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Sahara One’s disclosures under impact of audit qualifications for FY16
MUMBAI: Subrata Roy-promoted Sahara One Media & Entertainment has outstanding of Rs 57.89 crore (Rs 57,88,82,469) as advances towards purchase and production of movies, which is doubtful of recovery.
The company’s management has explained that these advances have been given in the normal course of business and are fully recoverable.
However, under the disclosure of ‘Impact of Audit Qualifications’ for FY16, the auditor has stated that “under our opinion amount is doubtful of recovery as these are outstanding/remained unadjusted for long period of time. Further, balance confirmations from these parties have also not been provided to us”.
Similarly, Rs 70.43 crore (70,42,72,243) is outstanding as recoverable from debtors and continues beyond the stipulated period of recovery.
Sahara One’s management, based on internal assessments and evaluations, has said that these debtors amount are fully recoverable and no provision is necessary as at balance sheet date.
However, under the disclosure of ‘Impact of Audit Qualifications’, it has been stated that “in absence of any convincing evidence, we are of the opinion that this amount should be considered as doubtful and requires appropriate provisioning”.
There is also mention of the deposit of Rs 69.40 crore (Rs 69,40,27,883) to Sahara-SEBI Refund account in the matter of dispute in respect of repayment of optionally fully convertible debentures (OFCDs) by two group companies, namely Sahara India Real Corporation and Sahara Housing Investment Corporation. In its order dated 21 November 2013, the Supreme Court had barred Sahara Group of companies from parting with movable and immovable properties. Accordingly, SEBI seized the company’s fixed deposit and non-current investment.
Subsequently, the apex court, in its order dated 4 June 2014, directed to defreeze the fixed deposit account of the company subject to condition that the total proceeds be transferred to the special account opened by the SEBI.
“However, we are unable to ascertain whether this amount is fully recoverable or not and its further impact, if any, that may arise in case if this amount is subsequently determined to be doubtful of recovery,” the disclosure note said.
Sahara One has said that the company has extended credit from time to time as per the market practice and the management is confident to recover the amount. Hence, no provision has been made by the management. For amount of Rs 57,88,82,469 as advances towards purchase and production of films given to SK Enterprises, a legal notice has been issued on 30 May 2016 and regular follow-up is being done by company officials. The company is confident of recovering the same amount with interest, hence no provisioning.
Regarding the Rs 69.40 crore, Sahara One said that it is not related in any way with the dispute. The matter is sub judice and the management is fully confident that the amount is fully recoverable, which is why no provisioning is required.