Siti Networks Ltd Directors Report.

To the Members of SITI Networks Limited

REPORT ON THE AUDIT OF THE STANDALONE FINANCIAL STATEMENTS

QUALIFIED OPINION

1. We have audited the accompanying standalone financial statements of SITI Networks Limited (‘the Company), which comprise the Balance Sheet as at 31 March 2020, the Statement of Profit and Loss (including Other Comprehensive Income), the Cash Flow Statement and the Statement of Changes in Equity for the year then ended, and a summary of the significant accounting policies and other explanatory information.

2. In our opinion and to the best of our information and according to the explanations given to us, except for the effects of the matter described in the Basis for Qualified Opinion section of our report, the aforesaid standalone financial statements give the information required by the Companies Act, 2013 (‘Act) in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India including Indian Accounting Standards (‘Ind AS) specified under section 133 of the Act, of the state of affairs of the Company as at 31 March 2020, and its loss (including other comprehensive income), its cash flows and the changes in equity for the year ended on that date.

BASIS FOR QUALIFIED OPINION

3. As described in note 47 to the accompanying standalone financial statements, the Companys ‘Revenue from operations includes broadcasters share in subscription income from pay channels, which has correspondingly been presented as an expense which is not in accordance with the requirements of Ind AS-115, ‘Revenue from contracts with customers. Had the management disclosed the same on net basis, the ‘Revenue from operations and the ‘Carriage sharing, pay channel and related costs each would have been lower by 3,902.38 million for the year ended 31 March 2020, while there would have been no impact on the net loss for the year ended 31 March 2020.

4. We conducted our audit in accordance with the Standards on Auditing specified under section 143(10) of 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 (‘ICAI) together with the ethical requirements that are relevant to our audit of the financial statements under the provisions of the Act 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 our qualified opinion.

MATERIAL UNCERTAINTY RELATED TO GOING CONCERN

5. We draw attention to note 50 to the accompanying standalone financial statements, which indicates that the Company has incurred a net loss (including other comprehensive income) of 1900.96 million during the year ended 31_ March_ 2020, and as of that date, the Companys accumulated losses amount to _18,614.11_million resulting in a negative net worth of

1,678.82 million and its current liabilities exceeded its current assets by 10,364.83 million resulting in negative working capital. As at 31 March 2020, there are delays/ defaults in repayment of obligations and borrowings. The above factors along with other matters as set forth in note 50, indicate a material uncertainty, which may cast significant doubt about the Companys ability to continue as a going concern. However, basis the impact of Tariff Order 2017, ongoing discussion with the lenders of the Company, and other factors mentioned in aforesaid note to the accompanying standalone financial statements, the management is of the view that going concern basis of accounting is appropriate for preparation of these financial statements.

The above assessment of the Companys ability to continue as going concern is by its nature considered as key audit matter in accordance with SA 701. In relation to the above key audit matter, our audit work included, but was not limited to, the following procedures:

We obtained an understanding of the managements process for identification of events or conditions that may cast significant doubt over the Companys ability to continue as a going concern and the process to assess the corresponding mitigating factors existing against each such event or condition.

Evaluated the design and tested the operating effectiveness of key controls around aforesaid identification of events or conditions and mitigating factors, and controls around cash flow projections prepared by the management.

We obtained the projected cash flows for the next twelve months from the management, basis their future business plans and considering the impact of Tariff Order, 2017.

We held discussions with the management personnel to understand the assumptions used and estimates made by them for determining the future cash flow projections.

The key assumptions such as revenue growth rate, changes in direct and administrative expenses, and capital expenditure outflows, were assessed for reasonableness by reference to historical data, future market trends, existing market conditions, business plans and our understanding of the business and the industry in which the Company operates.

We tested mathematical accuracy of the projections and applied independent sensitivity analysis to the key assumptions mentioned above to determine inputs leading to high estimation uncertainty of the cash flow projections.

We read the relevant correspondences with the lending banks.

We assessed the appropriateness and adequacy of disclosures made by the Company with respect to the aforesaid events and conditions in accordance with the provisions requirements of Ind AS 1 Presentation of Financial Statements.

KEY AUDIT MATTERS

6. 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 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.

7. In addition to the matters described in the Basis for Qualified Opinion and Material Uncertainty Related to Going Concern sections, we have determined the matters described below to be the key audit matters to be communicated in our report.

Key audit matter How our audit addressed the key audit matter
Impairment assessment of non-current investments Our audit procedures included, but were not limited to the following:
As described in Note 6 to the standalone financial statements, the Company has investments of 3,519.62 million in its subsidiaries, associates and joint venture entities, as at 31 March 2020 (hereinafter together referred to as ‘Component entities). • We obtained understanding of the management process for identification of possible impairment indicators and process performed by the management for impairment testing.
Certain Component entities have been incurring losses in the current year and previous year and have negative cash flows from operations during the current as well as previous years, thus resulting in possible impairment indicators. • We have performed detailed discussions with the management throughout the year to understand the impairment assessment process, assumptions used and estimates made by management to assess the reasonableness of the recoverable amount and tested the operating effectiveness of controls implemented by management.
In view of the above, management during the year ended 31 March 2020, has carried out impairment test for such investments, whereby the carrying amount of the investments was compared with the fair value of the business of respective component entity. To determine the fair value, management of the Company has prepared detailed cash flow projections, based on business plans of the respective component entity, expected growth rates of the business and other market related factors including the discount rates, etc. • We obtained from the management of the Company, the approved future business plans of the subsidiary companies and held detailed discussions with the management to understand the assumptions used and estimates made by them for determining the cash flow projections.
• We referred to the economic conditions prevalent in the jurisdiction in which the subsidiary company operates and understood from the management about the future business plans.
Based on the result of the aforesaid impairment tests, no impairment has been noted. • We assessed the reasonableness of the assumptions used and appropriateness of the valuation methodology applied.
Considering the materiality of the amount involved and significant degree of judgement and subjectivity involved in the estimates and key assumptions used in determining the cash flows used in the impairment evaluation, we have determined impairment of such investments as a key audit matter. • Working with our valuation specialists, we have assessed the reasonableness of assumptions around discount rate, beta, etc, used and valuation methodology applied for valuation of certain investment in optionally convertible debentures of the Component entities.
• Evaluated the appropriateness and adequacy of the related disclosures made in the standalone financial statements in accordance with the applicable accounting standards.
Provision for expected credit losses (ECL) Our audit procedures included, but were not limited to the following:
Refer note 3(j) for significant accounting policy and note 35 for credit risk disclosures. • We obtained an understanding of the management process for segregating receivables into appropriate groups, computation of average historical loss rate by age-band and adjustments made to historical loss rates (if any).
As described in note 10, trade receivables comprise a significant portion of the current financial assets of the Company. As at 31 March 2020 trade receivables aggregate to 2,073.25 million (net of allowance for expected credit losses of 4,524.03 million).
In accordance with Ind AS 109, the Company applies expected credit loss (ECL) model for measurement and recognition of impairment loss for financial assets. The Company has analysed the trend of trade receivables under different ageing bracket for last three years and calculated credit loss rate basis such ageing. The complexity in calculation of ECL is mainly related to calculations performed for different type of revenue streams in which the Company operates and the different recovery period for different categories of customers. Additional provision is recognised for the receivables which are specifically identified as doubtful or non-recoverable. • We assessed and tested the design and operating effectiveness of controls around managements assessment of the recoverability of trade receivables and corresponding provisioning for ECL. Also, evaluated the controls over the modelling process, validation of data and related approvals.
• We obtained from the management of the Company, detailed assessment, including computation, of the ECL.
• We audited the underlying data and assessed reasonableness of the assumptions used for each age- band of trade receivables.
• We analyzed the methodology used by the management and considered the credit and payment history of specific parties to determine the trend used for arriving at the expected credit loss provision.
Further, the management regularly assess each class of trade receivables for recoverability. Provision for ECL is adjusted considering the recovery trends noted for the respective class, adjusted for forward looking estimates. • We obtained the details of receivables specifically identified by the management for provisioning, over and above the ECL, and corroborated them from the ageing schedule and held discussions with management on their recoverability.
Estimation of provisions and assessment of recoverability of amounts involves significant degree of judgement and evaluation basis the ongoing communications with the respective parties and is therefore considered as a key audit matter. • We assessed the appropriateness of disclosures made by the management for the ECL recognized in accordance with applicable accounting standards.

INFORMATION OTHER THAN THE FINANCIAL STATEMENTSAND AUDITORS REPORT THEREON

8. The Companys Board of Directors is responsible for the other information. The other information comprises the information included in the Annual Report, but does not include the standalone financial statements and our auditors report thereon. The Annual Report 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 will 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 identified above when it becomes available and, in doing so, consider whether the other information is materially inconsistent with the standalone financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.

When we read the Annual Report, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance.

RESPONSIBILITIES OF MANAGEMENT AND THOSE CHARGED WITH GOVERNANCE FOR THE STANDALONE FINANCIAL STATEMENTS

9. The accompanying standalone financial statements have been approved by the Companys Board of Directors. The Companys Board of Directors is responsible for the matters stated in section 134(5) of the Act with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position, financial performance including other comprehensive income, changes in equity and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Ind AS 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.

10. In preparing the 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.

11. Those Board of Directors is also responsible for overseeing the Companys financial reporting process.

AUDITORS RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS

12. 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 Standards on Auditing will always detect a material misstatement when it exists. Misstatements 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.

13. As part of an audit in accordance with Standards on Auditing, 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 Act, we are also responsible for expressing our opinion on whether the Company has adequate internal financial controls with reference to financial statements in place and the operating effectiveness of such controls.

Evaluate the appropriateness of accounting policies usedandthereasonablenessofaccountingestimates 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;

14. 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.

15. 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.

16. 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.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

17. Based on our audit, we report that, as also detailed in note 49 of the accompanying standalone financial statements, the Company has paid managerial remuneration to its director amounting to 0.81 million, which is in excess of the limits prescribed under Section 197 of Act read with Schedule V of the Act, in respect of which approvals from the shareholders have been obtained within the prescribed time limit, however, prior approvals from the lenders as required under Section 197 have not been obtained by the Company.

18. As required by the Companies (Auditors Report) Order, 2016 (‘the Order) issued by the Central Government of India in terms of section 143(11) of the Act, we give in the Annexure I a statement on the matters specified in paragraphs 3 and 4 of the Order.

19. Further to our comments in Annexure I, as required by section 143(3) of the Act, based on our audit, we report, to the extent applicable, that:

a) we have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit of the accompanying standalone financial statements;

b) except for the effects of the matter described in the Basis of Qualified Opinion section, 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 standalone financial statements dealt with by this report are in agreement with the books of account;

d) except for the effects of the matter described in the Basis of Qualified Opinion section, in our opinion, the aforesaid standalone financial statements comply with Ind AS specified under section 133 of the Act;

e) the going concern matter described in paragraph 5 under the Material Uncertainty Related to Going Concern section, in our opinion, may have an adverse effect on the functioning of the Company;

f) on the basis of the written representations received from the directors and taken on record by the Board of Directors, none of the directors is disqualified as on 31 March 2020 from being appointed as a director in terms of section 164(2) of the Act;

g) the qualification relating to the maintenance of accounts and other matters connected therewith is as stated in the Basis for Qualified Opinion section;

h) we have also audited the internal financial controls with reference to financial statements of the Company as on 31 March 2020 in conjunction with our audit of the standalone financial statements of the Company for the year ended on that date and our report dated 29 June 2020 as per Annexure II expressed modified opinion; and

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, as detailed in note 39 to the standalone financial statements, has disclosed the impact of pending litigations on its financial position as at 31 March 2020;

ii. the Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses as at 31 March 2020;

iii. there were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company during the year ended 31 March 2020; and

iv. the disclosure requirements relating to holdings as well as dealings in specified bank notes were applicable for the period from 8 November 2016 to 30 December 2016, which are not relevant to these standalone financial statements. Hence, reporting under this clause is not applicable.

For Walker Chandiok & Co LLP
Chartered Accountants
Firms Registration No.: 001076N/N500013
Rajni Mundra
Partner
Place: New Delhi Membership No.: 058644
Date: 29 June, 2020 UDIN: 20058644AAAABF4958

ANNEXURE I TO THE INDEPENDENT AUDITORS REPORT

OF EVEN DATE TO THE MEMBERS OF SITI NETWORKS LIMITED ON THE STANDALONE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2020

Annexure I

Based on the audit procedures performed for the purpose of reporting a true and fair view on the financial statements of the Company and taking into consideration the information and explanations given to us and the books of account and other records examined by us in the normal course of audit, and to the best of our knowledge and belief, we report that:

(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of property, plant and equipment (‘PPE), except for some of the network equipment acquired in a scheme of arrangement in an earlier year where the records are maintained for a group of similar assets and not for each individual asset. However, the written down value of these assets is nil.

(b) The Company has a regular program of physical verification of its PPE that are verified in a phase manner over a period of three years, which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets, other than ‘set top boxes and ‘broadband consumer premises equipment (CPE) which are installed either at customer premises or lying with the distributors/ cable operators, and ‘distribution equipment comprising overhead and underground cables, since the physical verification of such items of PPE is not feasible owing to the nature and location of these assets. Further, the Company has not been able to reconcile the physical verification of certain ‘network equipment acquired in a scheme of arrangement in an earlier year to the books of account due to lack of records thereof as mentioned in paragraph (a) above. According to the information and explanations given to us, the existence of ‘set top boxes and CPE installed at customer premises is verified on the basis of the ‘active user status of the customers. No material discrepancies were noticed on the physical verification of the PPE of the Company. However, ‘set top boxes and CPE lying with the distributors/ cable operators, ‘distribution equipment comprising overhead and underground cables and ‘network equipment acquired in a scheme of arrangement as aforementioned have not been physically verified by the management during the year as explained above and we are therefore unable to comment on the discrepancies, if any, which could have arisen on verification thereof.

(c) The title deeds of all the immovable properties (which are included under the head PPE) are held in the name of the Company.

(ii) In our opinion, the management has conducted physical verification of inventory at reasonable intervals during the year and no material discrepancies between physical inventory and book records were noticed on physical verification.

(iii) The Company has not granted any loan, secured or unsecured to companies, firms, Limited Liability Partnerships (LLPs) or other parties covered in the register maintained under Section 189 of the Act. Accordingly, the provisions of clauses 3(iii)(a), 3(iii)(b) and 3(iii)(c) of the Order are not applicable.

(iv) In our opinion, the Company has complied with the provisions of Sections 186 in respect of investments. Further, in our opinion, the Company has not entered into any transaction covered under Section 185 and Section 186 of the Act in respect of loans, guarantees and security.

(v) In our opinion, the Company has not accepted any deposits within the meaning of Sections_73 to 76 of the Act and the Companies (Acceptance of Deposits) Rules, 2014 (as amended). Accordingly, the provisions of clause 3(v) of the Order are not applicable.

(vi) We have broadly reviewed the books of account maintained by the Company pursuant to the Rules made by the Central Government for the maintenance of cost records under sub-section (1) of Section 148 of the Act in respect of Companys services 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 cost records with a view to determine whether they are accurate or complete.

(vii) (a) The Company is regular in depositing undisputed statutory dues including provident fund, employees state insurance, income-tax, sales-tax, service tax, duty of customs, duty of excise, value added tax, cess and other material statutory dues, as applicable, to the appropriate authorities. Further, no undisputed amounts payable in respect thereof were outstanding at the year-end for a period of more than six months from the date they became payable.

(b) The dues outstanding in respect of income-tax, sales tax, service-tax, duty of customs, duty of excise and value added tax on account of any dispute, are as follows: Statement of disputed dues

Name of the statute Nature of dues Amount ( in million) Amount paid under protest ( in million) Period to which the amount relates Forum where dispute is pending
Finance Act, 1994 Service tax 141.22 2.03 July 2003 to June 2008, Financial year 2005-2006 to Financial year 2008-2009 and Financial year 2011-2012 The Customs Excise and Service Tax Appellate Tribunal
Karnataka Value Added Tax Act, 2003 Value added tax 8.61 - Financial year 2010-2011 High Court of Karnataka
Karnataka Value Added Tax Act, 2003 Value added tax 2.79 - Financial year 2012-2013 Joint Commissioner, Commercial Taxes (Appeals)
Kerala Value Added Tax Act, 2003 Value added tax 4.49 - Financial year 2015-2016 State Tax Officer
Andhra Pradesh Value Added Tax Act, 2005 Value added tax 1.70 - Financial year 2015- 2016 Additional Commissioner of Appeals
Andhra Pradesh Value Added Tax Act, 2005 Value added tax 16.80 - Financial year 2016-2017 High Court of Andhra Pradesh
Andhra Pradesh Value Added Tax Act, 2005 Value added tax 3.11 1.66 Financial year 2010-2017 Telangana Value Added Tax Appellate Tribunal
Delhi Value Added Tax Act, 2004 Value added tax 0.71 - Financial year 2013-2014 Additional Commissioner (Appeals)
The Uttar Pradesh Value Added Tax Act, 2008 Value added tax 8.19 - Financial year 2015-2016 to Financial year 2017-18 Appellate Deputy Commissioner, Commercial Taxes (Appeals)
The Haryana Value Added Tax Act, 2003 Value added tax 33.80 16.60 Financial year 2014-2015 to Financial year 2017-18 The Joint Excise and Taxation Commissioner (Appeals)
The Maharashtra Value Added Tax Act, 2002 Value added tax 6.78 - Financial Year 2007-2008 Joint Commissioner Of Commercial Taxes (Appeals)
Custom Act, 1962 Custom Duty 1,011.22 20 Financial Year 2014-2015 till 2018-2019 Additional Director General (Adjudication), Directorate of Revenue Intelligence, Delhi

(viii) The Company has no loans or borrowings payable to government and no dues payable to debenture-holders. The Company has defaulted in repayment of loans/borrowings to the following banks and financial institution:

- which were paid on or before the Balance Sheet date:

Name of the lenders Amount of default during the year ended 31 March 2020 ( in million) Period of default (in days) Remarks
Principal Interest Principal Interest
In case of:
(a) Banks Axis Bank 424.59 44.79 1-91 1-91
49.97 - 92-183 -
Indus Ind Bank 145.92 72.15 1-88 1-88
Kotak Mahindra Bank 313.74 4.06 1-88 1-88
208.20 14.86 1-91 1-91
IDBI Bank
- 3.11 - 92-183

 

Name of the lenders Amount of default during the year ended 31 March 2020 ( in million) Period of default (in days) Remarks
Principal Interest Principal Interest
HDFC Limited - 20.00 - 1-91
15.00 20.00 92-183 92-183
37.50 5.69 1-91 1-91
RBL Bank Limited
- 4.55 - 92-183
555.74 31.09 1-91 1-91
Standard Chartered Bank
20.50 - 92-183 -
(b) Financial institution
Aditya Birla Finance
112.50 140.27 1-89 1-89
Limited

- which were unpaid as at 31 March 2020:

Name of the lenders Amount of default during the year ended 31 March 2020 ( in million) Period of default (in days) Remarks
Principal Interest Principal Interest
In case of:
(a) Banks
281.25 53.42 1-91 1-91
187.50 54.00 92-183 92-183
Axis Bank
312.50 56.33 184-275 184-275
187.50 21.02 276-366 276-366
Indus Ind Bank - 20.70 - 1-32
Kotak Mahindra Bank 31.25 12.36 1 1-88
100.00 6.87 1-91 1-91
IDBI Bank 104.00 6.97 92-183 92-183
- 2.58 - 184-275
330.00 64.09 1-91 1-91
- 64.79 - 92-183
HDFC Limited
330.00 64.87 184-275 184-275
315.00 24.48 276-366 276-366
- 13.35 - 1-91
RBL Bank Limited - 13.50 - 92-183
525.00 12.72 184-275 184-275
107.95 31.58 1-91 1-91
Standard Chartered Bank
344.29 31.70 92-183 92-183
- 9.57 - 184-275
(b) Financial institution
Aditya Birla Finance Limited 37.50 26.52 1-33 1-33

(ix) The Company did not raise moneys by way of initial public offer or further public offer (including debt instruments). In our opinion, the term loans were applied for the purpose for which the loans were obtained.

(x) No fraud by the Company or on the Company by its officers or employees has been noticed or reported during the period covered by our audit.

(xi) The Company has paid managerial remuneration which is in excess of the limits prescribed under Section 197 of the

Act read with Schedule V of the Act, in respect of which approvals from the shareholders have been obtained within the prescribed time limit, however, prior approvals from the lenders as required under Section 197 have not been obtained by the Company. The details of the such excess managerial remuneration paid are as follows:

S. No Payment made to Amount Paid in excess of limits prescribed ( in million) Amount due for Recovery as at 31 March 2020 () Steps taken to secure the recovery of the amount Remarks (if any)
1 Whole time Director 0.81 million 0.81 million - The Company has submitted representation before lenders for reconsideration of remuneration so paid and approval is awaited for the same.

(xii) In our opinion, the Company is not a Nidhi Company. Accordingly, provisions of clause 3(xii) of the Order are not applicable.

(xiii) In our opinion all transactions with the related parties are in compliance with Sections 177 and 188 of Act, where applicable, and the requisite details have been disclosed in the financial statements etc., as required by the applicable Ind AS.

(xiv) During the year, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures.

(xv) In our opinion, the Company has not entered into any non-cash transactions with the directors or persons connected with them covered under Section 192 of the Act.

(xvi) The Company is not required to be registered under Section 45-IA of the Reserve Bank of India Act, 1934.

For Walker Chandiok & Co LLP
Chartered Accountants
Firms Registration No.: 001076N/N500013
Rajni Mundra
Partner
Place: New Delhi Membership No.: 058644
Date: 29 June, 2020 UDIN: 20058644AAAABF4958

ANNEXURE II TO THE INDEPENDENT AUDITORS REPORT

OF EVEN DATE TO THE MEMBERS OF SITI NETWORKS LIMITED ON THE STANDALONE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2020

ANNEXURE II

INDEPENDENT AUDITORS REPORT ON THE INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO FINANCIAL STATEMENTS UNDER CLAUSE _I_ OF SUB_SECTION 3 OF SECTION 143 OF THE COMPANIES ACT, 2013 _‘THE ACT_

1. In conjunction with our audit of the standalone financial statements of SITI Networks Limited (‘the Company) as at and for the year ended 31 March 2020, we have audited the internal financial controls with reference to financial statements of the Company as at that date.

RESPONSIBILITIES OF MANAGEMENT AND THOSE CHARGED WITH GOVERNANCE FOR INTERNAL FINANCIALC ONTROLS

2. The Companys Board of Directors is responsible for establishing and maintaining internal financial controls based on the internal financial controls with reference to 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 Reporting (‘the Guidance Note) 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 the Companys business, including adherence to the 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 FOR THE AUDIT OF THE INTERNALFINAN CIALC ONTROLS WITH REFERENCE TO FINANCIAL STATEMENTS

3. 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 Standards on Auditing issued by the ICAI prescribed under Section 143(10) of the Act, to the extent applicable to an audit of internal financial controls with reference to financial statements, and the Guidance Note issued by the ICAI. 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 were established and maintained and if such controls operated effectively in all material respects.

4. Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls with reference to financial statements and their operating effectiveness. Our audit of internal financial controls with reference to financial statements includes obtaining an understanding of such internal financial controls, 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 judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.

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

MEANING OF INTERNALFINAN CIALC ONTROLS WITH REFERENCE TO FINANCIAL STATEMENTS

6. 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 controls with reference to financial statements include 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 authorisations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised 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

7. 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 with reference to financial statements to future periods are subject to the risk that the internal financial controls with reference to 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

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

The Companys internal financial controls over preparation of financial statements with respect to presentation and disclosure of ‘Revenue from operations in accordance with the requirement of Ind AS 115 ‘Revenue from contracts with customers, were not operating effectively which has resulted in a material misstatement in the amounts recognised as ‘Revenue from operations and ‘Carriage sharing, pay channel and related costs including the relevant disclosures in the standalone financial statements, while there is no impact on the net loss for the year ended 31 March 2020.

9. A ‘material weakness is a deficiency, or a combination of deficiencies, in internal financial controls with reference to 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.

10. In our opinion, the Company has, in all material respects, adequate internal financial controls with reference to financial statements as at 31 March 2020, based on the internal financial controls with reference to financial statements criteria established by the Company considering the essential components of internal control stated in the Guidance Note issued by the ICAI and except for the effects of the material weakness described above on the achievement of the objectives of the control criteria, the Companys internal financial controls with reference to financial statements were operating effectively as at 31 March 2020.

11. We have considered the material weakness 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 as at and for the year ended 31 March 2020, and the material weakness has affected our opinion on the standalone financial statements of the Company and we have issued a qualified opinion on the standalone financial statements.

For Walker Chandiok & Co LLP
Chartered Accountants
Firms Registration No.: 001076N/N500013

 

Rajni Mundra
Partner
Place: New Delhi Membership No.: 058644
Date: 29 June, 2020 UDIN: 20058644AAAABF4958