Reliance Communications Ltd Directors Report.

To the Members of Reliance Communications Limited

Report on the Audit of the Standalone Financial Statements

Corporate Insolvency Proceedings as per Insolvency and Bankruptcy Code, 2016 (IBC)

The Honble National Company Law Tribunal, Mumbai Bench ("NCLT") admitted an insolvency and bankruptcy petition filed by a operational creditor against Reliance Communications Limited ("the Company") and appointed Resolution Professional (RP) who has been vested with management of affairs and powers of the Board of Directors with direction to initiate appropriate action contemplated with extant provisions of the Insolvency and Bankruptcy Code, 2016 and other related rules.

Qualified Opinion

We have audited the accompanying Financial Statements of Reliance Communications Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2020, and the Statements of Profit and Loss, Statements of Changes in Equity and Statements of Cash Flows for the year then ended, and notes to the Financial Statements, including a summary of significant accounting policies and other explanatory information.

In our opinion and to the best of our information and according to the explanations given to us, except for the possible effect of matters described in the Basis for Qualified Opinion section of our report, the aforesaid Financial Statements 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, 2020 and its loss (including total comprehensive loss) and its cash flows for the year ended on that date.

Basis for Qualified Opinion

We draw attention to following notes to the accompanying financial statements for the year ended March 31,2020:-

A. Note no. 2.15 & Note no 2.31, "Assets Held for Sale (AHS)" including Wireless Spectrum, Towers, Fiber and Media Convergence Nodes (MCNs) continue to be classified as held for sale at the value ascertained at the end of March 31, 2018, for the reasons referred to in the aforesaid note and impact of the non-payment of spectrum instalments due to Department of Telecommunication (DOT). Non determination of fair value as on the reporting date is not in compliance with Ind AS 105 "Non-Current Assets Held for Sale and Discontinued Operations". Accordingly, we are unable to comment on the consequential impact, if any, on the carrying amount of Assets Held for Sale and on the reported losses for the year ended March 31, 2020.

B. Note no. 2.48, regarding admission of the Company and its three subsidiaries into Corporate Insolvency Resolution Process ("CIRP"), and pending determination of obligations and liabilities including various claims submitted by the Operational/financial/other creditors and employees including interest payable on loans during CIRP. We are unable to comment the accounting impact and disclosure there of pending reconciliation and determination of final obligation.

The Company accordingly has not provided interest on borrowings amounting to Rs 4,212 Crore for year ended March 31, 2020 and Rs 6,962 Crore up to the previous financial year calculated based on basic rate of interest as per terms of loan. The Company further has not provided for foreign exchange variance (gain)/ loss amounting to Rs 1313 Crore for the ended March 31, 2020 and Rs 803 Crore of loss up to the previous financial year. Had such interest and foreign exchange variation (gain)/ loss as mentioned above been provided, the reported loss for the year ended March 31, 2020 would have been higher by Rs 5,524 Crore . Non provision of interest and nonrecognition of foreign exchange variation (gain)/ loss is not in compliance with Ind AS 23 "Borrowing Costs" and Ind AS 21 "The Effects of Changes in Foreign Exchange Rates" respectively.

C. Note no. 2.31, regarding pending comprehensive review of carrying amount of all other assets including investment in subsidiaries and liabilities on account of reason stated in the said note and accordingly non provision for impairment of carrying value of assets and write back of liabilities if any. Further Goods & Service Tax (GST) and Tax Deducted at source are pending for reconciliation. In the absence of Comprehensive review as mentioned above for the carrying value of all other assets and liabilities and pending reconciliation of Goods & Service Tax (GST) and Tax Deducted at Source (TDS), we are unable to comment that whether any adjustment is required in the carrying amount of such assets and liabilities and consequential impact, if any, on the reported losses for the year ended March 31, 2020. Non determination of fair value of financial assets & liabilities and carrying amount for other assets and liabilities are not in compliance with Ind AS 109- Financial Instruments and Ind AS 37- Provisions, Contingent Liabilities & Contingent Assets.

D. Note no. 2.52, regarding non adoption of Ind AS 116 "Leases" effective from April 01,2019 and the consequent impact thereof. The aforesaid accounting treatment is not in accordance with the relevant Indian Accounting Standard Ind-AS 116.

E. Note no 2.31, regarding continuous losses incurred by the Company, current liabilities exceeding its current assets, default in repayment of borrowings and default in payment of regulatory and statutory dues. This situation indicates that a material uncertainty exists that may cast significant doubt on the Companys ability to continue as a going concern. The accounts, however has been prepared by the management on a going concern basis for the reason stated in the aforesaid note. We however are unable to obtain sufficient and appropriate audit evidence regarding managements use of the going concern basis of accounting in the preparation of the financial statements, in view of on-going Corporate Insolvency Resolution Process, the outcome of which cannot be presently ascertained.

We conducted our audit in accordance with the Standards on Auditing (SAs) specified under section 143(10) of the Companies Act, 2013 (the Act). Our responsibilities under those Standards are further described in the Auditors Responsibilities for the Audit of the 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 together with the ethical requirements that are relevant to our audit of the financial statements under the provisions of the Companies Act, 201 3 and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for qualified opinion.

Emphasis of Matter Paragraph

A. We draw attention to Note no. 2.39.2 of the statement, regarding provision of license fee and spectrum usage charges based on management estimates pending special audit from Department of Telecommunications, pursuant to the judgment of Honble Supreme Court of India, vide its order dated October 24, 201 9 and status of payment thereof.

B. We draw attention to Note no. 2.53 of the statement, as regards to the managements evaluation of COVID - 19 impact on the future performance of the Company. The actual outcome of the assumptions and estimates may vary in future due to impact of pandemic.

Our opinion is not modified in respect of above matters.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the Financial Statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have determined the matters described below to be the key audit matters to be communicated in our report.

For each matter below, our description of how our audit addressed the matter is provided in that context.

We have fulfilled the responsibilities described in the Auditors responsibilities for the audit of the financial statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the financial statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying financial statements.

1. Revenue Recognition

The accuracy and completeness of revenue amounts recorded is an inherent industry risk. The revenue is categorised broadly into service and wholesale revenue. Service revenue mainly consists of income from fixed line, broadband, rentals and installations. Wholesale revenue comprises revenue from interconnection, external administration, capacity sales and from resellers.

We considered revenue recognition as a key audit matter as the amount involved is material to the financial statements and due to the complexity of the systems and processes used to record revenue. The accounting policy and relevant disclosures relating to revenue are set out in notes 1.12 and 2.25 respectively, to the financial statements.

Our audit procedures included, amongst others, the following:

• Testing the end-to-end reconciliation from business support systems to billing and to the general ledger,

• Performing tests on the accuracy of customer bill generation process on a sample basis and testing of a sample of the credits and discounts applied to such customer bills;

• Performed substantive analytical procedures over the significant revenue streams.

• Involving verification of controls surrounding revenue invoicing;

• Assessed transactions taking place before and after year-end to ensure that revenue was recognised in the appropriate period;

• Performing specific procedures to test the accuracy and completeness of adjustments, and performing procedures to ensure that the revenue recognition criteria adopted by the Company is in line with the companys accounting policies.

2. Valuation and disclosure of accrual estimates for legal claims, litigations, regulatory matters and contingencies and deposits against the same legal matters including provision of license fee and spectrum usage charges, pursuant to the judgment of Honble Supreme Court of India, vide its order dated October 24, 2019

The Company is involved as a party in legal proceedings, including regulatory and other governmental proceedings. The Company has also deposited substantial amounts with regulatory authorities against the demands in dispute, which has been classified as deposit.

This area is significant to our audit, since the accounting and disclosure for (contingent) legal liabilities is complex and judgmental (due to the difficulty in predicting the outcome of the matter and estimating the potential impact if the outcome is unfavourable), and the amounts Involved are, or can be, material to the financial statements as a whole. Further reference is made to Note no. 2.36 Contingent liabilities and note no. 2.39.2 on provision of Licence fees and Spectrum Usage Charges.

Our audit procedures included, amongst others, testing the effectiveness of the Companys internal controls around the identification and evaluation of claims/provisions, proceedings and investigations at different levels in the group, and the recording and continuous re-assessment of the related (contingent) liabilities and provisions and disclosures. We inquired with both internal legal staff including Resolution Professional (RP) as well as with the Companys financial staff in respect of ongoing investigations or claims, proceedings and investigations, inspected relevant correspondence, inspected the minutes of the meetings of the Audit Committee and requested a confirmation from the groups in-house responsible officials and RP. Also the Company has obtained legal opinions in past against these disputes. For claims settled during the year, we vouched the payments, as appropriate, and read the related orders to verify whether the settlements were properly accounted for.

We also assessed the adequacy of the Companys disclosure around legal claims, litigations, regulatory matters and contingencies as included in Note no. 2.36, Contingent liabilities.

We consider managements conclusion on the predicted outcome and estimation of potential impact reasonable and we assessed that the disclosures in Note no. 2.36, Contingent liabilities are reasonable.

Information Other than the Financial Statements and Auditors Report Thereon

The Companys Board of Directors is responsible for the preparation of other information. The other information comprises the information included in Boards Report including Annexures to Boards Report, but does not include the financial statements and our auditors report thereon. Our opinion on the financial statements does not cover the other information and we will not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. When we read the report containing other information, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance. We have nothing to report in this regard

Responsibility of Management and Those Charged with Governance for the Financial Statements

The financial Statements, which is the responsibility of the Companys Management is relied upon by the Resolution Professional based on the assistance provided by the Directors and taken on record by the Resolution Professional as fully described in Note no.2.54 of financial Statements .The Companys Management is responsible for the matters stated in section 134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation of these 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 effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, Directors/Resolution Professional(RP) 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 (RP) either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

The Management/RP is also responsible for overseeing the Companys Financial reporting process.

Auditors Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the 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. Misstatement can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these 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 financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our 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 control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Companies Act, 2013, we are also responsible for expressing our opinion on whether the company has adequate internal Financial controls system 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 that may cast significant doubt 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 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 financial statements, including the disclosures, and whether the 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 audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a Statements 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.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Other Matters

A. The entire audit finalisation process was carried from remote locations i.e. other than the office of the Company where books of account and other records are kept, based on the data/details or financial information provided to us through digital medium, owing to complete lockdown imposed by the Central Government to restrict the spread of COVID 1 9.. Being constrained, we resorted to and relied upon the results of the alternative audit procedures to obtain sufficient and appropriate audit evidence for significant matters in course of our audit. Our report is not modified in respect of this matter.

B. Pursuant to applications filed by Ericsson India Pvt. Ltd before the National Company Law Tribunal, Mumbai Bench ("NCLT") in terms of Section 9 of the Insolvency and Bankruptcy Code, 2016 read with the rules and regulations framed thereunder ("Code"), the NCLT had admitted the applications and ordered the commencement of corporate insolvency resolution process ("CIRP") of Reliance Communications Limited ("the Company") and two of its subsidiaries namely Reliance Infratel Limited (RITL) and Reliance Telecom Limited (RTL) (collectively, the "Corporate Debtors") vide its orders dated May 15, 2018. The committee of creditors ("CoC") of the Corporate Debtors, at the meetings of the CoC held on May 30, 2019, in terms of Section 22 (2) of the Code, resolved with the requisite voting share, to replace the Interim Resolution Professionals with the Resolution Professional ("RP") for the Corporate Debtors, which has been confirmed by the NCLT in its orders dated June 21, 2019 (published on the website of the NCLT on June 28, 2019).

The financial statements of the Company shall be signed by the Chairperson or Managing Director or Whole Time Director or in absence of all of them, it shall be signed by any Director of the Company who is duly authorized by the Board of Directors to sign the financial statements. As mentioned in Note No 2.54 of the financial statement, in view of the on going Corporate Insolvency Resolution Process, the powers of the board of directors stand suspended and are exercised by the Resolution Professional .

Report on Other Legal and Regulatory Requirements

As required by the Companies (Auditors Report) Order, 2016 ("the Order"), issued by the Central Government of India in terms of sub-section (11) of section 143 of the Companies Act, 2013, we give in the " Annexure A" a Statements on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.

As required by Section 143(3) of the Act, we report that:

(a) Except for the matters described in the Basis of Qualified opinion paragraph above, 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.

(b) Except for the possible effects of the matters described in the Basis of Qualified 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 Statements of Profit and Loss, and the Statements of Cash Flows and Statements of Changes in Equity dealt with by this Report are in agreement with the books of account.

(d) In our opinion, the aforesaid financial statements comply with the Indian Accounting Standards ( Ind AS) specified under Section 133 of the Act, read with the Companies (Indian Accounting Standards) Rules, 2015, as amended, except requirement of Ind AS 105 on Non-Current Assets Held for Sale and Discontinued Operations , Ind AS 23 on Borrowing Cost and Ind AS 21 on Effects of Changes in foreign exchanges ,Ind AS 116 on Leases , Ind AS 109 Financial Instruments ,Ind 37 on Provisions, Contingent Liabilities and Contingent Assets, with regard to matters described in the Basis of Qualified Opinion paragraph above

(e) The matter described under the basis for qualified opinion paragraph above and Qualified Opinion paragraph of Annexure B to this report in our opinion, may have an adverse effect on functioning of the Company and on the amounts disclosed in financial statements of the Company;

(f) On the basis of the written representations received from two directors of the Company as on March 31, 2020 taken on record by the Board of Directors and based on legal opinion obtained by the Company during previous year with regard to non payment of debenture holders due (Refer Note No.2.51), these two directors are not disqualified as on March 31, 2020 from being appointed as a director in terms of Section 164 (2) of the Act. Further as mentioned in Note no. 2.51 of the financial statements, other directors of the Company have resigned from the position of director, however their resignation has not been accepted for the reason stated in the said note and Company has not received declarations from these directors in this regard, accordingly we are unable to comment whether these directors are disqualified as on March 31, 2020 from being appointed as a director in terms of Section 164(2) of the Act.

(g) The qualification relating to maintenance of accounts and other matters connected therewith are as stated in the Basis for Qualified Opinion paragraph above

(h) With respect to the adequacy of the internal financial controls with reference to financial statements of the Company and the operating effectiveness of such controls, refer to our separate Report in "Annexure B".

(i) With respect to the other matters to be included in the Auditors Report in accordance with the requirements of section 197(16) of the Act, as amended:

In our opinion and to the best of our information and according to the explanation given to us, in respect of one managerial person of the Company, Managerial remuneration has been paid/provided in accordance with the requisite approval by shareholders as mandated by the provisions of section 197 read with schedule V of the Act.

Further in respect of one managerial person of the Company, managerial remuneration paid/provided is in excess of limits prescribed under section 197 read with schedule V of the Act. The company has paid/provided total managerial remuneration amounting to Rs 49 lakhs to this managerial person, which exceeds by Rs 22 lakhs from the limits prescribed under this Section, the company has disclosed the said excess payment as recoverable from the said managerial person and is in the process of obtaining requisite approval from shareholders in ensuing Annual General Meeting.

The Ministry of Corporate Affairs has not prescribed other details under section 197(16) which are required to be commented upon by us.

(a) 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, in our opinion and to the best of our information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations on its Financial position in its financial Statements - Refer 2.36 to the financial statements;

ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses; and

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

For Pathak H.D. & Associates LLP

Chartered Accountants

Firms Registration No: 107783W/W100593

Parimal Kumar Jha

Partner

Membership No: 124262

July 31, 2020 Mumbai

UDIN:20124262AAAADC4008

‘Annexure A to the Independent Auditors Report - March 31, 2020

With reference to the Annexure A referred to in the Independent Auditors Report to the Members of Reliance Communications Limited (the Company) on the financial statements for the year ended March 31, 2020, we report the following:

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

(b) We are informed that the Company physically verifies its assets over a three year period. In our opinion, this periodicity of physical verification is reasonable having regard to the size of the Company and the nature of its assets. In accordance with this policy and on account of Covid 1 9 pandemic, the Company has physically verified some of the fixed assets on sample basis during the year which is not under electronic surveillance and no material discrepancies were identified on such physical verification except certain Fixed Assets amounting to Rs 1.9 Crore taken from the Companys premises, for which necessary action has been initiated.

(c) According to the information and explanations given to us, the title deeds of immovable properties, as disclosed in Note 2.01 &2.15 to the financial statements, are held in the name of the Company, except for the following where the Company is in the process of transferring the title deeds in its name as these were acquired through various schemes of arrangement entered in the earlier years:

Particulars Freehold Land Leasehold Land Building
No of cases 359 14 376
Gross block as at March 31, 2020 ( Rs in crores) 133 12 245
Net block as at March 31, 2020 ( Rs in crores) 133 10 162

ii. The inventory has been physically verified by the management during the year. In our opinion, the frequency of such verification is reasonable. The discrepancies noticed on verification between the physical stocks and the book records were not material and have been dealt with in books of account.

iii. According to the information & explanations given to us, the Company has not granted any loans, secured or unsecured, to companies, firms, Limited liability Partnerships or other parties covered in the register maintained under Section 189 of the Act. Accordingly, paragraph (iii) of the Order is not applicable to the Company.

iv. In our opinion according to the information and explanations given to us, the Company has not granted any loans or provided any guarantees or security to the parties covered under Section 185 of the Act. The Company has complied with the applicable provisions of Section 186 of the Act to the extent applicable.

v. In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from the public in accordance with relevant provisions of Sections 73 to 76 or any other relevant provisions of the Act and the rules framed there under. Accordingly, paragraph (v) of the Order is not applicable to the Company.

vi. We have broadly reviewed the books of account maintained by the Company pursuant to the rules prescribed by the Central Government for maintenance of cost records under sub-section 1 of Section 148 of the Act, in respect of telecommunication activities and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. However, we have not made a detailed examination of the records.

vii. (a) According to the information and explanations given to us and on the basis of our examination of the records of the Company, we observed that there are delays in amounts deposited with appropriate authorities for amounts deducted/accrued in the books of account in respect of undisputed statutory dues including provident fund, income tax, goods and services tax, service tax, , duty of customs, sales tax, value added tax (VAT), entry tax, employees state insurance, cess and other material statutory dues. As explained to us, the Company did not have any dues on account of duty of excise.

According to the information and explanations given to us, undisputed amounts payable in respect of provident Fund, income tax, goods and services tax, sales tax, value added tax, employees state insurance and other material statutory dues which were in arrears as at March 31, 2020 for a period of more than six months from the date they became payable are as under:

Name of Statute* Nature of Dues Amount ( Rs in crore) Period to which the amount relates Due Date Date of Payment
Maharashtra Value Added Tax Act, 2002 Value Added Tax Payable 0.36 FY 2017-18 Various Dates Unpaid
Delhi Value Added Tax Act, 2004 Value Added Tax Payable 0.04 FY 2017-18 Various Dates Unpaid
Karnataka Value Added Tax Act, 2003 Value Added Tax Payable 0.05 FY2017-18 Various Dates Unpaid
Orissa Value Added Tax Act, 2004 Value Added Tax Payable 0.00 FY2017-18 Various Dates Unpaid
Gujarat Value Added Tax Act,2003 Value Added Tax Payable 0.41 FY2017-18 Various Dates Unpaid
Maharashtra Value Added Tax Act, 2002 Works Contract Tax Payable 0.01 FY2017-18 Various Dates Unpaid
Rajasthan Value Added Tax Act, 2003 Works Contract Tax Payable 0.03 FY 2017-18 Various Dates Unpaid

‘Annexure A to the Independent Auditors Report - March 31, 2020

Name of Statute* Nature of Dues Amount ( Rs in crore) Period to which the amount relates Due Date Date of Payment
Gujarat CST Act,1956 Central Sales Tax Payable 0.03 FY 2017-18 Various Dates Unpaid
Karnataka CST Act,1956 Central Sales Tax Payable 0.07 FY 2017-18 Various Dates Unpaid
Andhra Pradesh CST Act,1956 Central Sales Tax Payable 0.36 FY2017-18 Various Dates Unpaid
Punjab CST Act,1956 Central Sales Tax Payable 0.42 FY2017-18 Various Dates Unpaid
Rajasthan CST Act,1956 Central Sales Tax Payable 0.00 FY2017-18 Various Dates Unpaid
Madhya Pradesh CST Act,1956 Central Sales Tax Payable 0.00 FY2017-18 Various Dates Unpaid
Jharkhand CST Act,1956 Central Sales Tax Payable 0.00 FY 2017-18 Various Dates Unpaid
Chhattisgarh CST Act,1956 Central Sales Tax Payable 0.01 FY 2017-18 Various Dates Unpaid
Himachal Pradesh CST Act,1956 Central Sales Tax Payable 0.00 FY 2017-18 Various Dates Unpaid
Uttarakhand Value Added Tax Act,2005 Works Contract Tax Payable 0.00 FY 2017-18 Various Dates Unpaid
Andhra Pradesh Value Added Tax Act,2005 Works Contract Tax Payable 0.01 FY 2017-18 Various Dates Unpaid
Haryana Value Added Tax Act,2003 Works Contract Tax Payable 0.00 FY 2017-18 Various Dates Unpaid
Himachal Pradesh Value Added Tax Act,2005 Works Contract Tax Payable 0.00 FY 2017-18 Various Dates Unpaid
Punjab Value Added Tax Act,2005 Works Contract Tax Payable 0.00 FY 2017-18 Various Dates Unpaid
Kerala Value Added Tax Act,2003 Works Contract Tax Payable 0.00 FY 2017-18 Various Dates Unpaid
Maharashtra Value Added Tax Act,2002 Works Contract Tax Payable 0.25 FY 2017-18 Various Dates Unpaid
Chhattisgarh Value Added Tax Act,2003 Works Contract Tax Payable 0.00 FY 2017-18 Various Dates Unpaid
Orissa Value Added Tax Act,2004 Works Contract Tax Payable 0.01 FY 2017-18 Various Dates Unpaid
Madhya Pradesh Value Added Tax Act,2003 Works Contract Tax Payable 0.01 FY 2017-18 Various Dates Unpaid
Income Tax Act, 1961 Tax Deducted at source 20.99 FY 2017-18 & F.Y 2018-19 Various Dates Unpaid

*In respect of Goods & Service Tax (GST) payable, the Company is in the process of reconciliation (Refer note No. 2.31of the financial statements and our qualification in main report and report on Internal Financial Control with reference to Financial Statements in this regard). The Company has filed GST return up to the month February 2020 and hence as at March 31, 2020, no amount is unpaid for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us, there are no dues of cess which have not been deposited on account of any dispute. The dues of income tax, duty of customs, service tax, sales tax, value added tax and entry tax as disclosed below have not been deposited by the Company on account of disputes:

Name of Statue Nature of Dues Amount* ( Rs in crore) Period Forum
Central Sales Tax, Bihar Central Sales Tax 0.04 2005-06 Appellate Tribunal
0.43 2011-12 Asst. Commissioner of Commercial Taxes
Central Sales Tax, Chattisgarh Central Sales Tax 0.00 2011-12 Dy. Commissioner (Appeals)
Central Sales Tax, Madhya Pradesh Central Sales Tax 0.03 2011-12 to 2013-14 Dy. Commissioner (Appeals)
Central Sales Tax, Maharashtra Central Sales Tax 0.27 2011-12 Dy. Commissioner of Sales Tax
0.35 2013-14 Dy. Commissioner of Sales Tax
Central Sales Tax,Orissa Central Sales Tax 0.00 2009-10 Addl. Commissioner (Appeals)
0.02 Oct 06 to March 09 Sales Tax Appellate Tribunal

‘Annexure A to the Independent Auditors Report - March 31, 2020

Central Sales Tax, Uttar Pradesh Central Sales Tax 0.07 2006-07 High Court
0.08 2010-11 Additional Commissioner (Appeals)
0.50 2013-14 Dy. Commissioner of Commercial Taxes
1.25 2014-15 Dy. Commissioner of Commercial Taxes
Central Sales Tax, Uttarakhand Central Sales Tax 0.12 2009- 10 to 2010- 11 Dy. Commissioner of Commercial Taxes
0.14 2012-13 Jt. Commissioner of Commercial Taxes (Appeals)
Central Sales Tax, West Bengal Central Sales Tax 0.34 2007-08 Tax Revision Board Jt.Commissioner
0.36 2014-15 Commercial Taxes
Central Sales Tax, Punjab Central Sales Tax 0.05 2010-11 Dy. Excise and Taxation Commissioner (Appeals)
Entry Tax, Bihar Entry Tax 0.38 2007- 08 to 2008- 09 Commercial Tax Tribunal
0.25 2011-12 Asst. Commissioner of Commercial Taxes
Entry Tax, Chattisgarh Entry Tax 0.63 2006- 07 to 2007- 08 Dy. Commissioner (Appeals)
0.25 2010- 11 to 2011- 12 Dy. Commissioner (Appeals)
Entry Tax, Himachal Pradesh Entry Tax 1.01 2010-11 to 2013-14 High Court
Entry Tax, Madhya Pradesh Entry Tax 0.48 2002- 03 to 2003- 04 Asst. Commissioner of Commercial Taxes
1.58 2005-06 to 2008-09 & 2010-11 MP Taxation Board
0.21 2011-12 Dy. Commissioner (Appeals)
Entry Tax, Orissa Entry Tax 0.08 2009-10 Addl. Commissioner (Appeals)
0.05 Oct 06- March 09 Sales Tax Appellate Tribunal
Entry Tax, Uttar Pradesh Entry Tax 0.13 2003-04 Commercial Tax Tribunal
0.02 2013-14 Dy. Commissioner of Commercial Taxes
0.02 2014-15 Dy. Commissioner of Commercial Taxes
Entry Tax, West Bengal Entry Tax 0.17 2014-15 Jt.Commisioner Commercial Taxes
0.18 2015-16 Commercial Tax officer
Entry Tax, Rajasthan Entry Tax 1.70 2013- 14 to 2014- 15 Appellate Authority
14.73 2005-06, 2007-08 to 2012-13 Supreme Court
Entry Tax, Jammu & Kashmir Entry Tax 9.69 2008-09 to 2011-12 High Court
Entry Tax, Punjab Entry Tax 0.01 Oct 2012 to Dec 2012 High Court
VAT, Bihar VAT 0.24 2005-06 Commercial Tax Tribunal
8.33 2011-12 High Court
VAT, Haryana VAT 1.15 2011-12 Commercial Tax Tribunal
VAT, Kerala VAT 0.01 2006-07 Deputy Commisoner (Appeals)
2.79 2010-11 High Court
0.02 2011-12 Deputy Commissioner (Appeals)
0.32 2012-13 High Court
2.80 2013-14 High Court
2.15 2014-15 High Court
VAT, Punjab VAT 0.05 2010-11 Deputy Commissioner (Appeals)
VAT, Uttarakhand VAT 0.78 2009- 10 to 2010- 11 Dy. Commissioner of Commercial Taxes
0.03 2007-08 Jt. Commissioner (Appeals)
0.41 2012-13 Jt. Commissioner of Commercial Taxes (Appeals)
VAT, West Bengal VAT 4.17 200506,2007-08 to 2008-09 Tax Revision Board
0.03 2012-13 Jt. Commissioner of Commercial Taxes (Appeals)
0.02 2014-15 Jt. Commissioner Commercial Taxes
0.13 2015-16 Jt. Commissioner
VAT/Sales Tax, Uttar Pradesh VAT/Sales Tax 0.24 2003-04 UP Trade Tax Tribunal
0.93 2004-05 High Court
0.52 2005-06, Jan 08 to March 08 Dy. Commissioner of Commercial Taxes
0.20 2010-11 Addl. Commissioner (Appeals)
2.38 2013-14 Dy. Commissioner of Commercial Taxes
1.83 2014-15 Dy. Commissioner of Commercial Taxes
VAT, Chattisgarh VAT 0.02 2011-12 Dy. Commissioner (Appeals)
Finance Act, 1994 CENVAT Credit 2.42 01.4.2004 to 31.3.2015 Commissioner, CGST & Central Excise
3.21 01.4.2010 to 31.03.2014 Commissioner, CGST & Central Excise
1.32 2014-15 CESTAT
Income Tax Act, 1961 Income Tax 215.50 2009-10 Income Tax Appellate Tribunal
Income Tax Act, 1961 Income Tax 82.60 2010-11 Income Tax Appellate Tribunal
Income Tax Act, 1961 Income Tax 0.82 2011-12 Joint Commissioner of Income Tax
*Net of amounts paid ur ider protest.

viii. The company has defaulted in repayment of following dues to the financial institution, banks and debenture holders during the year, which were not paid as at Balance Sheet date.

Name of Lender

Borrowings

Interest

Amount (Rs In Cr.) Period (Maximum days) Amount (Rs In Cr.) Period (Maximum days)
I Loan from Banks
1 Burlington Loan Management DAC 163 842
2 Shubh Holdings Pte Ltd. 5022 1 129
3 Bank of Baroda 1 837 1 120 11 1 097
4 Bank of India 644 1 097 9 1 097
5 Bank of Maharashtra 473 1 049
6 Canara Bank 622 1 006
7 Central Bank of India 258 1 097 3 1 097
8 Corporation Bank 583 1 119 8 1 097
9 Dena Bank 250 784
10 Deutsche Bank 130 842 1 1 015
11 China Development Bank 2248 1 129 128 1 129
12 Industrial and Commercial Bank of Chine 1194 1129 33 1129
13 Export Import Bank of China 2 433 1 129 47 1 129
14 IDBI Bank 721 1 101 9 1 097
15 Indian Overseas Bank 120 1 097 1 1 097
16 RCOM Bond 1 955
17 Oriental Bank of Commerce 189 1 097 2 1 097
18 Punjab National Bank 623 1 098
19 Standard Chartered Bank 1 072 1 086
20 State Bank of India 2 227 1 097 21 1 097
21 Syndicate Bank 705 1 120 5 1 097
22 UCO Bank 681 1 097 9 1 097
23 Union Bank of India 742 1 097 3 1 097
24 United Bank of India 424 1 097 2 1 097
25 Vijaya Bank 16 686
II Debenture
26 Life Insurance Corporation of India 3 750 784
III Other Loans
27 Industrial Finance Corporation of India Limited 200 1 113 4 1 113
28 India Infrastructure Finance Corporation Limited 248 914 4 1 128
29 Asset Care and Reconstruction Enterprises Limited 492 1 108
30 Reliance Capital Limited 1 000 366 3 1 097
31 Neptune Steel Strips Limited 68 92
32 Deep Industrial Finance Limited 260 121
33 Pearl Housing Finance Limited 260 121
34 Shriyam Auto Fin Ltd 260 121
35 Traitrya Construction Finance Limited 260 121
36 Vishvakarma equipment finance Limited 142 121
Total 32 272 303

(Refer Note no 2.20.2 of Financials statements)

Apart from outstanding of Interest mentioned above, the Company has not provided Interest Expense of Rs 4,212 crore for the year and Rs 11,174 crore up to March 31, 2020, in respect of loans taken from financial institutions, banks, debenture holders and other lenders and therefore, it has not been disclosed above.

c) Installments amounting to Rs 808 crore payable to Department of Telecommunications as on March 31, 2020 for spectrum acquired on deferred payment basis, has not been paid. (Refer Note 2.02)

ix. During the year, the Company has not raised any money by way of initial public offer or further public offer (including debt instruments). The Company during the year has not taken term loans from banks and financial institutions hence question of utilization of term loans does not arise.

x. According to the information and explanations given to us, no material fraud by the Company or on the Company by its officers or employees has been noticed or reported during the course of our audit.

xi. In our opinion and to the best of our information and according to the explanation given to us-

In respect of one managerial person, Managerial remuneration has been paid/provided in accordance with the requisite approval by shareholders as mandated by the provisions of section 197 read with schedule V of the Act.

Further in respect of one managerial person of the Company, managerial remuneration paid/provided is in excess of limits prescribed under section 197 read with schedule V of the Act. The company has paid/provided total managerial remuneration amounting to Rs 49 lakhs to this managerial person, which exceeds by Rs 22 lakhs from the limits prescribed under this Section, the Company has disclosed the said excess payment as recoverable from the said managerial person and is in the process of obtaining requisite approval from shareholders in ensuing Annual General Meeting.

xii. In our opinion and according to the information and explanations given to us, the Company is not a nidhi company. Accordingly, paragraph (xii) of the Order is not applicable to the Company.

xiii. According to the information and explanations given to us and based on our examination of the records of the Company, transactions with the related parties are in compliance with Sections 177 and 188 of the Act, where applicable. The details of such related party transactions have been disclosed in the financial statements as required by the applicable accounting standards.

xiv. According to the information and explanations given to us and based on our examination of the records, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year.

xv. According to the information and explanations given to us and based on our examination of the records, the Company has not entered into non-cash transactions with directors or persons connected with him. Accordingly, paragraph (xv) of the Order is not applicable to the Company.

xvi. The Company is not required to be registered under Section 45-IA of the Reserve Bank of India Act, 1 934. Accordingly, the provisions of Clause (xvi) of the Order are not applicable to the Company.

For Pathak H.D. & Associates LLP

Chartered Accountants

Firms Registration No: 107783W/W100593

Parimal Kumar Jha

Partner

Membership No: 124262

July 31, 2020 Mumbai

UDIN:20124262AAAADC4008

Annexure B to the Independent Auditors Report - March 31, 2020

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 ("the Act").

We have audited the internal financial controls with reference to financial statements of Reliance Communications Limited ("the Company") as of March 31, 2020 in conjunction with our audit of the financial statements of the Company for the year 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 over 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 financial statements based on our audit. We conducted our audit in accordance with the Guidance Note and the Standards on Auditing as specified under Section 143(10) of the Act, to the extent 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 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 controls system with reference to 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 financial reporting, 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 financial statements, whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified opinion on the Companys internal financial controls system with reference to financial statements.

Meaning of Internal Financial controls with reference to financial statements

A companys internal financial controls with reference to financial statements is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A companys internal financial control with reference to 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 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 financial statements.

Inherent Limitations of Internal Financial controls with reference to financial statements

Because of the inherent limitations of internal financial controls with reference to 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 over financial statements to future periods are subject to the risk that the internal financial control with reference to financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Basis of Qualified Opinion

According to the information and explanations given to us and based on our audit, the following material weaknesses has been identified in the operating effectiveness of the Companys internal financial controls over financial statements as at March 31, 2020:

i. Balances of Trade Receivables ,Trade Payables, other liabilities and loan & advances are subject to confirmations. (Read with Note no. 2.31).

ii. Statutory dues including Goods and Service Tax/Service Tax/ Value Added Tax / Tax Deducted at Source accounts are not reconciled and during the year there were delays in filing of certain statutory returns with the respective authorities.

iii. The Companys internal control process in respect of closure of outstanding entries in Bank Reconciliation Statements.

iv. The Companys internal financial control with regard to the compliance with the applicable Indian Accounting Standards and evaluation of carrying values of assets and liabilities and other matters, as fully explained in basis for qualified opinion of our main report, resulting in the Company not providing for adjustments, which are required to be made, to the standalone financial statements.

A material weakness is a deficiency, or a combination of deficiencies, in internal financial control over financial statements, such that there is a reasonable possibility that a material misstatement of the Companys financial statements will not be prevented or detected on a timely basis.

Qualified Opinion

In our opinion and to the best of our information and according to the explanations given to us, except for the effects / possible effects of the material weaknesses described above under Basis for Qualified Opinion paragraph on the achievement of the objectives of the control criteria, the Company has, in all material respects an adequate internal financial controls system with reference to financial statements and such internal financial controls over financial statements were operating effectively as at March 31, 2020, based on the internal control over financial statements 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 statements issued by the ICAI.

We have considered material weakness identified and reported above in determining the nature, timing, and extent of audit tests applied in our audit of the financial statements of the

Company for the year ended March 31, 2020 and these material weaknesses affect our opinion on the financial statements of the Company for the year ended March 31, 2020 [our audit report dated July 31, 2020, which expressed a qualified opinion on those financial statements of the Company].

For Pathak H.D. & Associates LLP

Chartered Accountants

Firms Registration No: 107783W/W100593

Parimal Kumar Jha

Partner

Membership No: 124262

July 31, 2020 Mumbai

UDIN:20124262AAAADC4008