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Punjab Communications Ltd.

BSE: 500346 Sector: Telecom
NSE: PUNJCOMMU ISIN Code: INE609A01010
BSE 00:00 | 24 Apr Punjab Communications Ltd
NSE 05:30 | 01 Jan Punjab Communications Ltd
OPEN 12.49
PREVIOUS CLOSE 11.90
VOLUME 1301
52-Week high 19.20
52-Week low 9.00
P/E
Mkt Cap.(Rs cr) 15
Buy Price 11.75
Buy Qty 1.00
Sell Price 12.49
Sell Qty 170.00
OPEN 12.49
CLOSE 11.90
VOLUME 1301
52-Week high 19.20
52-Week low 9.00
P/E
Mkt Cap.(Rs cr) 15
Buy Price 11.75
Buy Qty 1.00
Sell Price 12.49
Sell Qty 170.00

Punjab Communications Ltd. (PUNJCOMMU) - Auditors Report


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Company auditors report

To The Members

Punjab Communications Limited

Report on the Standalone Ind AS Financial Statements

We have audited the accompanying standalone Ind AS financial statements of PunjabCommunications Limited ('the Company') which comprise the Balance Sheet as at 31 March2018 the Statement of Profit and Loss (including Other Comprehensive Income) theStatement of Cash Flows and the Statement of Changes in Equity for the year then ended anda summary of the Significant Accounting Policies and other explanatory information (hereinafter referred to as "Standalone Ind AS Financial Statements").

Management's Responsibility for the Standalone Financial Statements

The Company's Board of Directors is responsible for the matters stated in Section134(5) of the Companies Act 2013 ("the Act") with respect to the preparation ofthese Standalone Ind AS Financial Statements that give a true and fair view of thefinancial position financial performance including other comprehensive income cash flowsand changes in equity of the Company in accordance with the accounting principlesgenerally accepted in India including the Indian Accounting Standards (Ind AS) prescribedunder Section 133 of the Act read with relevant rules issued there under. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; anddesign implementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the standalone Ind AS financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on these Standalone Ind AS FinancialStatements based on our audit. We have taken into account the provisions of the Act theaccounting and auditing standards and matters which are required to be included in theaudit report under the provisions of the Act and the Rules made there under. We haveconducted our audit in accordance with the Standards on Auditing specified under Section143(10) of the Act. Those Standards require that we comply with ethical requirements andplan and perform the audit to obtain reasonable assurance about whether the standalone IndAS financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the standalone Ind AS financial statements. The procedures selecteddepend on the auditor's judgment including the assessment of the risks of materialmisstatement of the standalone Ind AS financial statements whether due to fraud or error.In making those risk assessments the auditor considers internal financial controlrelevant to the Company's preparation of the standalone Ind AS financial statements thatgive a true and fair view in order to design audit procedures that are appropriate in thecircumstances. An audit also includes evaluating the appropriateness of the accountingpolicies used and the reasonableness of the accounting estimates made by the Company'sDirectors as well as evaluating the overall presentation of the standalone Ind ASfinancial statements. We believe that the audit evidence we have obtained is sufficientand appropriate to provide a basis for our audit opinion on the standalone Ind ASfinancial statements.

Opinion

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone Ind AS financial statements give the informationrequired by the Act in the manner so required and give a true and fair view in conformitywith the accounting principles generally accepted in India including the Ind AS of thefinancial position of the Company as at 31 March 2018 and its financial performanceincluding other comprehensive income its cash flows and the changes in equity for theyear ended on that date.

Emphasis of Matters

We draw attention to the following matters in the Notes to the financial statements:

(a) Attention is invited to Notes 3 5 and 20 in financial statements regardingrealization of investment of ' 698.74 lacs (Face Value ' 700 lacs) in the Bonds of UPCo-operative Spinning Mills Federation Ltd. (UPCSMFL) duly guaranteed by the UP StateGovernment for tenure of 18 months. Consequent to the Bonds not being redeemed on the duedate of redemption viz 20-12-1999 the Company invoked the Government Guarantee. Pursuantto an ex-parte Order passed by the Hon'ble Punjab and Haryana High Court Chandigarh on31-01-2004 the UP State Government (Guarantor) deposited ' 735.63 lacs and a Govt.Guarantee of equivalent amount in the Civil Court Lucknow. The Company (Decree Holder)got the release of ' 735.63 lacs against furnishing of Bank Guarantee of the equivalentamount.

On appeal by the UP State Govt. the Hon'ble Supreme Court of India vide its Orderdated 19-012015 reversed the ex-parte Order of the Hon'ble Punjab and Haryana High Courtand directed the Civil Court to refund the amount to UP State Govt. In compliance of theOrders of the Hon'ble Supreme Court the Civil Judge District Court Lucknow passed onOrder on 31-03-2018 directing

the Company to refund '735.63 lacs within 15 days viz by 16-04-2018. However theCompany has decided to file Review Petition and the Lawyer has advised that it can befiled by 29-05-2018. The Company has already accounted for the liability of '735.63 lacsand reflected the same under Note 20.

Since the ex-parte Order of the Hon'ble Punjab and Haryana High Court was reversed bythe Hon'ble Supreme Court the Company filed a fresh Suit against UP State Govt. throughSpecial Secretary Industrial Development on 11-03-2016.

UP Co-operative Spinning Mills Federation Ltd. (UPCSMFL) is under liquidation videOrder passed in

March 2006 by the Hon'ble Bombay High Court and Official Liquidator was appointed inAugust 2006. The liquidation is still pending. The Company has also filed a Claim withthe Official Liquidator of UPCSMFL on 23-05-2016.

In view of the protracted litigation the Company has accordingly reflected the valueof the investment in Bonds at Cost as the same is fully guaranteed by the UP StateGovernment

(b) Attention is invited to Note 8 and 19 in the matter of balance confirmationswherein we further specify that the said balance confirmations have not been received byus till the date of signing of Balance Sheet.

(c) Attention is invited to Significant Accounting Policy 1-I (b) certain items ofincome and expenditure have been accounted for as and when they are incurred ascertainedor settled. Impact of such treatment on profits for the year has not been ascertained.

(d) As per the explanation and information provided to us the Company has beenselected for Disinvestment by Cabinet Committee on Disinvestment. Government of Punjab butno final Decision in respect of disinvestment mode has been taken place during the yearunder review.

Our opinion is not modified in respect of the matters mentioned above at (a) (b) (c)and (d).

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government of India in terms of section 143(11) of the Act we givein the Annexure A a statement on the matters specified in the paragraph 3 and 4 of theorder.

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

(a) We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit;

(b) In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books and proper returnsadequate for the purposes of our audit have been received from the branches not visited byus;

(c) The Balance Sheet the Statement of Profit and Loss the Statement of Cash Flowsand the Statement of Changes in Equity dealt with by this Report are in agreement with thebooks of account and with the returns received from branches not visited by us.

(d) In our opinion the aforesaid standalone Ind AS financial statements comply withthe Accounting Standards specified under Section 133 of the Act read with relevant ruleissued there under;

(e) On the basis of the written representations received from the directors as on 31March 2018 taken on record by the Board of Directors none of the directors isdisqualified as on 31 March 2018 from being appointed as a director in terms of Section164 (2) of the Act;

(f) With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate report in "Annexure B"; and

(g) With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 as amended byCompanies (Audit and Auditors) Amendment Rules 2017 in our opinion and to the best ofour information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations on its financialposition in its standalone Ind AS financial statements - Refer Note 33 and 37 to thestandalone Ind AS financial statements;

ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses except as mentioned above in Para ofMatter of Emphasis and Note 38. to the standalone Ind AS financial statements;

iii. During the year under audit there were no amounts that were required to betransferred to the Investor Education and Protection Fund by the Company.

for Grewal & Singh

Chartered Accountants Firm's registration number: 012322N

CA. Harcharan Singh Grewal

Partner

Membership number: 083692

PLACE: S.A.S. Nagar (Mohali)

DATE: May 24 2018

"ANNEXURE A" REFERRED TO IN PARAGRAPH 1 UNDER THE HEADING "REPORT ONOTHER LEGAL AND REGULATORY REQUIREMENTS" OF OUR REPORT OF EVEN DATE

Re: Punjab Communications Limited

1. (a) As per the information and explanations provided to us the company ismaintaining proper records

showing full particulars including quantitative details and situation of fixed assets;

(b) The company has a regular system of verification of fixed assets at the end of eachyear which in our opinion is reasonable having regard to the size of the company and thenature of its assets. Fixed assets were verified by the company and no discrepancy wasnoticed.

(c) As per the information and explanations provided to us the title deeds ofimmovable properties of the company are held in the name of company.

2. The company has a regular system of verification of the inventory at the end of eachyear which in our opinion is reasonable having regard to the size of the company. Theinventory was verified and the discrepancies noticed on physical verification betweenphysical stock and book records were not material and have been adequately dealt in thebooks of account.

3. As per the information and explanations given to us the company has not granted anyloans secured or unsecured to companies firms LLPs or other parties covered in theregister maintained under section 189 of the Companies Act.

4. In our opinion and according to the information and explanations given to us inrespect of loans investments guarantees and securities the company has complied withthe provisions of Section 185 and 186 of the Companies Act 2013.

5. According to the information and explanations given to us we are of opinion thatthe company has not accepted any deposit in pursuance of sections 73 to 76 or any otherrelevant provisions of the Companies Act and the rules framed there under.

6. We have broadly reviewed the books and account maintained by the company pursuant tothe Rules made by the Central Government for the maintenance of cost records undersub-section (1) of section 148 of the Companies Act 2013 and is of the opinion that primafacie the prescribed accounts and records have been made and maintained. However duringthe current year the company was not required to maintain cost records as per theprovisions of Section 148(1).

7. (a) According to the information and explanations given to us and books and recordsas produced and

examined by us are in accordance with generally accepted auditing practices in Indiaand also based on management representation the company is regular in depositingundisputed statutory dues including provident fund employees state insurance income-taxsales tax service tax duty of customs duty of excise value added tax cess and anyother statutory dues with the appropriate authorities. Further we report that noundisputed amount payable in respect to such statutory dues were outstanding as at March31 2018 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us there are no dues ofprovident fund employees state insurance income-tax sales tax service tax duty ofcustoms duty of excise value added tax cess and any other statutory dues which have notbeen deposited on account of any dispute. However the following demands have been raisedin respect of disputed dues pending before various statutory authorities:

S.No. Particulars Tentative

amount

involved

Matter/ Cases pending since Forum where dispute is pending Current status/Reason for pendency
1. Excise and

custom duty demand

'30.20

Lacs

FY 2002-03 Deputy

Commissioner of Customs New Delhi

Reply was submitted in 2002-03. Thereafter no further communication has been received.
2. Sales Tax demand '14.85

Lacs

FY 2011-12 Sales Tax Appellate Tribunal Andhra Pradesh. Appeal against the said Sales tax demand for FY 2004-05 was admitted. Matter not listed for hearing yet.
3. Sales Tax demand '16.77

Lacs

FY 2014-15 Ld. Senior Joint Commissioner Salt Lake Taxation appellate office West Bengal Appeal filed by the company against the said sales tax demand for FY 2011-12 admitted by the department.
4 Sales Tax demand '14.67

Lacs

FY 2015-16 Ld. Senior Joint commissioner Salt Lake Taxation appellate office West Bengal Appeal filed by the company against the said sales tax demand for FY 2012-13 was admitted by the department.

8. In our opinion and according to the information and explanations given to us thecompany has not defaulted in repayment of dues to the financial institutions or banks orGovernment. We further report that the company has no debenture holders during the year.

9. The Company did not raise any money by way of initial public offer or further publicoffer (including debt instruments) and term loans during the year under audit.

10. According to the information and explanations given to us no fraud by or on thecompany by its officers/employees has been noticed or reported during the course of ouraudit.

11. The Section 197 read with Schedule V to the Companies Act in relation to themanagerial remuneration is not applicable to Government companies as per Notification NoGSR 463E dated 5 June 2015.

12. The company is a manufacturing company and not a chit fund or a Nidhi Company.Therefore this clause is not applicable to the Company.

13. The company transactions with the related parties are in compliance with section177 and 188 of Companies Act 2013 and the details have been disclosed in the financialstatement as required by the Indian Accounting Standards and Companies Act 2013 andamendments thereon.

14. The company has not made any preferential allotment/private placement of shares orfully or partly convertible debentures during the year.

15. As per information and explanation provided to us no such non cash transactionswere entered into by the Company with Directors or persons connected with it.

16. According to the information and explanations given to us the company is notrequired to be registered under section 45-IA of the Reserve Bank of India Act 1934.

for Grewal & Singh

Chartered Accountants Firm's registration number: 012322N

CA. Harcharan Singh Grewal

Partner

Membership number: 083692

PLACE: S.A.S. Nagar (Mohali) DATE: May 24 2018

"ANNEXURE B" TO INDEPENDENT AUDITOR'S REPORT FY 2017-18

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act")

We have audited the internal financial controls over financial reporting of PunjabCommunications Limited ("the Company") as of 31 March 2018 in conjunction withour audit of the financial statements of the Company for the year ended on that date.

Management's Responsibility for Internal Financial Controls

The Company's management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls over Financial

Reporting issued by the Institute of Chartered Accountants of India ('ICAI').

These responsibilities include the design implementation and maintenance of adequateinternal financial controls that were operating effectively for ensuring the orderly andefficient conduct of its business including adherence to company's policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information as required under the Companies Act 2013.

Auditors' Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We have conducted our audit inaccordance with the Guidance Note on Audit of Internal Financial Controls over FinancialReporting (the "Guidance Note") and the Standards on Auditing issued by ICAI

and deemed to be prescribed under section 143(10) of the Companies Act 2013 to theextent applicable to an audit of internal financial controls both applicable to an auditof Internal Financial Controls and both issued by the Institute of Chartered Accountantsof India. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls over financial reporting was established andmaintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgment including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls systemover financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedures that

(1) pertains to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company;

(2) provides reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accountingprinciples and that receipts and expenditures of the company are being made only inaccordance with authorizations of management and directors of the company; and

(3) provides reasonable assurance regarding prevention or timely detection ofunauthorized acquisition use or disposition of the company's assets that could have amaterial effect on the financial statements.

Inherent Limitations of Internal Financial Controls Over Financial Reporting

Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at 31st March 2018 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.

for Grewal & Singh Chartered Accountants Firm's registration number: 012322N CA.Harcharan Singh Grewal Partner

Membership number: 083692

PLACE: S.A.S. Nagar (Mohali)

DATE: May 24 2018