Auditor Report of Digital Electronics Ltd.

Mar 31, 2014

1. Report on the Financial Statements

We have audited the accompanying financial statements of Digital Electronics Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2014, and the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

2. Management''s Responsibility for the Financial statements

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 ("the Act") read with the General Circular 15/2013 dated 13th September, 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013 and in accordance with the accounting principles generally accepted in India. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

3. Auditors'' Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is not sufficient and not appropriate to provide a basis for our audit opinion.

4. Opinion

In our opinion and to the best of our information and according to the explanations given to us, the financial statements give the information required by the Act in the manner so required and give a true and fair view subject to our observation and comments in Para No. 5 of our report and Notes No: 1, 18, and 19 to the financial statements, is in conformity with the accounting principles generally accepted in India:

a) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2014;

b) in the case of the Statement of Profit and Loss, of the loss for the year ended on that date; and

c) in the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

4. Emphasis of Matter:

We draw attention to Notes No: 1, 18 and 19 to the financial statements regarding the Company''s intention to continue to serve the market after discontinuance of its manufacturing and trading operations from FY 2005-06 onwards by focusing on exploration of new line of business and developing management training centre. Based on the management projections for the future, the financial statements have accordingly been prepared on going concern basis. The company has incurred major expenses towards foreign travelling of directors and business promotion as referred to in Note No: 19 to the financial statements; which are without proper evidences and supporting. However, the management had represented that these expenses are related to the business of the company and also have been approved by the Board of Directors of the company. We are unable to comment on the nature of expenses and consequential effects, if any on the financial statements, arising from the above. Our opinion is not qualified in respect of this matter.

6. Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2003 ("theOrder") issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

2. As required by section 227(3) of the Act, we report that:

a) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit;

b) in our opinion proper books of account as required by law have been kept by the Company so far as appears from our examination of those books.

bb) Since the Company does not have any branches, the report on the accounts of the branch offices audited by other auditor under section 228(3)(c) of the Companies Act, 1956 is not applicable;

c) the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement dealt with by this Report are in agreement with the books of account.

d) in our opinion, the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement comply with the Accounting Standards referred to in subsection (3C) of section 211 of the Companies Act, 1956 read with the General Circular 15/2013 dated 13th September, 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013. and

e) on the basis of written representations received from the directors as on March 31, 2014, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2014, from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

Annexure to Independent Auditors'' Report

Referred to in Paragraph 1 under the heading of "report on other legal and regulatory requirements" of our report of even date.

1. In respect of fixed assets:

(a) The company has maintained proper records showing full particulars including quantitative details and situation of its fixed assets.

(b) As explained to us, fixed assets have been physically verified by the management at reasonable intervals; no material discrepancies were noticed on such verification.

(c) In our opinion, the Company has not disposed off a substantial part of its fixed assets during the year and the going concern status of the Company is not affected.

2. In respect of inventories:

As explained to us, during the year no trading activity was carried out, and hence clause 4(ii) of the order is not applicable.

3. In respect of loans, secured or unsecured, granted or taken by the Company to/from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956.

(a) According to the information and explanation given to us, the company has not granted any loans, secured or unsecured to companies, firm or other parties covered in the register maintained u/s 301 of the Act.

(e) According to the information and explanations given to us and on the basis of our examination of the books of account, the Company has not taken loans from companies, firms or other parties listed in the register maintained under Section 301 of the Companies Act, 1956. Thus sub clauses (f) & (g) of paragraph 4 of the Order are not applicable to the company.

4. In our opinion and according to the information and explanations given to us, there is generally an adequate internal control procedure commensurate with the size of the company and the nature of its business, for the purchase of fixed assets and payment for expenses. During the course of our audit, no major instance of continuing failure to correct any weaknesses in the internal controls has been noticed.

5. In respect of the contracts or arrangements referred to in section 301 of the Companies Act, 1956.

a) Based on the audit procedures applied by us and according to the information and explanations provided by the management, the particulars of contracts or arrangements referred to in section 301 of the Act have been entered in the register required to be maintained under that section.

b) As per information & explanations given to us and in our opinion, the transaction entered into by the company with parties covered u/s 301 of the Act does not exceeds five lacs rupees in a financial year therefore requirement of reasonableness of transactions does not arises.

6. According to the information and explanations given to us, the Company has not accepted any deposits from the public covered under section 58A and 58AA of the Companies Act, 1956. Therefore, the provisions of clause (vi) of paragraph 4 of the Order are not applicable to the company.

7. In our opinion and as per information & explanations given by the management, the Company has an internal audit system commensurate with its size and the nature of its business.

8. As per information & explanation given by the management, maintenance of cost records has not been prescribed by the Central Government under clause (d) of sub-section (1) of section 209 of the Act.

9. In respect of statutory dues:

(a) According to the records of the company, undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees'' State Insurance, Income-tax, Sales-tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, cess, to the extent applicable and any other statutory dues have generally been regularly deposited with the appropriate authorities. According to the information and explanations given to us there were no outstanding statutory dues as on 31st of March, 2014 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us and as per the records of the Company, the following dues of sales tax, income tax, wealth tax, service tax, customs duty, excise duty and cess have not be deposited on account of some dispute or are partly deposited under protest

Amount Forum where Sr Period to Name of Nature of dispute is No which relates the Statute the dues (Rs.) pending 1 AY 2005-06 Income Tax Income tax 39,85,596 High Court Act, 1961

2 AY 2007-08 Income Tax Income tax 93,43,650 ITAT Act, 1961

3 AY 2007-08 Income Tax Income tax 70,93,850 ITAT Act, 1961 [Penalty U/s 271 (1C)]

4 AY 2010-11 Income Tax Income tax 35,337 ITO Act, 1961

10. The Company does not have any accumulated loss. However, it has incurred cash loss during the financial year covered by our audit and in the immediately preceding financial year.

11. Based on our audit procedures and on the information and explanations given by the management, we are of the opinion that, the Company has not defaulted in repayment of dues to a financial institution, bank or debenture holders.

12. According to the information and explanations given to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

13. The Company is not a chit fund or a nidhi /mutual benefit fund/society. Therefore, the provision of this clause of the Companies (Auditor''s Report) Order, 2003 (as amended) is not applicable to the Company.

14. According to the information and explanations given to us the Company is not dealing or trading in shares, securities, debentures and other investments. The company has invested surplus funds in marketable securities and mutual funds. According to the information and explanations given to us proper records have been maintained of the transactions funds and contracts and timely entries have been made therein. The marketable securities and mutual fund have been held by the company in its own name.

15. According to the information and explanations given to us, the Company has not given any

16. Based on our audit procedures and on the information given by the management, we report that the company has not raised any term loans during the year.

17. Based on the information and explanations given to us and on an overall examination of the Balance Sheet of the Company as at 31st March, 2014, we report that no funds raised on short- term basis have been used for long-term investment by the Company.

18. Based on the audit procedures performed and the information and explanations given to us by the management, we report that the Company has not made any preferential allotment of shares during the year.

19. The Company has no outstanding debentures during the period under audit.

20. The Company has not raised any money by public issue during the year.

21. Based on the audit procedures performed and the information and explanations given to us, we report that no fraud on or by the Company has been noticed or reported during the year, nor have we been informed of such case by the management.

FOR VASANI & THAKKAR CHARTERED ACCOUNTANTS Firm Regi no: 111296W

Sd/-

PLACE : MUMBAI (R. N. VASANI) DATED: 25-Aug-2014 PARTNER M No. 12217

---

Mar 31, 2013

Report on the Financial Statements

We have audited the accompanying financial statements of Digital Electronics Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2013, and the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management''s Responsibility for the Financial statements

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 ("the Act"). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors'' Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

a) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2013;

b) in the case of the Statement of Profit and Loss, of the loss for the year ended on that date; and

c) in the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2003 ("theOrder") issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

2. As required by section 227(3) of the Act, we report that:

a) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit;

b) in our opinion proper books of account as required by law have been kept by the Company so far as appears from our examination of those books

c) the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement dealt with by this Report are in agreement with the books of account.

d) in our opinion, the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement comply with the Accounting Standards referred to in subsection (3C) of section 211 of the Companies Act, 1956;

e) on the basis of written representations received from the directors as on March 31, 2013, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2013, from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

Annexure to Auditors'' Report

On the basis of such checks as we considered appropriate and according to the information and explanation given to us during the course of our audit, we report that:

1. In respect of fixed assets:

(a) The company has maintained proper records showing full particulars including quantitative details and situation of its fixed assets.

(b) As explained to us, fixed assets have been physically verified by the management at reasonable intervals; no material discrepancies were noticed on such verification.

(c) In our opinion and according to the information and explanations given to us, the company has written of generator and we have been explained that it is not in existence with the company. However it does not affect the going concern assumption.

2. In respect of inventories:

As explained to us, during the year no trading activity was carried out, and hence clause 4(ii) of the order is not applicable.

3. In respect of loans, secured or unsecured, granted or taken by the Company to/from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956.

1. According to the information and explanation given to us, the company has not granted any loans, secured or unsecured to companies, firm or other parties covered in the register maintained u/s 301 of the Act.

(e) According to the information and explanations given to us and on the basis of our examination of the books of account, the Company has not taken loans from companies, firms or other parties listed in the register maintained under Section 301 of the Companies Act, 1956. Thus sub clauses (f) & (g) are not applicable to the company.

4. In our opinion and according to the information and explanations given to us, there is generally an adequate internal control procedure commensurate with the size of the company and the nature of its business, for the purchase of fixed assets and payment for expenses. During the course of our audit, no major instance of continuing failure to correct any weaknesses in the internal controls has been noticed.

5. In respect of the contracts or arrangements referred to in section 301 of the Companies Act, 1956.

a) Based on the audit procedures applied by us and according to the information and explanations provided by the management, the particulars of contracts or arrangements referred to in section 301 of the Act have been entered in the register required to be maintained under that section.

b) As per information & explanations given to us and in our opinion, the transaction entered into by the company with parties covered u/s 301 of the Act does not exceeds five lacs rupees in a financial year therefore requirement of reasonableness of transactions does not arises.

6. According to the information and explanations given to us, the Company has not accepted any deposits from the public covered under section 58A and 58AA of the Companies Act, 1956. Therefore, the provisions of clause (vi) of paragraph 4 of the Order are not applicable to the company.

7. In our opinion and as per information & explanations given by the management, the Company has an internal audit system commensurate with its size and the nature of its business.

8. As per information & explanation given by the management, maintenance of cost records has not been prescribed by the Central Government under clause (d) of sub-section (1) of section 209 of the Act.

9. In respect of statutory dues:

a) According to the records of the company, undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees'' State Insurance, Income-tax, Sales-tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, cess, to the extent applicable and any other statutory dues have generally been regularly deposited with the appropriate authorities. According to the information and explanations given to us there were no outstanding statutory dues as on 31st of March, 2013 for a period of more than six months from the date they became payable.

b) According to the information and explanations given to us and as per the records of the Company, the following dues of sales tax, income tax, wealth tax, service tax, customs duty, excise duty and cess have not be deposited on account of some dispute or are partly deposited under protest

Period to Forum where Amount Sr Name of which Nature of the dues dispute is No the Statute (Rs.) relates pending

1 AY 2005-06 Income Tax Income tax 39,85,596 High Court

2 AY 2007-08 Income Tax Income tax 93,43,650 ITAT

3 AY 2007-08 Income Tax Income tax [Penalty 70,93,850 CIT(A) U/s 271 (1C)]



10. The Company does not have any accumulated loss and has incurred cash loss during the financial year covered by our audit and in the immediately preceding financial year.

11. Based on our audit procedures and on the information and explanations given by the management, we are of the opinion that, the Company has not defaulted in repayment of dues to a financial institution, bank or debenture holders.

12. According to the information and explanations given to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

13. The Company is not a chit fund or a nidhi /mutual benefit fund/society. Therefore, the provision of this clause of the Companies (Auditor''s Report) Order, 2003 (as amended) is not applicable to the Company.

14. According to the information and explanations given to us the Company is not dealing or trading in shares, securities, debentures and other investments. The company has invested surplus funds in marketable securities and mutual funds. According to the information and explanations given to us proper records have been maintained of the transactions funds have and contracts and timely entries have been made therein. The marketable securities and mutual fund have been held by the company in its own name.

15. According to the information and explanations given to us, the Company has not given any guarantee for loan taken by others from a bank or financial institutions.

16. Based on our audit procedures and on the information given by the management, we report that the company has not raised any term loans during the year.

17. Based on the information and explanations given to us and on an overall examination of the Balance Sheet of the Company as at 31st March, 2013, we report that no funds raised on short- term basis have been used for long-term investment by the Company.

18. Based on the audit procedures performed and the information and explanations given to us by the management, we report that the Company has not made any preferential allotment of shares during the year.

19. The Company has no outstanding debentures during the period under audit.

20. The Company has not raised any money by public issue during the year.

21. Based on the audit procedures performed and the information and explanations given to us, we report that no fraud on or by the Company has been noticed or reported during the year, nor have we been informed of such case by the management.



FOR VASANI & THAKKAR

CHARTERED ACCOUNTANTS

Firm Regi no: 111296W



Sd/-



PLACE : MUMBAI (R. N. VASANI)

DATED: 28-May-2013 PARTNER

M No. 12217

---

Mar 31, 2012

1. We have audited the attached Balance Sheet of Digital Electronics Limited ('the Company'), as at March 31, 2012 and also the related Statement of Profit and Loss and the Cash Flow Statement for the year ended on that date all of which have been signed under reference to this Report. These financial statements are the responsibility of the management of the Company. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We have conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatements. An audit includes examining, on a test check basis, evidences supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides reasonable basis for our opinion.

3. As required by the Companies (Auditor's Report) Order, 2003, as amended by the Companies (Auditor's Report) (Amendment) order, 2004, issued by the Central Government of India in terms of Sub-Section (4A) of section 227 of 'The Companies Act, 1956' of India ('the Act') and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to us, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4. Further to our above comments:

i. we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit;

ii. in our opinion proper books of account as required by law have been kept by the Company so far as appears from our examination of those books;

iii. the Balance Sheet, the statement of Profit and Loss and the Cash Flow Statement referred to in this Report are in agreement with the books of account;

iv. in our opinion, the Balance Sheet and the statement of Profit and Loss dealt with by this Report are in compliance with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956 in so far as they apply to the Company;

v. On the basis of information and explanations given to us and written representations received from such directors, and taken on record by the Board of Directors, we report that none of the directors of the Company is disqualified as on March 31, 2012 from being appointed as director in terms of section 274(l)(g) of the Companies Act, 1956.

vi. The company has invested in the shares of companies under the same management amounting to Rs. 1,145.46 lacs (previous year Rs. 381.25 lacs). The management is of the opinion that this investment is fully realizable in the context of the long term potential of that business. Accordingly provision has not been made against this investment. Vie ultimate impact of such non-provision on the profits and reserves is presently not ascertainable.

vii. in our opinion and to the best of our information and according to the explanations given to us, and subject to our comments in paragraph (vi) above, the said accounts read together with the significant accounting policies and other notes thereon give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view:

a) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2012;

b) in the case of the Statement of Profit and Loss Account, of the loss of the Company for the year ended on that date; and

c) in the case of Cash Flow Statement, of the cash flows for the year ended on that date.

Annexure to the Auditors' Report (Referred to in Paragraph (3) thereof)

With reference to the Annexure referred to in paragraph 3 of the report of the Auditors' to the members of the Digital Electronics Limited ('the Company') On the financial statements for the year ended March 31, 2012, we report that:

1. (a) The Company has maintained records for Fixed Assets showing full particulars including

quantitative details and situation of its fixed assets.

(b) As explained to us, the fixed assets have been physically verified by the management and no material discrepancies were noticed on such verification.

(c) As explained to us, the company has not disposed off a substantial part of fixed assets during the year.

2. As explained to us, during the year no trading activity was carried out, and hence clause 4(ii) of the order is not applicable.

3. (a) According to the information and explanation given to us, the company has not granted

any loans, secured or unsecured to companies, firm or other parties covered in the register maintained u/s 301 of the Act except for an Optionally Fully Convertible Debentures (OFCDs) to a company in which directors are interested for Rs 50 Lacs. We have been informed that the terms and conditions of such OFCDs are prima facie not preducial to the interest of the company.

(e) According to information and explanation given to us, the company has not taken any

loans, secured or unsecured from companies, firm or other parties covered in the register maintained u/s 301 of the Act, accordingly sub clause (f) and (g) of clause 4(iii) is not applicable to the company.

4. In our opinion there are adequate internal control procedures commensurate with the size of the Company and nature of its business for the purchase of inventories and fixed assets and for sale of goods and services. During the course of our audit and according to the information and explanations given to us, we have neither come across nor have been informed of any instance of major weaknesses in internal control.

5. (a) In respect of transactions entered in the register maintained in pursuance of section 301

of the Companies Act, 1956, to the best of our knowledge and belief and according to the information and explanations given to us, particulars of contracts or arrangements that needed to be entered into the register have been so entered.

(b) in respect of the transactions made in pursuance of such contracts or arrangements exceeding value Rs. Five lacs entered into during the financial year, because of the unique and specialized nature involved and in absence of any comparable prices, we are unable to comment whether the same are made at prevailing market prices. For price justification reliance is placed on the information and explanation given by the management.

6. In our opinion and according to information and explanation given to us, the Company has not accepted any deposits from the public to which the directives issued by the Reserve Bank of India and the provisions of Section 58A, 58AA or other relevant provisions of the Act and the rules framed there under are applicable. We have also been informed that no order has been passed by the Company Law Board or Reserve Bank of India or any court or any other tribunal in this regard.

7. The company has an internal Audit System which is commensurate to the size of its operations.

8. We have been informed that the Central Government has not prescribed maintenance of cost records under section 209(l)(d) of the Companies Act, 1956.

9. (a) According to the information and explanations given to us and on the basis of our

examination of the books of account, the Company has been generally regular in depositing undisputed statutory dues including Provident Fund, Income Tax, VAT Tax, Service Tax, Custom Duty, Excise Duty and Cess during the year with the appropriate authorities. There are no undisputed dues payable for a period of more than six months from the date they have become payable.

(b) According to the information and explanations given to us and as per the records of the Company, the following dues of sales tax, income tax, wealth tax, service tax, customs duty, excise duty and cess have not be deposited on account of some dispute or are partly deposited under protest



Forum where Sr Period to Name of Nature of Amount dispute is No which relates the Statute the dues (Rs.) pending

1 AY 2005-06 Income Tax Income tax 3,985,596 High Court

2 AY 2007-08 Income Tax Income tax 21,075,000 ITAT

3 AY 2007-08 Income Tax Income tax 7,093,850 CIT(A)

4 AY 2010-11 Income Tax Income tax 35,337 ITO



10. The company does not have accumulated losses as at 31st March 2012. However the company has incurred cash losses during the financial year ended on that date.

11. On the basis of information and explanations given to us and on the basis of verification of the books of account, the Company has not defaulted in repayment of dues to financial institutions / banks or debenture holders.

12. According to the information and explanations given to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

13. The provisions of any special statute as specified under clause 4(xiii) of the order are not applicable to the Company.

14. According to the information and explanations given to us the Company is not dealing or trading in shares, securities, debentures and other investments. The company has invested surplus funds in marketable securities and mutual funds. According to the information and explanations given to us proper records have been maintained of the transactions and contracts and timely entries have been made therein. The marketable securities and mutual funds have been held by the company in its own name.

15. According to the information and explanations given to us, the Company has given a guarantee against fixed deposit for loan taken by a third party from a bank amounting to Rs. 3.60 lacs.

16. According to the information and explanations provided to us and on an overall examination, the company has not taken any term loan.

17. According to the information and explanation given to us and over all examination of the Balance sheet of the Company, we report that, funds raised on short term purposes have, prima facie, not been utilized for long term purposes and vice-versa.

18. According to information and explanation given to us, the Company has not made any preferential allotment of shares during the year.

19. According to the information and explanation given to us, the Company has not issued any debentures during the year.

20. The company has not raised any money by public issues during the year.

21. To the best of our knowledge and according to the information and explanations given to us, there have been no cases of fraud on or by the Company noticed or reported during the year.

For MZS & Associates

Chartered Accountants .

Firm Reg.-106400W

Abuali Darukhanawala

Partner (M. No. 108053)

Mumbai:

---

Mar 31, 2011

1. We have audited the attached Balance Sheet of Digital Electronic Limited ('the Company'), as at March 31, 2011 and also the related Profit and Loss Account and Cash Flow Statement for the year ended on that date all of which have been signed under reference to this Report. These financial statements are the responsibility of the management of the Company. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We have conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatements. An audit includes examining, on a test check basis, evidences supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides reasonable basis for our opinion.

3. As required by the Companies (Auditor's Report) Order, 2003, as amended by the Companies (Auditor's Report) (Amendment) order, 2004, issued by the Central Government of India in terms of Sub-Section (4A) of section 227 of 'The Companies Act, 1956' of India ('the Act') and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to us, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4. Further to our above comments :

i. we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit;

ii. in our opinion proper books of account as required by law have been kept by the Company so far as appears from our examination of those books;

iii. the Balance Sheet, Profit and Loss Account and Cash Flow Statement referred to in this Report are in agreement with the books of account;

iv. in our opinion, the Balance Sheet and Profit and Loss Account dealt with by this Report are in compliance with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956 in so far as they apply to the Company;

v. on the basis of information and explanations given to us and written representations received from such directors, and taken on record by the Board of Directors, we report that none of the directors of the Company is disqualified as on March 31, 2011 from being appointed as director in terms of section 274(1)(g) of the Companies Act, 1956.

vi. As stated in note 11 to the financial statement, even though the company is listed on Bombay Stock Exchange (BSE) in India, it has not complied with various listing requirements and accordingly, the trading of shares of the company on such stock exchange has been suspended. We are not able to ascertain the impact of such non-compliance.

vii. As stated in note 12 to the financial statement, the company has invested in the shares of company under the same management amounting to Rs. 317.99 lacs (previous year Rs. 299.99 lacs). The management is of the opinion that this investment is fully realizable in the context of the long term potential of that business. Accordingly provision has not been made against this investment. The ultimate impact of such non-provision on profits and reserves is presently not ascertainable.

viii. in our opinion and to the best of our information and according to the explanations given to us, and subject to our comments in paragraph (vi) and (vii) above, the said accounts read together with the significant accounting policies and other notes thereon give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view:

a) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2011;

b) in the case of the Profit and Loss Account, of the loss of the Company for the year ended on that date; and

c) in the case of Cash Flow Statement, of the cash flows for the year ended on that date.

Annexure to the Auditors' Report (Referred to in Paragraph (3) thereof) With reference to the Annexure referred to in paragraph 3 of the report of the Auditors' to the members of the Digital Electronic Limited ('the Company') on the financial statements for the year ended March 31, 2011, we report that:

1. (a) The Company is still in the process of compiling records to show full particulars including quantitative details and situation of its fixed assets.

(b) As explained to us, the fixed assets have been physically verified by the management and no material discrepancies were noticed on such verification.

(c) As explained to us, the company has not disposed off a substantial part of fixed assets during the year.

2. As explained to us, during the year no trading activity was carried out, and hence clause 4(ii) of the order is not applicable.

3. (a) According to the information and explanation given to us, the company has not granted any loans, secured or unsecured to companies, firm or other parties covered in the register maintained u/s 301 of the Act, accordingly sub clause (b), (c), and (d) of clause 4(iii) is not applicable to the company.

(e) According to information and explanation given to us, the company has not taken any loans, secured or unsecured from companies, firm or other parties covered in the register maintained u/s 301 of the Act, accordingly sub clause (f) and (g) of clause 4(iii) is not applicable to the company.

4. In our opinion there are adequate internal control procedures commensurate with the size of the Company and nature of its business for the purchase of inventories and fixed assets and for sale of goods and services. During the course of our audit and according to the information and explanations given to us, we have neither come across nor have been informed of any instance of major weaknesses in internal control.

5. (a) In respect of transactions entered in the register maintained in pursuance of section 301 of the Companies Act, 1956, to the best of our knowledge and belief and according to the information and explanations given to us, particulars of contracts or arrangements that needed to be entered into the register have been so entered.

(b) in respect of the transactions made in pursuance of such contracts or arrangements exceeding value Rs. Five lacs entered into during the financial year, because of the unique and specialized nature involved and in absence of any comparable prices, we are unable to comment whether the same are made at prevailing market prices. For price justification reliance is placed on the information and explanation given by the management.

6. In our opinion and according to information and explanation given to us, the Company has not accepted any deposits from the public to which the directives issued by the Reserve Bank of India and the provisions of Section 58A, 58AA or other relevant provisions of the Act and the rules framed there under are applicable. We have also been informed that no order has been passed by the Company Law Board or Reserve Bank of India or any court or any other tribunal in this regard.

7. The Company does not have an internal audit system.

8. We have been informed that the Central Government has not prescribed maintenance of cost records under section 209(1)(d) of the Companies Act, 1956.

9. (a) According to the information and explanations given to us and on the basis of our examination of the books of account, the Company has been generally regular in depositing undisputed statutory dues including Provident Fund, Income Tax, VAT Tax, Service Tax, Custom Duty, Excise Duty and Cess during the year with the appropriate authorities though there has been a slight delay in a few cases. There are no undisputed dues payable for a period of more than six months from the date they become payable except for service tax of Rs. 52,175/- and sales tax of Rs. 110,667/-which remained unpaid as on 31st March, 2011.

(b) According to the information and explanations given to us and as per the records of the Company, the following dues of sales tax, income tax, wealth tax, service tax, customs duty, excise duty and cess have not be deposited on account of some dispute or are partly deposited under protest

Sr Period to Name of Nature of Amount (Rs.) Forum where

No which relates the Statute the dues dispute is pending

1 AY 2005-06 Income Tax Income tax 5,00,000 ITO

2 AY 2006-07 Income Tax Income tax 4,60,107 ITO

3 AY 2007-08 Income Tax Income tax 93,43,650 ITAT

10. The company does not have accumulated losses as at 31st March 2011. However the company has incurred cash losses during the financial year ended on that date.

11. On the basis of information and explanations given to us and on the basis of verification of the books of account, the Company has not defaulted in repayment of dues to financial institutions / banks or debenture holders.

12. According to the information and explanations given to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

13. The provisions of any special statute as specified under clause 4(xiii) of the order are not applicable to the Company.

14. According to the information and explanations given to us the Company is not dealing or trading in shares, securities, debentures and other investments. The company has invested surplus funds in marketable securities and mutual funds. According to the information and explanations given to us proper records have been maintained of the transactions and contracts and timely entries have been made therein. The marketable securities and mutual funds have been held by the company in its own name.

15. According to the information and explanations given to us, the Company has given a guarantee against fixed deposit for loan taken by a third party from a bank amounting to Rs. 3.60 lacs.

16. According to the information and explanations provided to us and on an overall examination, the company has not taken any term loan.

17. According to the information and explanation given to us and over all examination of the Balance sheet of the Company, we report that, funds raised on short term purposes have, prima facie, not been utilized for long term purposes and vice-versa.

18. According to information and explanation given to us, the Company has not made any preferential allotment of shares during the year.

19. According to the information and explanation given to us, the Company has not issued any debentures during the year.

20. The company has not raised any money by public issues during the year.

21. To the best of our knowledge and according to the information and explanations given to us, there have been no cases of fraud on or by the Company noticed or reported during the year.

For MZS & Associates Chartered Accountants ICAI Regn No: 106400W

Sd/- Abuali Darukhanawala Partner (M. No. 108053)

Mumbai: 30 May, 2011

---

Mar 31, 2010

1. We have audited the attached Balance Sheet of Digital Electronic Limited (the Company), as at March 31, 2010 and also the related Profit and Loss Account and Cash Flow Statement for the year ended on that date all of which have been signed under reference to this Report. These financial statements are the responsibility of the management of the Company. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We have conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatements. An audit includes examining, on a test check basis, evidences supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides reasonable basis for our opinion.

3. As required by the Companies (Auditors Report) Order, 2003, as amended by the Companies (Auditors Report) (Amendment) order, 2004, issued by the Central Government of India in terms of Sub-Section (4A) of section 227 of The Companies Act, 1956 of India (the Act) and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to us, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4. Further to our above comments :

i. we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit;

ii. in our opinion proper books of account as required by law have been kept by the Company so far as appears from our examination of those books;

iii. the Balance Sheet, Profit and Loss Account and Cash Flow Statement referred to in this Report are in agreement with the books of account;

iv. in our opinion, the Balance Sheet and Profit and Loss Account dealt with by this Report are in compliance with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956 in so far as they apply to the Company;

v. on the basis of information and explanations given to us and written representations received from such directors, and taken on record by the Board of Directors, we report that none of the directors of the Company is disqualified as on March 31, 2010 from being appointed as director in terms of section 274(l)(g) of the Companies Act, 1956.

vi. As stated in note 14 to the financial statement, even though the company is listed on certain stock exchanges in India, the company has not complied with various listing requirements and accordingly, the trading of shares of the company on such stock exchange has been suspended. We are not able to ascertain the impact of such non-compliance.

vii. As stated in note 15 to the financial statement, the company has invested in the shares of company under the same management amounting to Rs. 299.99 lacs (previous year Rs. 299.99 lacs). The management is of the opinion that this investment is fully realizable in the context of the long term potential of that business. Accordingly provision has not been made against this investment. The ultimate impact of such non-provision on profits and reserves is presently not ascertainable.

viii. in our opinion and to the best of our information and according to the explanations given to us, and subject to our comments in paragraph (vi) and (vii) above, the said accounts read together with the significant accounting policies and other notes thereon give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view:

a) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2010;

b) in the case of the Profit and Loss Account, of the Profit of the Company for the year ended on that date; and

c) in the case of Cash Flow Statement, of the cash flows for the year ended on that date.

Annexure to the Auditors Report (Referred to in Paragraph (3) thereof)

With reference to the Annexure referred to in paragraph 3 of the report of the Auditors to the members of the Digital Electronic Limited (the Company) on the financial statements for the year ended March 31, 2010, we report that:

1. (a) The Company is still in the process of compiling records to show full particulars including quantitative details and situation of its fixed assets.

(b) As explained to us, the fixed assets have been physically verified by the management. However in absence of a detailed Fixed Asset Register, we are unable to comment on the discrepancies on such verification.

(c) As explained to us, the company has not disposed off a substantial part of fixed assets during the year.

2. As explained to us, during the year no trading activity was carried out, and hence clause 4(ii) of the order is not applicable.

3. (a) According to the information and explanation given to us, the company has not granted any loans, secured or unsecured to companies, firm or other parties covered in the register maintained u/s 301 of the Act, accordingly sub clause (b), (c), and (d) of clause 4(iii) is not applicable to the company.

(e) According to information and explanation given to us, the company has not taken any loans, secured or unsecured from companies, firm or other parties covered in the register maintained u/s 301 of the Act, accordingly sub clause (f) and (g) of clause 4(iii) is not applicable to the company.

4. In our opinion there are adequate internal control procedures commensurate with the size of the Company and nature of its business for the purchase of inventories and fixed assets and for sale of goods and services. During the course of our audit and according to the information and explanations given to us, we have neither come across nor have been informed of any instance of major weaknesses in internal control.

5. (a) In respect of transactions entered in the register maintained in pursuance of section 301 of the Companies Act, 1956, to the best of our knowledge and belief and according to the information and explanations given to us, particulars of contracts or arrangements that needed to be entered into the register have been so entered.

(b) in respect of the transactions made in pursuance of such contracts or arrangements exceeding value Rs. Five lacs entered into during the financial year, because of the unique and specialized nature involved and in absence of any comparable prices, we are unable to comment whether the same are made at prevailing market prices. For price justification reliance is placed on the information and explanation given by the management.

6. In our opinion and according to information and explanation given to us, the Company has not accepted any deposits from the public to which the directives issued by the Reserve Bank of India and the provisions of Section 58A, 58AA or other relevant provisions of the Act and the rules framed thereunder are applicable. We have also been informed that no order has been passed by the Company Law Board or Reserve Bank of India or any court or any other tribunal in this regard.

7. The Company does not have an internal audit system.

8. We have been informed that the Central Government has not prescribed maintenance of cost records under section 209(1)(d) of the Companies Act, 1956.

9. (a) According to the information and explanations given to us and on the basis of our examination of the books of account, the Company has been generally regular in depositing undisputed statutory dues including Provident Fund, Income Tax, VAT Tax, Service Tax, Custom Duty, Excise Duty and Cess during the year with the appropriate authorities though there has been a slight delay in a few cases. There are no undisputed dues payable for a period of more than six months from the date they become payable except for service tax of Rs. 52,175/- and sales tax of Rs. 110,667/-which remained unpaid as on 31st March, 2010.

(b) According to the information and explanations given to us and as per the records of the Company, the following dues of sales tax, income tax, wealth tax, service tax, customs duty, excise duty and cess have not be deposited on account of some dispute or are partly deposited under protest Sr Period to Name of the Nature of the Amount Forum where No which Statute dues (Rs .) dispute is relates pending

1 1999-00 ESIC ESIC 2,03,224 High Court of Mumbai

2 2001-02 Sales Tax Sales tax 22,693 Assistant Commissioner of sales tax

3 2002-03 Sales Tax Sales tax 1,43,194 Assistant Commissioner

4 AY 2004-05 Income Tax Income tax 10,26,787 Income tax Appellate Tribunal

5 AY 2005-06 Income Tax Income tax 4,63,750 ITAT

6 AY 2006-07 Income Tax Income tax 4,60,107 CIT Appeals

7 AY 2007-08 Income Tax Income tax 93,43,650 CIT Appeals

10. The company does not have accumulated losses as at 31st March 2010 and has not incurred cash losses during the financial year ended on that date or in the immediately preceding financial year.

11. On the basis of information and explanations given to us and on the basis of verification of the books of account, the Company has not defaulted in repayment of dues to financial institutions / banks or debenture holders.

12. According to the information and explanations given to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

13. The provisions of any special statute as specified under clause 4(xiii) of the order are not applicable to the Company.

14. According to the information and explanations given to us the Company is not dealing or trading in shares, securities, debentures and other investments. The company has invested surplus funds in marketable securities and mutual funds. According to the information and explanations given to us proper records have been maintained of the transactions and contracts and timely entries have been made therein. The marketable securities and mutual funds have been held by the company in its own name.

15. According to the information and explanations given to us, the Company has not given any guarantees for loans taken by others from bank and financial institutions.

16. According to the information and explanations provided to us and on an overall examination, the company has not taken any term loan.

17. According to the information and explanation given to us and over all examination of the Balance sheet of the Company, we report that, funds raised on short term purposes have, prima facie, not been utilized for long term purposes and vice-versa.

18. According to information and explanation given to us, the Company has not made any preferential allotment of shares during the year.

19. According to the information and explanation given to us, the Company has not issued any debentures during the year.

20. The company has not raised any money by public issues during the year.

21. To the best of our knowledge and according to the information and explanations given to us, there have been no cases of fraud on or by the Company noticed or reported during the year.

For MZS & Associates Chartered Accountants

Abuali Darukhanawalal Partner (M. No. 108053) Mumbai: Sept 3, 2010