DISH TV INDIA LTD (31st MARCH 2021)
From Auditors’ Report (Standalone)
Basis of Qualified Opinion
As stated in Note 41 to the accompanying standalone financial statements, the Company has a non-current investment in and other non-current loans to its wholly-owned subsidiary amounting to Rs. 515,412 lacs and Rs. 74,173 lacs respectively. The wholly-owned subsidiary has negative net current assets and has incurred losses in the current year, although it has a positive net worth as of 31st March 2021. As described in the aforementioned note, management, basis its internal assessment, has considered such balances as fully recoverable as of 31st March 2021. However, the management has not carried out a detailed and comprehensive impairment testing in accordance with the principles of Indian Accounting Standard – 36, “Impairment of Assets” and Indian Accounting Standard – 109, “Financial Instruments”. In the absence of sufficient appropriate evidence to support management’s conclusion, we are unable to comment upon adjustments, if any, that may be required to the carrying value of these non-current investments and non-current loans and its consequential impact on the accompanying standalone financial statements.
Our opinion for the year ended 31st March 2020 was also modified in respect of this matter.
From Auditors’ Report on Internal Financial Controls regarding Financial Statements
Qualified Opinion
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 Company’s internal financial controls with reference to financial statements as of 31st March 2021: As explained in Note 41 and Note 42 to the standalone financial statements, the Company has performed an internal assessment to estimate the fair value of its investment in its subsidiary, which in our view is not a detailed and comprehensive test in accordance with the principles of Indian Accounting Standard – 36 “Impairment of Assets” and Indian Accounting Standard – 109 “Financial Instruments”. As a result, the Company’s internal financial control system towards estimating the fair value of its investment in its subsidiary were not operating effectively, which could result in the Company not providing for adjustment, if any that may be required to the carrying values of non-current investment and other non-current loans, and its consequential impact on the earnings, reserves and related disclosures in the accompanying standalone financial statements.
From Notes to Financial Statements
Note 41
The Company has non-current investments (including equity component of long term loans and guarantees)
in and non-current loans to its wholly-owned subsidiary, Dish Infra Services Private Limited (‘Dish Infra’), amounting to Rs. 515,412 lacs and Rs. 74,173 lacs respectively. Dish Infra’s net worth is positive although it has incurred losses in the current year. Based on internal assessment, the management believes that the realisable amount from Dish Infra will be higher than the carrying value of the non-current investments and other non-current loans. Hence, no impairment has been considered. The internal assessment is based on the ability of Dish Infra to monetise its assets including investments in new-age technologies, which will generate sufficient cash flows in the future.
From Directors’ Report
Details of Audit Qualification, as per Auditors’ Report dated 30th June 2021, on the Standalone Financial Results of the Company for the Financial Year 2020-21: Not reproduced
Management Response:
(a) The Company as of 31st March 2021, has non-current Investment (including equity component of long term loans and guarantees) in and non-current loans to its wholly-owned subsidiary, Dish Infra Services Private Limited (‘Dish Infra’), amounting to Rs. 5,15,412 lacs and Rs. 74,173 lacs respectively. Dish Infra’s net worth is positive although it has incurred losses in the current year. Based on internal assessment, Management believes that the realisable amount from Dish Infra will be higher than the carrying value of the non-current investments and other non-current financial assets. Hence, no impairment has been considered. The internal assessment is based on the ability of Dish Infra to monetise its assets including investments in new-age technologies, which will generate sufficient cash flows in the future.
(b) The Company has a well-defined system in place to access the appropriateness of the carrying value of its investments and estimation is performed with proper laid down process based on valuation models, usually applied in such cases. The model is refined from time to time to provide appropriateness, accuracy and fair value at a particular point in time. Our internal valuation team has performed the assessment of valuation models, specifically in the testing of key assumptions, the accuracy of inputs used in the models to determine the fair value.
