Tulip Telecom Ltd Auditor Reports

To

The Members,

M/S TULIP TELECOM LIMITED

NEW DELHI.

1. We have audited the attached Balance Sheet of M/S TULIP TELECOM LIMITED as at 31st March, 2013, the Profit & Loss Account and also the Cash Flow statement on the date annexed thereto. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditors Report) Order, 2003 as amended by The Companies (Auditors Report) (Amendment) Order, 2004 issued by Central Government of the India in terms of section 227(4A) of the Companies Act, 1956, and on the basis of such checks as we considered appropriate and according to information and explanation given to us and books and records examined by us in the normal course of audit, we annex hereto a statement on the matters specified in paragraph 4 and 5 of the said Order.

4. Further to our comments in the Annexure referred to above, we report that:

a. We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit.

b. In our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of books of account of the Company.

c. The Balance Sheet, Profit & Loss Account and Cash Flow statement dealt with the report are in agreement with the books of account of the company.

d. In our opinion the Balance Sheet, Profit & Loss account and Cash Flow statement complies with the Mandatory Accounting Standards referred to in Section 211(3C) of the Companies Act, 1956.

e. On the basis of written representation received from the directors, as on 31st March, 2013 and taken on record by the Board of Directors, we report that none of the director is disqualified from being appointed as a director of the company, as on 31st March, 2013, under clause (g) of sub-section (1)of section 274 of the Companies Act, 1956.

f. In our opinion and to the best of our information and according to the explanations given to us, the said accounts read with the notes thereon, give the information required by the Companies Act 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:-

i. In the case of the Balance Sheet, of the state of affairs of the company as at 31st March, 2013.

ii. In the case of the Profit & Loss Account, of the Loss of the company for the Six months period ended on that date; and

iii. In the case of Cash Flow Statement, for the cash flow of the company for the Six months period ended on that date.

	For Fi. CHADHA & ASSOCIATES
	Chartered Accountants
	Firm Reg. No.: 004046N
Place: New Delhi	Rakesh Chadha
Date: May 30, 2013	Partner
	Membership No. 83135

ANNEXURE REFERRED TO IN PARAGRAPH 3 OF OUR REPORT OF EVEN DATE TO THE MEMBER OF M/s TULIP TELECOM LIMITED ON THE ACCOUNTS FOR THE PERIOD ENDED MARCH 31, 2013.

1) a. The Company is maintaining proper records showing full particulars, including quantitative details and situation of fixed assets.

b. The Fixed Assets have been physically verified by the management during the period, which in our opinion is reasonable having regard to the size of the company and the nature of its assets. No material discrepancies were noticed on physical verification.

c. There was no substantial disposal of fixed assets during the period.

2) a. As informed to us by management, physical verification of inventory has been conducted at reasonable intervals during the period.

b. The procedures followed by the management for physical verification of inventory are reasonable and adequate in relation to the size of the company and the nature of its business.

c. On the basis of our examination of records of inventory, the company is maintaining proper records of inventory. We are informed that there were no material discrepancies on physical verification.

3) a. The company has not granted or taken any loans, secured or unsecured from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956 other then disclosed in balance sheet.

b. Accordingly, Clause 3(b), 3(c) & 3(d) of the order are not applicable.

4) In our opinion and according to the information and explanations given to us, there is an adequate internal control procedure commensurate with the size of the company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods.

5) a. In our opinion and according to the information and explanations given to us the transactions that need to be entered in to the register maintained under section 301 of the Companies Act, 1956, have been so entered.

b In our opinion and according to the information and explanation given to us, the transactions made in pursuance of contracts or arrangements entered into the register maintained under section 301 of the Companies Act, 1956 and exceeding the value of Rs. Five Lakhs in respect of any party during the year have been made at prices, which are reasonable having regard to prevailing market price at relevant time.

6) The company has not accepted deposits from the public, hence the directives issued by the Reserve Bank of India and the provisions of section 58A & 58AA of the Act are not applicable.

7) In our opinion, the company has an internal audit system commensurate with its size and nature of business.

8) We have broadly reviewed the books of account maintained by the Company pursuant to the rules prescribed by the Central Government for maintenance of cost records under section 209(1)(d) of the Companies Act, 1956 in respect of corporate data connectivity business activities and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. However, we have not made a detailed examination of the records.

9) a. The company is not regular in depositing undisputed statutory dues which are applicable to the company including Provident Fund, Employees State Insurance, Income Tax, Sales Tax, Custom Duty, Excise Duty, Cess, Service Tax and anyotherstatutorydues with the appropriate authorities, b. According to the information and explanations given to us following amounts of undisputed statutory dues are outstanding as on 31st March, 2013 for a period exceeding six months:

(Rs. In Lacs)

Name of Statute	Nature of Dues	Amount (Rs) which relate	Period to	Due date paid	Date when Deposited
Income Tax	TDS	136.02	Apr12	07-May-12
Income Tax	TDS	183.07	May12	07-Jun-12
Income Tax	TDS	337.72	June12	07-Jul-12
Income Tax	TDS	327.1	July12	07-Aug-12
Income Tax	TDS	318.58	Aug12	07-Sep-12
Income Tax	TDS	307.16	Sept12	07-0ct-12
Sales Tax/VAT	Sales Tax	14.22	June12	25-Jul-12
Sales Tax/VAT	Sales Tax	11.67	Sept12	25-0ct-12
Provident fund and miscellaneous provisions act 1952	Provident Fund	52.96	May12	21-Jun-12
	Provident Fund	59.97	June12	21-Jul-12
	Provident Fund	56.99	July12	21-Aug-12
	Provident Fund	43.47	Aug12	21-Sep-12
	Provident Fund	44.16	Sept12	21-0ct-12
Employee State	ESI	14.23	May12	15-Jun-12
Insurance Act, 1948	ESI	15.79	June12	15-Jul-12
	ESI	14.60	July12	15-Aug-12
	ESI	15.71	Aug12	15-Sep-12
	ESI	16.18	Sept12	15-0ct-12
Service Tax	Service Tax	228.57	Apr12	06-May-12
Service Tax	Service Tax	36.49	May12	06-Jun-12
Service Tax	Service Tax	737.26	June12	06-Jul-12
Service Tax	Service Tax	31.89	July12	06-Aug-12
Service Tax	Service Tax	786.29	Sept12	06-0ct-12
Prof. Tax	Prof. Tax	2.17	Apr12	20-May-12
Prof. Tax	Prof. Tax	3.97	May12	20-Jun-12
Prof. Tax	Prof. Tax	4.49	June12	20-Jul-12
Prof. Tax	Prof. Tax	0.16	July12	20-Aug-12
Prof. Tax	Prof. Tax	1.27	Aug12	20-Sep-12
Prof. Tax	Prof. Tax	5.91	Sept12	20-0ct-12

c. According to the information and explanation given to us, the following are the disputed amount of Statutory dues outstanding as on March 31, 2013 for a period exceeding six months:- (p_s :_n Lacs)

Name of Statute	Period to which relate	Amount (Rs.)	Demand Description	Forum where dispute is pending
Sales Tax VAT	2007-08	75.90	VAT Plus Interest	Special Comm. DVAT, New Delhi
Sales Tax VAT	2007-08	26.78	Penalty	Special Comm. DVAT, New Delhi
Sales Tax VAT	2008-09	39.98	VAT Plus Interest	Special Comm. DVAT, New Delhi
Sales Tax VAT	2008-09	50.83	Penalty	Special Comm. DVAT, New Delhi
	Total	193.49

 

Name of Statute	Period to which relate	Amount (Rs.)	Demand Description	Forum where dispute is pending
Income Tax	2004-05	420.96	Assessment order 153(A)	CIT (A)- XXXI, New Delhi
Income Tax	2005-06	621.16	Assessment order 153(A)	CIT (A)- XXXI, New Delhi
Income Tax	2006-07	4,353.08	Assessment order 153(A)	CIT (A)- XXXI, New Delhi
Income Tax	2007-08	4,316.84	Assessment order 153(A)	CIT (A)- XXXI, New Delhi
Income Tax	2008-09	11,512.59	Assessment order 153(A)	CIT (A)- XXXI, New Delhi
Income Tax	2009-10	10,565.04	Assessment order 153(A)	CIT (A)- XXXI, New Delhi
Income Tax	2010-11	7,866.53	Assessment order 143(3)/153(A)	CIT (A)- XXXI, New Delhi
	Total	39,656.21

 

Name of Statute	Period to which relate	Amount (Rs.)	Demand Description	Forum where dispute is pending
Custom Duty	2004-05	23.36	Custom duty demand	CESTAT- Mumbai
	Total	23.36

10) The company does not have any accumulated losses at the end of the financial period; however it has incurred cash losses ofRs. 16,088.79 Lacs in the current period. There are no accumulated losses or cash loses reported in the immediately preceding financial period.

11) Based on our audit procedures and as per the information and explanations given to us, the company has defaulted on redemption of Foreign currency convertible bonds aggregating to Rs. 78533.73 Lacs (USD 145 Millions) (including redemption premium). The bonds become due for redemption on 26th August, 2012 and have not been redeemed till the date of this report. The company during the period has also defaulted in repayment of dues to financial institutions and banks in respect of Letter of Credit/Bill discounting/ External Commercial Borrowings/ Non Convertible Debentures/ Term Loans Liabilities. Following are the details ofsuch defaults:

(Rs. In Lacs)

Particulars	Delay upto 90 days	Delay 91-180 days	Delay 181-250 days	Total
Letter of Credit/ Bill Discounting/ Bank Guarantees	18,014.47	27,559.59	1,476.53	47,050.59
Term Loans	6,013.00	6,013.00	3,190.09	15,216.09
External Commercial Borrowings	Nil	3,358.00	3,358.00	6,716.00
Non Convertible Debentures	Nil	5,000.00	Nil	5,000.00

The CDR proposal of the company has been approved by the CDR empowered group in their meeting held on March 25, 2013 which cured all defaults during the period to financial institutions and banks except for dues to non CDR lenders amounting to Rs. 10,806.09 Lacs on account of Term Loans/ External Commercial Borrowings/ Non Convertible Debentures/ Interest, which continues post the period-end.

12) The company has not granted loan & advance on the basis of security by way of pledge of shares, debentures & other securities; hence this point of order is not applicable.

13) The provisions of any special statute applicable to chit fund are not applicable to the company.

14) The company is not dealing in or trading in shares, securities, debenture & other investments.

15) According to the information and explanations given to us, the company has given guarantees for loans taken by others from banks or financial institutions, the term and conditions whereof in our opinion are not prime-facie prejudicial to the interest of the company.

16) In our opinion and according to the information and explanation given to us, the term loans were applied for the purpose for which obtained.

17) Based on the information and explanations given to us on an overall examination of the balance sheet of the company, in our opinion, there are no funds raised on short term basis which have been used for long term investment and vice versa.

18) According to the information and explanation given to us the company has not made preferential allotment of shares to parties and Companies covered in the register maintained under section 301 of the Companies Act, 1956.

19) The company has not issued any debentures during the period under audit.

20) The company has not raised any money by way of public issues during the period.

21) According to the information and explanation given to us and to the best of our knowledge and belief, no fraud on or by the company has been noticed or reported during the course of our audit.

	For R. CHADHA &ASSOCIATES
	Chartered Accountants
	Firm Reg. No.: 004046N
Place: New Delhi
Date: May 30, 2013	Rakesh Chadha
	Partner
	Membership No. 83135