The company's total liabilities during the financial year 2018-2019 stood at Rs 14,601.82 crore, while the net worth of the company is negative Rs 9,918.33 crore.
The auditors of state-owned Mahanagar Telephone Nigam (MTNL) have stated that the company’s net worth has been fully eroded, and that the current liabilities of the company have exceeded the current assets substantially.
The auditors’ report said that while the company’s standalone Ind-AS financial statements have been prepared on a going concern
basis keeping in view the majority stake of the government of India, it is doubtful that the company can continue as a going concern.
“The company has accumulated losses and its net worth has been fully/ substantially eroded, the company has incurred net loss/net cash loss during the current and previous year(s) and the company’s current liabilities exceeded its current assets as at the balance date. These events or conditions, along with other matter…indicate that a material uncertainty exists that may cast significant doubt on the company’s ability to continue as a going concern,” the auditor report states.
According to the independent auditor’s report on the company’s standalone financial statements, the company has incurred net cash loss during the year ended March 31, 2019 as well as the previous year.
Reporting its highest net loss in the last five years, MTNL posted a net loss of over `3,390 crore for the full year ended March 31, 2019. The company had reported its last net profit of over `7,838 crore in the financial year 2013-2014.
The revenues during the year came in lower by 16% at `1,987.80 versus last year, and were the lowest in six years. The company’s Ebitda (earning before interest tax depreciation and amortisation) which has been in the negative since 2014, declined further to a negative `2,305.93 crore in FY19.
The company’s total liabilities during the financial year 2018-2019 stood at Rs 14,601.82 crore, while the net worth of the company is negative Rs 9,918.33 crore.
The auditors have further observed that department of public enterprises has classified the status of the company as ‘Incipient sick CPSE’ and department of telecommunication has also confirmed the status through its circular.
The auditors have also stated that there were certain receivables and payables to other government entities like Bharat Sanchar Nigam Limited (BSNL) and DoT, the status of which the auditors could not ascertain and therefore are not in a position to comment on the correctness of the outstanding balances and resultant impact of the same on the standalone Ind-AS financial statements of the company.
For instance, MTNL has certain balances receivables from and payables to BSNL, the net amount recoverable of Rs 3,352.67 crore out of which Rs 2,505.46 crore is subject to reconciliation and confirmation. “In view of non reconciliation and non confirmation and also in view of various pending disputes regarding claims and counter claims,” they said.
The company has not provided a provision for doubtful claims in respect of lapsed CENVAT credit due to non-payment of service tax to service providers within the period of 180 days and due to transition provision under the goods and services tax (GST) where the aforesaid CENVAT credit amounting to Rs 144.66 crore has not been carried forward or ineligible credits amounting to Rs 51.65 crore excessively carried forward to TRANS- I under GST laws resulting in overstatement of current assets and understatement of loss to that extent.
Similarly, the company has certain balances receivables from and payables to DoT. “The net amount recoverable of Rs 6,69.34 crore is subject to reconciliation and confirmation. In view of non reconciliation and non confirmation, we are not in a position to ascertain and comment on the correctness of the outstanding balances and resultant impact of the same on the standalone Ind-AS financial statements of the company,” they said.
Some of the other such items on which auditors could not have a view were impact of depreciation and amount of property, plant and equipment capitalised in the balance sheet due to delays in issuance of the completion certificates or receipt of the bills or receipt of inventory issue slips, absence of relevant records related to certain land and buildings transferred to MTNL from DoT in earlier years, and in matters related to DoT’s demand of Rs 3313.15 crore in 2012-13 on account of one time charges for 2G spectrum held by the company for GSM and CDMA for the period of licence already elapsed and also for the remaining valid period of license including spectrum given on trial basis.