To the Members of Zee Media Corporation Limited
We have audited the accompanying standalone financial statements of Zee MediaCorporation Limited (the Company') which comprise the balance sheet as at 31March 2019 the statement of profit and loss (including other comprehensive income) thestatement of changes in equity the statement of cash flows for the year then ended andnotes to the standalone financial statements including a summary of the significantaccounting policies and other explanatory information (herein-after referred to asstandalone financial statements).
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone financial statements give the information requiredby the Companies Act 2013 (the Act) in the manner so required and give a trueand fair view in conformity with the accounting principles generally accepted in Indiaincluding the Indian Accounting Standards (Ind AS) prescribed under Section 133 of the Actread with the Companies (Indian Accounting Standards) Rules 2015 as amended of thestate of affairs of the Company as at 31 March 2019 and its loss total comprehensiveloss changes in equity and its cash flows for the year ended on that date.
2. Basis for opinion
We conducted our audit of the standalone financial statements in accordance with theStandards on Auditing (SAs) prescribed under Section 143(10) of the Act. Ourresponsibilities under those Standards are further described in the Auditor'sResponsibilities for the Audit of the standalone financial statements section of ourreport. We are independent of the Company in accordance with the Code of Ethics issued bythe Institute of Chartered Accountants of India (ICAI) together with the ethicalrequirements that are relevant to our audit of the standalone financial statements underthe provisions of the Act and the Rules thereunder and we have fulfilled our otherethical responsibilities in accordance with these requirements and the ICAI's Code ofEthics.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our opinion.
3. Key Audit Matters
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone financial statements of the current period.These matters were addressed in the context of our audit of the standalone financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters.
a) Assessment of impairment of investment in non-convertible redeemable preferenceshares of Diligent Media Corporation Limited (Refer note 8(b) (ii) and 30 of thestandalone financial statements)
At each reporting date an entity is required to assess whether the credit risk on afinancial instrument has increased significantly since recognition. If there issignificant increase in credit risk of a financial instrument from initial recognitionthen an entity is required to recognize life time expected credit losses (impairmentlosses) in the statement of profit and loss as per Ind AS 109 FinancialInstruments. In performing the assessment of impairment as at 31 March 2019 asrequired by Ind AS 109 investment in non-convertible redeemable preference shares ofDiligent Media Corporation Limited (DMCL) was impaired by Rs. 1033.46 million.
The impairment assessment of investment in DMCL is considered to be a key audit matterdue to the fact that the calculation of fair value of financial instrument requires theuse of estimates and assumptions concerning the future cash flows which at this time areinherently uncertain and could change over time.
Our audit procedures included among others assessing the appropriateness of themanagement's judgment and assumptions in estimating the fair value of the investment inDMCL.
We have been provided by the management of the Company a fair valuation report of theinvestment in DMCL as at 31 March 2019 carried out by an independent valuer which isconsidered and taken on record by the Board of Directors of the Company. We evaluated thekey assumptions used in estimating the fair valuation of the above investment. We assessedthe appropriateness of the disclosures made in the standalone financial statements.
b) Contingent liabilities (Refer note 34(a) and 34(d) of the standalonefinancial statements)
Legal cases filed against the Company and claims of such cases not acknowledged as debtas at 31 March 2019 is Rs. 3234.15 million. Further financial guarantees (CorporateGuarantees) provided by the Company for borrowings/debentures availed/issued by a relatedparty as at 31 March 2019 is Rs. 4016.98 million. The existence and probability ofpayments against these claims and the probability that the related party will not defaultpayments to lenders and debenture holders requires management judgment to ensuredisclosure of most appropriate values of contingent liabilities.
Due to level of judgment required relating to estimation and presentation of contingentliabilities this is considered to be a key audit matter.
Our audit procedures included among others assessing the appropriateness of themanagement's judgment in estimating the contingent liabilities.
We have obtained details of pending legal cases and demands/claims as at 31 March 2019from the management. We assessed the completeness of the details of these claims throughdiscussion with senior management personnel. We have also reviewed the outcome of thedisputed cases pending at various forums. We have also assessed the appropriateness ofpresentation of the contingent liabilities in the standalone financial statements.
c) ImpairmentI assessment of investments in associates
Management performs an annual impairment test on the recoverability of the carryingamounts of investments where impairment indicators exist as required by Ind AS 36 Impairment of Assets which is subjective in nature due to judgment having tobe made of future performance.
In performing the annual assessment of impairment as required by Ind AS 36 it wasconcluded by the management that the investment in associates Today Retail NetworkPrivate Limited and Today Merchandise Private Limited were not impaired as at 31 March2019.
The impairment assessment of the investments in associates is considered to be a keyaudit matter due to the fact that the calculation of the recoverable amount requires theuse of estimates and assumptions concerning the future cash flows which at this time areinherently uncertain and could change over time.
Our audit procedures included among others assessing the appropriateness of themanagement's judgment and assumptions in estimating the fair value of the investment inassociates.
We have been provided by the management a note and cash flows based on the futuregrowth prospects of business carried out by these associates. We evaluated the keyassumptions used in estimations such as discount rate applied future projections. etc. Weassessed the appropriateness of the disclosures made in the standalone financialstatements.
4. Information other than the standalone financial statements and Auditor'sReport thereon
The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Management Discussion and AnalysisBoard's Report including Annexures to Board Report but does not include the standalonefinancial statements and our auditor's report thereon.
Our opinion on the standalone financial statements does not cover the other informationand we do not express any form of assurance conclusion thereon.
In connection with our audit of the standalone financial statements our responsibilityis to read the other information and in doing so consider whether the other informationis materially inconsistent with the standalone financial statements or our knowledgeobtained in the audit or otherwise appears to be materially misstated. If based on thework we have performed we conclude that there is a material misstatement of this otherinformation we are required to report that fact. We have nothing to report in this regard.
5. 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 Act with respect to the preparation of these standalone financial statementsthat give a true and fair view of the financial position financial performance includingother comprehensive income changes in equity and cash flows of the Company in accordancewith the accounting principles generally accepted in India including the Ind ASprescribed under Section 133 of the Act read with the Companies (Indian AccountingStandards) Rules 2015 as amended.
This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding the assets of the Company andfor preventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; and design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the accuracy and completeness ofthe accounting records relevant to the preparation and presentation of the standalonefinancial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.
In preparing the standalone financial statements management is responsible forassessing the Company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessmanagement either intends to liquidate the Company or to cease operations or has norealistic alternative but to do so. Those Board of Directors are also responsible foroverseeing the Company's financial reporting process.
6. Auditor's responsibility for the audit of the standalone financial statements
Our objectives are to obtain reasonable assurance about whether the standalonefinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these standalone financial statements.
As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the standalonefinancial statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrol.
Obtain an understanding of internal control relevant to the audit in order todesign 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 hasadequate internal financial controls system in place and the operating effectiveness ofsuch controls.
Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basis ofaccounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe standalone financial statements or if such disclosures are inadequate to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor's report. However future events or conditions may cause the Company to cease tocontinue as a going concern.
Evaluate the overall presentation structure and content of the standalonefinancial statements including the disclosures and whether the standalone financialstatements represent the underlying transactions and events in a manner that achieves fairpresentation.
We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.
From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the standalone financial statementsof the current period and are therefore the key audit matters. We describe these mattersin our auditor's report unless law or regulation precludes public disclosure about thematter or when in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.
7. Report on other Legal and Regulatory requirements
I . As required by the Companies (Auditor's Report)
Order 2016 issued by the Central Government of India in terms of Section 143(11) ofthe Act (the Order) and on the basis of such checks of the books and recordsof the Company as we considered appropriate and according to the information andexplanations given to us we give in the Annexure A a statement on thematters specified in the paragraph 3 and 4 of the Order.
II. As required by Section143(3) of the Act we report that:
a) We have sought and obtained all the information and explanations which to thebest of 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;
c) The balance sheet the statement of profit and loss (including othercomprehensive income) the statement of changes in equity and the statement of cash flowsdealt with by this Report are in agreement with the books of account;
d) In our opinion the aforesaid standalone financial statements comply with theIndian Accounting Standards specified under Section 133 of the Act read with Companies(Indian Accounting Standards) Rules 2015 as amended;
e) On the basis of written representations received from the directors of theCompany as on 31 March 2019 and taken on record by the Board of Directors none of thedirectors is disqualified as on 31 March 2019 from being appointed as a director in termsof Section 164 (2) of the Act;
f) With respect to the adequacy of the internal financial controls overfinancial reporting of the Company and the operating effectiveness of such controls referto our separate Report in Annexure B.
g) With respect to the other matters to be included in the Auditor's Report inaccordance with the requirements of Section 197(16) of the Act as amended:
In our opinion and to the best of our information and according to the explanationsgiven to us the remuneration paid by the Company to its directors during the year is inaccordance with the provisions of Section 197 of the Act.
h) 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 in our opinionand to the best of our information and according to the explanations given to us: i. TheCompany has disclosed the impact of pending litigations on its financial position in itsstandalone financial statements;
ii. The Company did not have any long-term contracts including derivative contractshaving any material foreseeable losses; and
iii. There are no amounts required to be transferred to the Investor Education andProtection Fund by the Company during the year.
For Ford Rhodes Parks & Co. LLP
Firm Registration Number: 102860W/W100089
Membership Number 016059
Mumbai 14 May 2019
Annexure - A to the Independent Auditor's Report
Annexure referred to in paragraph 7(I) under Report on other Legal and Regulatoryrequirements of our report of even date to the members of Zee Media CorporationLimited on the standalone financial statements for the year ended 31 March 2019 i. (a)The Company has maintained proper records showing full particulars including quantitativedetails and situation of fixed assets.
(b) All the fixed assets of the Company except Integrated Receiver Decoders (IRD)boxes lying with third parties have been physically verified by the management during theyear. As informed to us no material discrepancies were noticed on such verification.
(c) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the title deeds of immovable properties areheld in the name of the Company except four immovable properties having gross block valueof Rs. 43.03 million and written down value of Rs. 41.88 million and one immovableproperty received pursuant to the Scheme of Arrangement and Amalgamation having grossblock value of Rs. 25.24 million and written down value of Rs. 22.28 million which areyet to be transferred in the name of the Company.
ii. The inventory of program has been physically verified by the management during theyear. As explained to us no discrepancies were noticed on physical verification ascompared to book records.
iii. According to the information and explanations given to us the Company has notgranted any loans secured or unsecured to companies firms limited liabilitypartnerships or other parties covered in the register maintained under Section 189 of theAct.
iv. In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of Section 185 and 186 of the Act in respect ofguarantees given and investments made by it.
v. The Company has not accepted any deposits from the public within the meaning ofSections 73 to 76 of the Act.
vi. We have broadly reviewed the cost records maintained by the Company prescribed bythe Central Government under Section 148(1) of the Act and are of the opinion that primafacie the prescribed accounts and records have been made and maintained. We have howevernot made a detailed examination of such records with a view to determine whether they areaccurate or complete.
vii. According to the records of the Company examined by us and information andexplanations given to us:
a) Undisputed statutory dues including provident fund employees' state insuranceincome tax sales tax service tax duty of customs duty of excise value added taxgoods and services tax cess and others as applicable have generally been regularlydeposited with the appropriate authorities except delay in few cases. There are noundisputed amounts payable in respect of aforesaid dues outstanding as at 31 March 2019for a period of more than six months from the date they became payable.
b) There are no dues of sales tax service tax duty of customs duty of excise andvalue added tax which have not been deposited on account of any dispute. The disputed duesof income tax which have not been deposited are as under:
|Name of the Statute ||Nature of the Dues ||Rs. in million ||Period to which the amount relate ||Forum where dispute is pending |
|The Income Tax Act 1961 ||Income Tax ||0.67 ||FY 2013-2014 ||Commissioner of Income Tax (Appeals) |
viii. According to the records of the Company examined by us and the information andexplanations given to us the Company has not defaulted in repayment of loans orborrowings to financial institutions or banks. The Company has not taken any loans fromgovernment and has not issued any debentures during the year.
ix. In our opinion and according to the information and explanations given to us theCompany has not raised any money by way of debt instruments through initial public offeror further public offer. Amounts raised by way of term loans during the year have beenapplied for the purpose for which they were raised.
x. During the course of our examination of the books and records of the Companycarried out in accordance with the generally accepted auditing practices in India andaccording to the information and explanations given to us we have neither come across anyinstance of material fraud by the Company or on the Company by its officers or employeesnoticed or reported during the year nor have been informed of any such case by theManagement.
xi. According to the records of the Company examined by us and information andexplanations given to us the Company has paid/provided for managerial remuneration inaccordance with the requisite approvals mandated by the provisions of Section 197 readwith Schedule V to the Act.
xii. In our opinion and according to the information and explanations given to us theCompany is not a Nidhi company and the Nidhi Rules 2014 are not applicable to it.
xiii. According to the information and explanations given to us and based on ourexamination of the records of the Company transactions with the related parties are incompliance with Sections 177 and 188 of the Act where applicable and details of suchtransactions have been disclosed in the standalone financial statements as required by theapplicable Indian Accounting Standards.
xiv. According to the records of the Company examined by us and information andexplanations given to us the Company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures during the year.
xv. According to the records of the Company examined by us and information andexplanations given to us the Company has not entered into non-cash transactions withdirectors or persons connected with him.
xvi. The Company is not required to be registered under Section 45-IA of the ReserveBank of India Act 1934.
For Ford Rhodes Parks & Co. LLP
Firm Registration Number: 102860W/W100089
Membership Number 016059
Mumbai 14 May 2019
Annexure - B to the Independent Auditor's Report
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 (the Act) as referred to in paragraph 7(II)(f)under Report on other Legal and Regulatory requirements of our report of evendate to the members of Zee Media Corporation Limited on the standalone financialstatements for the year ended 31 March 2019
We have audited the internal financial controls over financial reporting of ZeeMedia Corporation Limited (the Company) as of 31 March 2019 in conjunctionwith our audit of the standalone financial statements of the Company for the year ended onthat 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 (theGuidance Note) issued by the Institute of Chartered Accountants of India(ICAI). These responsibilities include the design implementation and maintenance ofadequate internal financial controls that were operating effectively for ensuring theorderly and efficient conduct of its business including adherence to Company's policiesthe safeguarding 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 Act.
Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls over FinancialReporting (the Guidance Note) issued by the Institute of CharteredAccountants of India and the Standards on Auditing prescribed under Section 143(10) of theCompanies Act 2013 to the extent applicable to an audit of internal financial controls.Those Standards and the Guidance Note require that we comply with ethical requirements andplan and perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls over financial reporting was established and maintained and if suchcontrols 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 standalone financial statements whether due to fraud orerror.
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) pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures of the company are being made only in accordance with authorisations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised acquisition use or disposition of theCompany's assets that could have a material 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.
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 31 March 2019 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note issued by theInstitute of Chartered Accountants of India.
For Ford Rhodes Parks & Co. LLP
Firm Registration Number: 102860W/W100089
Membership Number 016059
Mumbai 14 May 2019