siti networks ltd Auditors 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 statements of SITI Network Limited (‘the Company), which comprise the Balance Sheet as at March 31, 2023, 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 March 31, 2023, 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 financial statements, the Company has defaulted in repayment of bank loans and accounts have been classified as Non-Performing Assets (NPA) by the lenders under the Consortium. The Company has not provided additional and penal interest as part of finance cost in terms with conditions put forth in arrangements entered into between the banks & financial institutions with the Company and in accordance with the requirements of Ind AS 109, Financial Instruments. In absence of the computation of such interest along with other sufficient appropriate audit evidence as described in note 47 to the Statement, we are unable to comment upon the impact of such non-compliance on the financial information for the year ended March 31, 2023.

4. As described in note 45 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 ‘Pay channel costs each would have been lower by 3,284.54 million for the year ended March 31, 2023, while there would have been no impact on the net loss for the year ended March 31, 2023.

5. 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 on the standalone financial statements.

Material Uncertainty Related to Going Concern

6. We draw attention to note 46 to the accompanying standalone financial statements, which indicates that the Company has incurred a net loss (including other comprehensive income) of 2,986.64 million during the year ended March 31, 2023, and as of that date, the Companys accumulated losses amount to 26,422.79 million resulting in a negative net worth of 9,487.49_ million and its current liabilities exceeded its current assets by 15,190.58 million resulting in negative working capital. As at March 31, 2023, there are delays/defaults in repayment of obligations and borrowings. The above factors along with other matters as set forth in note 46, indicate a material uncertainty, which may cast significant doubt about the Companys ability to continue as a going concern. However, basis the ongoing discussion with the lenders for debt restructuring, positive cash flow from operations during the year 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. Our opinion is not modified in respect of this matter.

The above assessment of the Companys ability 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 from the management for the next twelve months from the balance sheet date, basis their future business plans.

• 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, to 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.

Our opinion is not modified in respect of this matter.

Key Audit Matters

7. 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.

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:
AsdescribedinNote6tothestandalonefinancialstatements, the Company has gross investments of 3,521.67 million in its subsidiaries, associates and joint venture entities, as at March 31, 2023 (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 March 31, 2023, 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.
Based on the result of the aforesaid impairment tests, impairment amounting to 346.20 million has been recorded during the year. Post such impairment, the Company has investments of 3,156.59 million in its subsidiaries, associates and joint venture entities, as at March 31, 2023 • 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.
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. • We assessed the reasonableness of the assumptions used and appropriateness of the valuation methodology applied.
• Working with our valuation specialists, we have assessed the reasonableness of assumptions around discountrate, 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(k) for significant accounting policy and note 34 for credit risk disclosures. • We obtained an understanding of the management process for segregating receivables into appropriate groups, current & historical past due amounts & write offs and collections (if any).
As described in note 10, trade receivables comprise a significant portion of the current financial assets of the Company. As at March 31, 2023 trade receivables aggregate to 1,295.74 million (net of allowance for expected credit losses of 4.255.10 million). • 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.
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 obtained from the management of the Company, detailed assessment, including computation, of the ECL.
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 audited the underlying data and assessed reasonableness of the assumptions used for each age- band of trade receivables.
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 analysed 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.
• 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.
• We assessed the appropriateness of disclosures made by the management for the ECL recognized in accordance with applicable accounting standards.

Emphasis of Matter

8. We draw attention to note 54 which indicates Bank Limited has filed an application against the Company under section 7 of the Insolvency and Bankruptcy Code, 2016 before NCLT, Mumbai for initiation of Corporate Insolvency Resolution Process (‘CIRP) on account of default in repayments of 1,488.29 million. The proceedings are currently ongoing, and the interim order passed by NCLT has been appealed by the Director of the Company. The main petition in appeal and a contempt application filed by the Director of the Company are listed for final arguments on the next hearing.

Information other than the Financial Statements and Auditors Report thereon

9. The Companys Board of Directors is responsible 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

10. 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 for 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.

11. 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.

12. Those charged with governance is also responsible for overseeing the Companys financial reporting process.

Auditors Responsibilities for the Audit of the Standalone Financial Statements

13. Our objectives are to obtain reasonable assurance 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 standalone financial statements.

14. 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 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;

15. 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.

16. 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.

17. 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

18. Based on our audit, we report that the Company has not paid or provided for any managerial remuneration during the year. Accordingly, reporting under section 197(16) of the Act is not applicable.

19. As required by the Companies (Auditors Report) Order, 2020 (‘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.

20. Further to our comments in Annexure I, as required 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(s) described in the Basis for 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 for 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 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 March 31, 2023 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 are 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 March 31, 2023 in conjunction with our audit of the standalone financial statements of the Company for the year ended on that date and our report dated May 30, 2023 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 37 to the standalone financial statements, has disclosed the impact of pending litigations on its financial position as at March 31, 2023;

ii) the Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses as at March 31, 2023;

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 March 31, 2023;

iv) (a) The management has represented that, to the best of its knowledge and belief as disclosed in note 53(A)(i) to the financial statements, no funds have been advanced or loaned or invested (either from borrowed funds or securities premium or any other sources or kind of funds) by the Company to or in any persons or entities, including foreign entities (‘the intermediaries), with the understanding, whether recorded in writing or otherwise, that the intermediary shall, whether, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (‘the Ultimate Beneficiaries) or provide any guarantee, security or the like on behalf the Ultimate Beneficiaries;

(b) The management has represented that, to the best of its knowledge and belief, as disclosed in note 53(A)(ii) to the financial statements, no funds have been received by the Company from any persons or entities, including foreign entities (‘the Funding Parties), with the understanding, whether recorded in writing or otherwise, that the Company shall, whether directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (‘Ultimate Beneficiaries) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries; and

(c) Based on such audit procedures performed as considered reasonable and appropriate in the circumstances, nothing has come to our notice that has caused us to believe that the management representations under sub-clauses (a) and (b) above contain any material misstatement.

v) The Company has not declared or paid any dividend during the year ended March 31, 2023.

vi) Proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 for maintaining books of account using accounting software which has a feature of recording audit trail (edit log) facility is applicable to the Company w.e.f. April 01, 2023 and accordingly, reporting under Rule 11(g) of Companies (Audit and Auditors) Rules, 2014 is not applicable for the financial year ended March 31, 2023.

For DNS & Associates

Chartered Accountants

Firms Registration No.: 006956C

Ankit Marwaha
Partner
Place: Noida Membership No.: 518749
Date: May 30, 2023 UDIN: 23518749BGYYMF4602

Annexure I

Independent Auditors Report of even date to the members of SITI Networks Limited on the standalone financial statements for the year ended March 31, 2023

In terms of the information and explanations sought by us and given by the Company and the books of account and records examined by us in the normal course of audit, and to the best of our knowledge and belief, we report that:

(i) (a) (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 maintained proper records showing full particulars of intangible assets.

(b) The company has a regular program of physical verification of its PPE and right of use assets 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 (including investment properties) held by the Company (other than properties where the Company is the lessee and the lease agreements are duly executed in favour of the lessee) disclosed in the financial statements are held in the name of the Company, except for the following properties, {for which the Companys management is in the process of getting the registration in the name of the Company:

Description of property Gross carrying value Held in name of Whether promoter, director or their relative or employee Period held Reason for not being held in name of company
Building 93.88 Information TV Private Limited No Greater than 365 days Legal procedures of transfer of the property are in progress. Post completion of such processes, property will be registered in the name of Company.

(d) The Company has not revalued its Property, Plant and Equipment and Right of Use assets or intangible assets during the year.

(e) No proceedings have been initiated or are pending against the Company for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and rules made thereunder. Accordingly, reporting under clause 3(i) (e) of the Order is not applicable to the Company.

(ii) (a) The management has conducted physical verification of inventory at reasonable intervals during the year. In our opinion, the coverage and procedure of such verification by the management is appropriate and no discrepancies of 10% or more in the aggregate for each class of inventory were noticed.

(b) The Company has a working capital limit in excess of 5 crore, sanctioned by banks and/or financial institutions on the basis of security of current assets. However, such borrowings are declared as non-performing assets (NPAs) by the respective banks and financial institutions (FIs). Company is under discussion with the banks for re-structuring of such loans. As a result, Company has not been filing any quarterly returns or statements of current assets with the banks or FIs.

(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 Section 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 the 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) In our opinion, and according to the information and explanations given to us, undisputed statutory dues including goods and services tax, provident fund, employees state insurance, income-tax, sales-tax, service tax, duty of customs, duty of excise, value added tax, cess and other material statutory dues, as applicable, have generally been regularly deposited with the appropriate authorities by the Company, though there have been slight delays in a few cases. 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) According to the information and explanations given to us, there are no statutory dues referred in subclause (a) which have not been deposited with the appropriate authorities on account of any dispute except for the following:

Statement of disputed

( in million)

Name of the statute Nature of dues Amount Amount paid under protest Period to which the amount relates Forum where dispute is pending
Uttar Pradesh Entertainment and Betting Tax Act Entertainment tax 32.95 10.00 Financial year 2016-17 to 2017-18 Supreme Court
Finance Act, 1994 Service tax 2,203.41 1.67 July 2003 to June 2008, Financial year 2005-06 to 2008- 09 and Financial Year 2011-2012 The Customs Excise and Service Tax Appellate Tribunal
Entry Tax act, 1976 Entry Tax 6.12 - 2016 -17 & financial year 2017-18 to 2022-23 Commercial tax officer
Karnataka Value Added Tax Act, 2003 Value added tax 8.61 8.61 Financial year 2010-11 High Court of Karnataka
Andhra Pradesh Value Added Tax Act, 2005 Value added tax 33.60 8.40 Financial year 2016-17 High Court of Andhra Pradesh
Telangana Value Added Tax Act, 2005 Value added tax 3.11 1.38 Financial year 2010-11 to 2016-17 Telangana Value Added Tax Appellate Tribunal
Delhi Value Added Tax Act, 2004 Value added tax 0.86 - Financial year 2013-14 Additional Commissioner (Appeals)
Delhi Value Added Tax Act, 2004 Value added tax 2.10 5.30 Financial year 2014-15 Additional Commissioner (Appeals)
The Uttar Pradesh Value Added Tax Act, 2008 Value added tax 8.19 8.19 Financial year 2015-16 to 2017-18 Appellate Deputy Commissioner, Commercial Taxes (Appeals)
The Haryana Value Added Tax Act, 2003 Value added tax 10.88 10.88 Financial year 2014-15 to 2017-18 The Joint Excise and Taxation Commissioner (Appeals)
Kolkatta Value Added Tax Act, 2005 Value added tax 61.30 - Financial year 2007-08 and 2011- 12 to 2015-16 State Tax Officer
Madhya Pradesh CGST Act, 2017 Goods & Service Tax 1.20 - Financial Year 2019-2020 Assistant commissioner of State tax
Haryana CGST Act, 2017 Goods & Service Tax 13.7 - Financial Year 2019-2020 Office of commissioner of State tax
Telgana CGST Act, 2017 Goods & Service Tax 5.20 - Financial Year 2017-2018 Office of commissioner of State tax
Maharashtra CGST Act, 2017 Goods & Service Tax 8.54 - Financial Year 2018-2019 Superintendent of Central Tax & Customs
Custom Act, 1962 Custom Duty 1,030.50 20.00 Financial Year 2014-15 till 2018- 19 Additional Director General (Adjudication), Directorate of Revenue Intelligence, Delhi

(viii) According to the information and explanations given to us, no transactions were surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (section_43 of 1961) which have not been recorded in the books of accounts.

(ix) (a) According to the information and explanations given to us, the Company has not defaulted in repayment of loans or other borrowings to any lender or in the payment of interest thereon, except for the below:

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

Name of the bank

Amount of default during the year ended March 31, 2023 ( in million)

Period of default (maximum days)

Principal Interest Principal Interest
Axis Bank 281.00 - 821 -
IDBI Bank - 47.30 - More than 1 year
Assets Reconstruction Company (India) Limited - 29.75 - 1,115

- which were unpaid as at March 31, 2023:

Name of the bank

Amount of default as on March 31, 2023 ( in million)

Period of default upto the date of balance sheet (maximum days)

Principal Interest Principal Interest
Terms loans
Axis Bank 1,447.68 758.47 1,340 1,371
Indus Ind Bank 1,385.28 219.69 825 701
IDBI Bank 149.55 73.26 1,279 1,279
Assets Reconstruction Company (India) Limited 1,985.00 855.61 1,340 1,187
RBL Bank Limited 478.50 187.44 1,309 1,279
Standard Chartered Bank 677.79 323,24 1,275 1,218
Aditya Birla Finance Limited 1,339.92 298.94 852 731
Loans repayable on demand from banks
Axis Bank 248.73 99.08 - More than one year
IDBI Bank 1,000 295.24 - More than one year
RBL Bank Limited 0.80 11.00 - More than one year

(b) According to the information and explanations given to us including confirmations received from banks/financial institution and/or other lenders and representation received from the management of the Company, and on the basis of our audit procedures, we report that the Company has not been declared a willful defaulter by any bank or financial institution or other lender.

(c) In our opinion and according to the information and explanations given to us, no money was raised by way of term loans. Accordingly, the provision stated in paragraph 3(ix)(c) of the Order is not applicable to the Company.

(d) In our opinion and according to the information and explanations given to us, and on an overall examination of the financial statements of the Company, no funds were raised by the Company on short term basis.

(e) According to the information and explanations given to us and on an overall examination of the financial statements of the Company, the Company has not taken any funds from any entity or person on account of or to meet the obligations of its subsidiaries, associates or joint ventures.

(f) According to the information and explanations given to us, the Company has not raised any loans during the year on the pledge of securities held in its subsidiaries, joint ventures or associate companies.

(x) (a) The Company did not raise moneys by way of initial public offer or further public offer (including debt instruments). Accordingly, reporting under clause 3(x)(a) of the Order is not applicable to the Company.

(b) According to the information and explanations given to us, the Company has not made any preferential allotment or private placement of shares or (fully, partially or optionally) convertible debentures during the year. Accordingly, reporting under clause 3(x)(b) of the Order is not applicable to the Company.

(xi) (a) To the best of our knowledge and according to the information and explanations given to us, no fraud by the Company or on the Company has been noticed or reported during the period covered by our audit.

(b) No report under section 143 (12) of the Act has been filed with the Central Government for the period covered by our audit.

(c) According to the information and explanations given to us including the representation made to us by the management of the Company, there are no whistle-blower complaints received by the Company during the year.

(xii) The Company is not a Nidhi Company and the Nidhi Rules, 2014 are not applicable to it. Accordingly, reporting under clause 3 (xii) of the Order is not applicable to the Company.

(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) (a) In our opinion and according to the and explanations given to us, the Company has an internal audit system as required under section 138 of the Act which is commensurate with the size and nature of its business.

(b) We have considered the reports issued by the Internal Auditors of the Company till date for the period under audit.

(xv) According to the information and explanation given to us, the Company has not entered into any non-cash transactions with its directors or persons connected with them and accordingly, provisions of section 192 of the Act are 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, 1934. Accordingly, reporting under clause 3(xvi) of the Order is not applicable to the Company.

(xvii) Based on the overall review of the standalone financial statements, the Company has not incurred cash losses in the current financial year and in the immediately preceding financial year. Hence, the provisions stated in paragraph 3(xvii) of the Order are not applicable to the Company.

(xviii) There has been no resignation of the statutory auditors during the year. Accordingly, reporting under clause 3 (xviii) of the Order is not applicable to the Company.

(xix) According to the information and explanations given to us and on the basis of the financial ratios, ageing and expected dates of realisation of financial assets and payment of financial liabilities, other information accompanying the standalone financial statements, our knowledge of the plans of the Board of Directors and management, we are of the opinion that material uncertainty exists as on the date of the audit report that Company is capable of meeting its liabilities existing at the date of balance sheet as and when they fall due within a period of one year from the balance sheet date. However, basis the ongoing discussion with the lenders of the Company, positive cash flow from operations during the year 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.

(xx) According to the information and explanations given to us, The Company does not fulfil the criteria as specified under section 135(1) of the Act read with the Companies (Corporate Social Responsibility Policy) Rules, 2014 and according, reporting under clause_(xx) of the Order is not applicable to the Company.

(xxi) The reporting under clause (xxi) is not applicable in respect of audit of standalone financial statements of the Company. Accordingly, no comment has been included in respect of said clause under this report.

For DNS & Associates

Chartered Accountants

Firms Registration No.: 006956C

Ankit Marwaha
Partner
Place: Noida Membership No.: 518749
Date: May 30, 2023 UDIN: 23518749BGYYMF4602

Annexure II

Independent Auditors Report on the internal financial controls with reference to the 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 statements of Siti Network Limited (the ‘Company) as at and for the year ended March 31, 2023, 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 Financial Controls

2. The Companys Board of Directors is responsible 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 Internal Financial Controls with Reference to Financial Statements

3. Our responsibility is to express an opinion on 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 Institute of Chartered Accountants of India (‘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 on Audit of Internal Financial Controls Over Financial Reporting (‘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 for 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 Internal Financial Controls with Reference to Financial Statements

6. A companys internal financial controls with 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 the 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 March 31, 2023:

a. The companys internal financial controls over preparation of financial statements with respect to presentation and disclosure of ‘Finance costs in accordance with the requirement of Ind AS 109 ‘Financial instruments, were not operating effectively which has resulted in a material misstatement in the amounts recognised as ‘Finance costs including the relevant disclosures in the standalone financial statements. In the absence of the computation of such interest along with other sufficient appropriate audit evidence, we are unable to comment upon the impact of such non-compliance on the financial information for the year ended March 31, 2023.

b. 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 ‘Pay channel, carriage sharing 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 March 31, 2023.

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 March 31, 2023, 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 March 31, 2023.

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 March 31, 2023, 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 DNS & Associates

Chartered Accountants

Firms Registration No.: 006956C

Ankit Marwaha
Partner
Place: Noida Membership No.: 518749
Date: May 30, 2023 UDIN: 23518749BGYYMF4602