for the year 2025-26 issued by the Comptroller & Auditor General of India under section 143(5) of the
Companies Act, 2013.
Based on the information and explanations given to us we report as under:
| Sr.No. | Areas Examined | Observation / Finding |
| 1 | Assess the fair valuation of all the | The company has made investments only in equity |
| investments, both quoted and unquoted, | instruments of Subsidiary, Associates and Joint | |
| made directly by the company or through | Venture Companies. All such investments have | |
| Trusts, for Post retirement benefits of | been stated at cost in the financial statements (less | |
| the employees. This includes verifying | provision for impairment wherever required) as | |
| valuation methodologies, ensuring | per provisions of Ind AS-109 read with Ind AS -27. | |
| consistency with IND AS and reviewing | In addition, the investment made by Trusts (for | |
| supporting documentation. The auditor | Post retirement benefits of the employees) have | |
| shall provide a brief note on the valuation | been stated at Cost less provision for impairment. | |
| approach, its reasonability and compliance | Valuation of investments is according to the | |
| with applicable regulations, reporting any | provisions of accounting standards and accounting | |
| material deviations or misstatements. | procedures. | |
| There are no deviations or misstatement. | ||
| 2 | Whether the company has system in place | Yes, Majority of the accounting transactions are |
| to process all the accounting transactions | done through the IT system. Although manual | |
| through IT system? If yes, the implications | intervention is prevalent. Adequate security | |
| of processing of accounting transactions | measures for manual intervention need to be | |
| outside IT system on the integrity of | strengthened with supervisory sanction only and | |
| the accounts along with the financial | properly documented. | |
| implications, if any, may be stated. | ||
| However, the billing of following services is not | ||
| integrated with WFMS (accounting software): | ||
| 1. GSM Billing | ||
| 2. Lease Circuit | ||
| 3. IN CRM | ||
| 4. IUC | ||
| 5. GSM Prepaid |
| 3 | Whether funds (grants/subsidy etc.) | The company has received the Swachh Action Plan |
| received/ receivable from the specific | contribution during FY 2017-18 is Rs. 0.21 Crore, | |
| schemes from central/ state government or | FY 2018-19 is Rs. 0.35 Crore, FY 2019-20 is Rs. | |
| its agencies were properly accounted for | 0.35 Crore out of which Rs. 0.22 Crore is pending | |
| as per the applicable accounting standards | utilization with the Company. | |
| or norms and whether the received | ||
| Further, the company has not received any | ||
| funds were utilized as per its terms and | ||
| contribution under Swachh Action Plan during | ||
| conditions? Whether accounting of interest | ||
| FY 2020-21, 2021-2022, 2022-23, 2023-24, 2024-25 & | ||
| earned on grant received has been done as | ||
| 2025-26. | ||
| per its terms and conditions of the Grant. | ||
| List the cases of deviation. | ||
| 4 | Whether the company has identified the | We have inquired about risk areas and policy of |
| key risk areas? If yes, whether the company | the company to mitigate such risk. We have been | |
| has formulated any Risk Management | informed that the company has identified key risk | |
| Policy to mitigate these risks? If yes, | areas and formulated a policy to mitigate various | |
| (a) whether the Risk Management Policy | risks. Also, we have read the Management and | |
| has been formulated considering | Discussion Analysis of the Report of Board of | |
| global best practices? | Directors related to risk areas and company\u2019s step | |
| to mitigate such risks. Major risks in our opinion | ||
| (b) Whether the company has identified | are market and completion risk, regulatory risk, | |
| its data assets and whether it has been | operational risk, service quality risk and significant | |
| valued appropriately? | risk of going concern. | |
| Considering the overall situation and adverse | ||
| opinion on financial statement of the company | ||
| due to numerous qualifications and emphasis of | ||
| matter paras, we are not able to comment whether | ||
| the Risk Management Policy of the company is in | ||
| consonance with the best global practices. | ||
| We are not aware of any data assets and valuation | ||
| thereof in the company. Also, we have inquired | ||
| about the same and was not provided any sort of | ||
| detail in this regard. | ||
| 5. | Whether the company is complying with | We draw attention to the audit report on financial |
| the Securities and Exchange Board of India | statements of the company. The report contains | |
| (SEBI) (Listing Obligation and Disclosure | adverse opinion and numerous qualifications/ | |
| Requirements) Regulations, 2015 and other | emphasis of matter paras. We have broadly | |
| applicable rules and regulations of SEBI, | reviewed the compliance of various statutes to | |
| Departments of Investment and Public | the extent information have been provided to us. | |
| Asset Management, Ministry of Corporate | We have inquired about compliance with these | |
| Affairs, Department of Public Enterprises, | regulations. | |
| Reserve Bank of India, Telecom Regulatory | ||
| Regulations related to Public Sector enterprises, | ||
| Authority of India, CERT-IN, Ministry of | ||
| e.g. DIPAM/DPE guidelines, we have been | ||
| Electronics and Information Technology | ||
| informed that the same are complied with to the | ||
| and National Payments Corporations of | ||
| best possible extent. |
| India whenever applicable? If not, the cases | On our review We have not came across any | |
| non-compliance ofdeviationmaybehighlighted. towards SEBI and | significant | |
| Reserve Bank of India except that requirement | ||
| of SEBI guidelines regarding minimum number | ||
| of requisite independent directors has not been | ||
| complied with. | ||
| As regards other regulations i.e. CERT-IN, Ministry | ||
| of Electronics and Information Technology and | ||
| National Payments Corporations of India we have | ||
| been explained that the same are complied with | ||
| wherever applicable. | ||
| As regards TRAI regulations, we have been | ||
| informed that the company is not complied with | ||
| the parameters prescribed by TRAI and this has | ||
| resulted in disincentive levied on the company. | ||
| We have relied upon information/documents | ||
| provided to us by the company. | ||
| II. Sub-Directions | ||
| Sr. No. | Areas Examined | Observation / Finding |
| 1 | Whether the amount of revenue share | Yes, AGR Audit Report and Calculation sheet |
| (License fees and Spectrum Usage charges) | attached herewith. | |
| recognized in the financial statements is | ||
| in accordance with the License conditions | ||
| agreed by the company with DoT? If so, | ||
| detailed statement & calculation sheet may | ||
| beattached | ||
We have conducted the audit of accounts of Mahanagar Telephone Nigam Limited for the year ended 2025-26 in accordance with the directions issued by the C&AG of India under section 143(5) of the Companies Act, 2013 and certify that we have complied with the all directions issued to us.
| For O P Bagla & Co LLP | For S.L. Chhajed & Co. LLP |
| Chartered Accountants | Chartered Accountants |
| Firm Registration No.: 000018N/N500091 | Firm Registration No.: 000709C/C400277 |
| CA Nitin Jain | CA Vijit Baidmutha |
| Partner | Partner |
| Membership No.: 510841 | Membership No.: 406044 |
| UDIN: 26510841BBUEQY2654 | UDIN: 26406044NGNRFC7902 |
| Place: Delhi | Place: Delhi |
| Date: 21 st May 2026 | Date: 21 st May 2026 |
ANNEXURE C TO THE INDEPENDENT AUDITORS REPORT
(Referred to in paragraph (g) under Report on Other Legal and Regulatory Requirements section of our report of even date)
Report on the Internal Financial Controls with reference to the standalone financial under Clause (i) of sub-section 3 of section 143 of the Companies Act, 2013 (the Act)
We have audited the internal financial statements of Mahanagar Telephone Nigam Limited (the Company) as of March 31st, 2026 in conjunction with our audit of the standalone financial ended on that date.
Managements Responsibility for Internal Financial Controls
The Companys management is responsible for establishing and maintaining internal financial controls based on the internal control with reference to financial reporting criteria established by the Company considering the essential components of internal control stated in the
Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India (ICAI). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to companys policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Act.
Auditors Responsibility
Our responsibility is to express an opinion on the Companys internal financial controls with reference to the standalone financial statements based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls over Financial Reporting (the Guidance Note) and the Standards on Auditing, issued by ICAI and deemed to be prescribed under section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls, both applicable to an audit of Internal Financial Controls and, both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls with reference to the standalone financial statements was established and maintained and if such controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial control system with reference to these standalone financial statements and their operating effectiveness. Our audit of internal financial controls with reference to financial statements included obtaining an understanding of internal financial controls with reference to these standalone financial statements, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the standalone financial statements, whether due to fraud or error. sufficient appropriate to provide a Webelievethattheauditevidencewehaveobtainedis basis for our audit opinion on the Companys internal financial these standalone financial statements.
Meaning of Internal Financial Controls with reference to these standalone financial statements.
A companys internal financial control with reference to these standalone financial statements is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of standalone financial statements for external purposes in accordance with generally accepted accounting principles. A companys internal financial control over financial statements includes those policies and procedures that: (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company.
(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of standalone financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the companys assets that could have a material effect on the standalone financial statements.
Inherent Limitations of Internal Financial Controls with reference to the standalone financial statements
Because of the inherent limitations of internal financial controls with reference to the standalone financial statements, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls with reference to the standalone financial statements to future periods are subject to the risk that the internal financial control with reference to the standalone financial statements may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Qualified Opinion
According to the information and explanations given to us and based on our audit, the following material weaknesses have been identifiedintheoperatingeffectiveness of the Companys internal financial controls over financial reporting with reference to the standalone financial statements as at March 31st, 2026:
(i) The Companys billing software has not been operating properly in the Delhi Unit Unit. Additionally, the Company has not implemented sufficient alternative or manual procedures to ensure billing accuracy or safeguard against errors and fraud during this period, indicating a lack of effective internal controls over the billing process. (ii) The Company does not have appropriate internal control system for ensuring capitalization of Property, Plant and Equipment as and when the same is ready for use due to delayed issueofcompletioncertificateby engineering department or due to delay in receipt of bills from the vendors for bought out items or due to delay of inventory issue slip by stores.
Hence, the date of capitalization is not reliable. This could potentially result into delayed capitalization and corresponding impact on the operational results due to lower charge of depreciation.
(iii) The Company does not have an appropriate internal control system for ensuring de-commissioning and de-capitalization of Property, Plant and Equipment in respect of assets which are no longer in use and held for disposal as scrap. This could potentially result into overstatement of gross block and corresponding impact on the operational results due to higher charge of depreciation and lower provision for impairment of assets.
(iv) The Company does not have an appropriate internal control system to ensure that provisions made pending receipt of bills from vendors / contractors / operators / government departments at the financial year end are duly reversed when actual bills are received and accounted for. This could potentially result in the same being accounted twice. (v) The Company does not have an appropriate internal control system to track open purchase orders, work orders, agreements and contracts which have been entered with vendors / contractors / operators / government departments and are lying open. This could have liabilities andabearing provisions pertaining to the same.
(vi) The Company does not have an integrated ERP system. Different software packages used by the company are interfaced through software links or manual intervention leaving gaps between them. This could potentially result into impaired financial reporting. In Mumbai Unit, the Company does not have an appropriate internal control system for reconciliation of Debtors between Billing software and Accounts, which could potentially result in some . changesinthestandalonefinancialstatements
(vii) The Company does not have an appropriate internal control system for reconciliation of vendors / contractors / operators / government departments, accounts which could potentially result in some changes in the standalone financial statements. The cases identified by us have been appropriately qualified at various places in our report.
(viii)The Company does not have effective internal audit system so as to cover all with extensive scope. The extent and depth of coverage, manner of conduct and reporting in respect of internal audit is very weak. This could potentially result into weak checks and balances and unreported financial irregularities ultimately resulting into distorted reporting.
(ix) The Company does not have an appropriate internal control system for reconciliation of items of unlinked debits and credits because of receipts from the subscriber and the amount debited by the banks. This could potentially lead unreported financial adjustments ultimately resulting into distorted financial reporting.
(x) The Company does not have an appropriate internal control system for invoicing which are due and payable based on manual invoicing. The invoicing systems does not have reliability of measurement and reconciliation of items. This leads to multiple revisions and errors in invoicing. This could potentially lead errors in revenue recognition.
(xi) The Company does not have appropriate internal control system for ensuring end use of issued inventory. The accounting is done based on the requisition statement of item and not actual installation or commission of item. This could potentially result into non-identification of pilferage and also early capitalization of equipment.
(xii) The Company does not have an appropriate internal control system for ensuring billing and recovery of water and electricity charges from the lessee. This could potentially result in non-recovery and delayed recovery of such charges causing financial loss of the absolute expenses and finance cost on the delay in realization. This could also result in inaccurate expense values in the financial statements of the company.
(xiii) The company does not have appropriate internal control system towards renewals of the expired Rent/Lease agreements. Even though in some of the cases where lease agreements have been expired, company is receiving rentals on the terms and conditions mentioned in the expired agreement with the parties.
(xiv) The company does not have appropriate internal control towards the timely closure of workorders w.r.t landline & FTTH connections and creation of customer master for billing.
This could potentially result in leakage and potential loss of revenue.
(xv) The Company does not have appropriate internal control system for reconciliation of refundable with form 26ASandTDScertificatewhere applicable, which could potentially result in changes in standalone financial statement.
(xvi)In some cases, company is recognizing rentals on the terms and conditions mentioned the expired agreements with the parties and not receiving any amount from such parties for more than one year. However, the company has not provided provision for doubtful debts for all such cases.
(xvii) The Internal Financial Controls (IFC) configured within the Credit/Collection & Sales
Management System (CSMS) are editable by users without any corresponding edit log or change-tracking mechanism. Since no Edit Log is maintained for modifications made to these controls, it is not possible to verify or establish the integrity and accuracy of the data or configurations at any given point in time. The reliability of information generated from CSMS is therefore questionable.
A material weakness is a deficiency,or a combination of deficiencies, in internal financial control with reference to the standalone financial statements, such that there is a reasonable possibility that a material misstatement of the companys annual or interim financial statements will not be prevented or detected on a timely basis.
In our opinion, except for theeffects/ possible effects of the material weaknesses described above on the achievement of the objectives of the control criteria, the Company has maintained, in all material respects, adequate internal financial controls with reference to the standalone financialstatements and such internal financial controls with reference to the standalone financial statements were operating effectively as of March 31st, 2026, based on the internal control financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.
We have considered the material weaknesses identified and reported above in determining the nature, timing, and extent of audit tests applied in our audit of the standalone financial statements of the Company for the year ended March 31, 2026, and these material weaknesses do not affect our opinion on the standalone financial statements of the Company.
| For O P Bagla & Co LLP | For S.L. Chhajed & Co. LLP |
| Chartered Accountants | Chartered Accountants |
| Firm Registration No.: 000018N/N500091 | Firm Registration No.: 000709C/C400277 |
| CA Nitin Jain | CA Vijit Baidmutha |
| Partner | Partner |
| Membership No.: 510841 | Membership No.: 406044 |
| UDIN: 26510841BBUEQY2654 | UDIN: 26406044NGNRFC7902 |
| Place: Delhi | Place: Delhi |
| Date: 21 st May 2026 | Date: 21 st May 2026 |
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IIFL Capital Services Limited - Stock Broker SEBI Regn. No: INZ000164132 (Member ID - NSE: 10975 BSE: 179 MCX: 55995 NCDEX: 01249), DP SEBI Reg. No. IN-DP-185-2016, IA SEBI Regn. No: INA000000623, Merchant Banker SEBI Regn. No. INM000010940, RA SEBI Regn. No: INH000000248, BSE Enlistment Number (RA): 5016, AMFI-Registered Mutual Fund Distributor & SIF Distributor
ARN NO : 47791 (Date of initial registration – 17/02/2007; Current validity of ARN – 08/02/2027), PFRDA Reg. No. PoP 20092018, IRDAI Corporate Agent (Composite) : CA1099
This Certificate Demonstrates That IIFL As An Organization Has Defined And Put In Place Best-Practice Information Security Processes.
