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| Exchange Disseminated Time | Mahanagar Telephone Nigam Ltd (MTNL) has informed BSE that in the limited review report of the Company for the quarter ended March 31, 2007, the Auditors of the Company have made the following observations:
1. Other Income includes interest of Rs 969.99 Million for the quarter under review has been calculated on the basis of the appeal effect order received from the assessing officer for the Assessment Years 1998-99, 1999-2000, 2000-01 and 2002-03 and on estimated basis for assessment years 1995-96 and 1996-97 on the issue of License Fee and benefit u/s 80 IA and certain other issues, for the Assessment Years 1995-96, 1996-97, 1998-99, 1999-2000, 2000-2001 and 2002-2003.
2. The Company, in its un-audited results published for the quarter under review / report, has neither disclosed - How the qualifications made by the auditors in respect of previous accounting years have been addressed nor it has given the impact of these qualifications on the Profit and Loss in the un-audited quarterly results for the quarter under report, as required under the provisions of clause 41 of the Listing Agreement.
3. The provision for leave encashment, Pension Contribution and Gratuity has been made on estimated basis, Pending actuarial valuation, the impact of the above on the quarter under review is not ascertainable.
4. The Company has adopted the following basis for valuing Fixed Assets, Capital Work in Progress & Depreciation, which in the Auditors' opinion, is not in agreement with Accounting Standard - 10 - "Accounting for Fixed Assets", and Accounting Standard - 6 - "Accounting for Depreciation", issued by the Institute of Chartered Accountants of India :
(a) The overheads are allocated as a percentage of capital expenditure as prescribed by DOT and not on the basis of identification of directly allocable costs.
(b) In some cases, replacement cost of existing fixed assets have been capitalized without any adjustments of the relevant costs and written down value of discarded assets from the fixed assets block. Further, in respect of various assets (other than exchange equipments and WLL Handsets) scrapped / decommissioned during the period, the same are not valued at lower of net book value or realizable value and consequent loss, if any, has not been charged to the Profit and Loss Account.
5. The Company has adopted the basis of valuation of inventories (except for WLL Handsets) as per Significant Accounting Policy of the company, which is not in accordance with the Accounting Standard - 2 on "Valuation of Inventories" issued by the Institute of Chartered Accountants of India, which prescribes for valuation of the same at the lower of cost and net realisable value.
6. All receivables and payables including amount due / payable to BSNL / DOT, bank balances and inter unit balances are subject to confirmation, reconciliation and consequent adjustments. Also the sundry debtors control accounts and the subsidiary records are subject to reconciliation and consequent adjustments.
7. In respect of Mumbai MS unit no entries have been passed for accounting of exchange rate difference on amount realized from international operators & amount outstanding against them at the end of the period, in contravention to AS - 11, the effects of changes in foreign exchange rates issued by ICAI.
8. The overall impact of matters referred to in the foregoing paras on the Statements of unaudited financial results is not determined / unascertainable.
9. Corresponding previous period ending March 31, 2006 figures are re-grouped and re-arranged wherever considered necessary. |
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