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Auditor Report of Gradiente Infotainment Ltd.

Mar 31, 2015

1. We have audited the accompanying financial statements of M/s GradientInfotainments Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2015 and the Statement of Profit and Loss and Cash Flow Statement for the year ended, and a summary of significant accounting policies and other explanatory information.

Management's Responsibility for the Financial Statements

2. The management and Board of Directors of the Company are responsible for the matters stated in Section 134(5) of the Companies Act, 2013 ('the act') with respect to the preparation of these financial statements that give a true and fair view of the financial position, financial performance of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with rule 7 of Companies (Accounts) Rules, 2014. This responsibility includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; design, implementation and maintenance of adequate internal financial controls, that are operating effectively for ensuring the accuracy and completeness of the accounting records, 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.

Auditor's Responsibility

3 Our responsibility is to express an opinion on these financial statements based on our audit. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made there under. We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. 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

4 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 financial control relevant to the Company's preparation of the financial statements, that give a true and fair view, in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on whether the Company has in place an adequate internal financial controls system over financial reporting and the operating effectiveness of such controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the Company's management and Board of Directors, as well as evaluating the overall presentation of the financial statements

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

Basis of Qualified opinion

6.The balance of trade payables of Rs.8216.04 lakhs , Trade receivables of Rs.9643.16 lakhs and loans and advances Rs.1372.63 lakhs are subject to confirmation. We have not received any confirmations though management has circulated the balance confirmation letters.

Qualified Opinion

7. In our opinion and to the best of our information and according to the explanations given to us, expect for the effects of the matters described in the qualifies opinion paragraph ,the financial statements give the information required by the Act in the manner so accepted in India of the state of affairs of the Company as at 31st March 2015, its Profit for the year ended on that date.

Report on Other Legal and Regulatory Requirements

7 As required by the Companies (Auditor's Report) Order, 2015 ("the Order") issued by the Central Government of India in terms of sub-section (11) of section143 of the Act, we give in the Annexure a statement on the matters Specified in paragraphs 3 and 4 of the Order.

8 As required by section 143(3) of the Act, we further report that:

a. We have sought and 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 dealt with by this Report are in agreement with the books of account;

d. In our opinion, the aforesaid financial statements comply with the applicable Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules 2014;

e. On the basis of written representations received from the directors as on March 31, 2015, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2015, from being appointed as a director in terms of Section 164(2) of the Act ;

f. In our opinion and to the best of our information and according to the explanations given to us,

We report as under with respect to other matters to be included in the Auditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014:

(i) The Company does not have any pending litigations which would impact its financial position

(ii) The Company did not have any long-term contracts including derivative contracts; as such the question of commenting on any material foreseeable losses thereon does not arise

(iii)There has not been an occasion in case of the Company during the year under report to transfer any sums to the Investor Education and Protection Fund. The question of delay in transferring such sums does not arise.

Annexure referred to in paragraph 7 of Our Report of even date

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

(i).(a) The Company has not maintained proper records showing full particulars including quantitative details and situation of fixed assets on the basis of available information.

(b) Substantial portion of fixed assets have been physically verified by the management during the year at reasonable intervals and following material discrepancy between book records and physical inventory was noticed and properly dealt with in books of accounts.

Capital work in progress amounting to Rs.203.98 lakhs stands duly adjusted as described in Pt no.6 forming part of notes to accounts

(ii)The physical verification of inventory is not applicable to the company due to its nature of business. As at the date of reporting the company does not have any physical inventory.

(iii) The company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 189 of the Act.

(iv) In our opinion and according to the information and explanations given to us, there is adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of fixed assets and for the sale of services. Further, on the basis of our examination of the books and records of the Company and according to the information and explanations given to us, no major weakness has been noticed or reported.

(v) The Company has not accepted any deposits from the public covered under Section 73 to 76 of the Companies Act, 2013.

(vi) According to the information and explanations given to us, the Central Government has not prescribed maintenance of cost records under sub-section (1) of Section 148 of the Act.

(vii) (a) According to the information and explanations given to us and based on the records of the company examined by us, the company is not regular in depositing the service tax The outstanding liability of service tax due for more than 6 months as on the need of financial year is Rs. 37,53,382/-.Further, the Company did not comply to the statutory requirement of prompt deduction and remittance of Tax at source on applicable instances. The provisions of Customs, Provident fund, Employees State Insurance Act are not presently applicable to the Company.

(b) According to the information and explanations given to us and based on the records of the company examined by us there are statutory dues of earlier years payable in respect of Tax deducted at source being Rs.2,04,04,578/-, in respect of service tax being Rs.8,57,57,579/-, in respect of FBT being Rs.2,61,180/- and in respect of income tax payable being Rs.5,53,36,908/-.

(c) According to the information and explanations given to us there is no instance of requirement to transfer any sums to the Investor Education and Protection Fund.

(viii) The Company has accumulated losses of Rs.27,88,65,432/- as at 31.03.2015, being more than 50% of its net worth. The Company has incurred cash profit for the current financial year under audit and cash loss for the preceding financial year.

(ix) According to the records of the company examined by us and as per the information and explanations given to us, the company has defaulted in repayment of dues to banks to the extent of Rs.40,40,870/- as per books of accounts, comprising of Rs.36,14,500/- dues to Andhra Bank and Rs.4,26,370/- dues to Indian Bank, as described in Pt no.2 forming part of notes to accounts.

(x) 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 institution during the year

(xi) According to the information and explanations given to us, the company has not raised any term loans during the year

(xii) In our opinion and according to the information and explanation given to us, considering the size and nature of the Company's operations, no fraud of material significance on or by the Company has been noticed or reported during the year.

For CRK & Co,

Chartered Accountants

FRN: 010388S

Place: Hyderabad Sd/-

Date : 14.11.2015 C.R.Kumar

Proprietor


Mar 31, 2014

We have audited the accompanying financial statements of Gradiente Infotainment 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.

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.

Auditor's 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.

Basis of Qualified Opinion

The balances of Trade payables of Rs. 7,802 Lakhs, Trade receivables of Rs. 9,093 Lakhs, Loans and advances of Rs. 1372 Lakhs are subject to confirmation and reconciliation. We have circularized confirmation letters for obtaining balances however we did not receive the confirmations.

Qualified Opinion

In our opinion and to the best of our information and according to the explanations given to us, except for the effects of the matters described in the Qualified opinion paragraph, 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, 2014;

(b) In the case of the Profit and Loss Account, 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 ("the Order") 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 [and proper returns adequate for the purposes of our audit have been received from branches not visited by us]

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. Except for effects of the matters described in the basis of the qualified opinion paragraph 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, 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. 31st MARCH 2014 (Referred to in paragraph 3 of the Auditor's Report to the Members of Gradiente Infotainment Limited on the financial statements for the year ended 31st March, 2014)

(i) (a) The Company has not maintained proper records to show full particulars including quantitative details and situation of fixed assets.

(b) The Substantial portion of the fixed assets has been verified physically verified by the Management during the year and no material discrepancies between the book records and the physical inventory have been noticed. In our opinion the frequency of verification is reasonable.

(c) In our opinion and according to the information and explanations given to us, a substantial part of fixed assets has not been disposed off by the Company during the year.

(ii) The physical verification of inventory is not applicable to the company due to its nature of business.

(iii) (a) According to the information and explanations given to us, the Company has not granted any Loans, secured or unsecured to the Companies covered in the register maintained under section 301 of the Companies Act, 1956.

(b) According to the information and explanations given to us, the Company has taken unsecured loans from the parties covered under the register maintained under Sec 301 of the companies Act, 1956 and the outstanding amount as on 31/03/2014 is Rs. 3,20,70,450/- and the same is obtained without interest during the year.

(iv) In our opinion and according to the information and explanations given to us, there are generally adequate internal control procedures commensurate with the size of the Company and nature of its business with regard to fixed assets and with regard to the production income. Further, on the basis of our examination 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 the aforesaid internal control procedures.

(v) (a) According to the information and explanations given to us, we are of the opinion that the transactions that need to be entered in the register maintained under section 301 of the Companies Act, 1956 have been entered.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956 and exceeding the value of rupees five lakhs in respect of any party during the year, have been made at prices which are reasonable having regard to prevailing market prices, except in the case of items stated to be of specialized nature for which as informed there are no alternate sources of supply to enable a comparison of the prices paid / charged.

(vi) The Company has not accepted any deposits from the public.

(vii) The Company has no internal audit system, which is commensurate with the size and nature of its business.

(viii)Pursuant to the Rules made by the Central Government, the maintenance of cost records has not been prescribed under section 209(1) (d) of the Companies Act, 1956.

(ix) (a) According to the information and explanations given to us and records of the Company examined by us, the undisputed statutory dues payable in respect of Tax deducted at source is Rs. 2,04, 04,578/-, in respect of Service tax is Rs. 8,57,57,759/-, in respect of FBT of earlier years is Rs. 2,61,180/- and in respect of Income tax payable is Rs. 5,53,36,908/-.

(b) We are informed that there are no disputed statutory dues as at the year end outstanding for a period of more than six months from the date they became payable.

(x) The Company has incurred cash losses in the financial year ended on that date and in the immediately preceeding year.

(xi) According to the records of the Company examined by us and the information and explanations given to us, the Company has defaulted in repayment of dues to banks to the extent of Rs. 40,40,870/- of which Rs. 36,14,500/- is with Andhra Bank and Rs. 4,26,370/- with Indian Bank as per the books of accounts.

(xii) In our opinion and according to the information and explanations given to us, the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

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

(xiv) The Company is not dealing or trading in shares, securities, debentures and other investments.

(xv) According to the information and explanations given to us, the Company has not given any guarantee during the year for loans taken by others from banks or financial institutions.

(xvi) In our opinion and according to the information and explanations given to us, the company has not availed any term loan during the year hence this clause not applicable.

(xvii) According to the information and explanations given to us and on overall examination of the balance sheet of the Company, we report that short-term funds have not been used to finance long-term investments and vice- versa.

(xviii) As the Company has not made any preferential allotment of shares during the year paragraph 4 (xviii) of the Order is not applicable, however the company has received preferential share application money of Rs 20,00,000/- and the same is not covered in the register maintained under Sec 301 of the Companies Act, 1956.

(xix) As the Company has not issued any debentures during the year, paragraph 4(xix) of the Order is not applicable.

(xx) As the Company has not raised money by way of public issue paragraph 4 (xx) of the Order is not applicable.

(xxi) Based on the audit procedures performed and information and explanations given to us by the management, we report that, no fraud on or by the Company has been noticed or reported during the course of our audit for the year ended March 31, 2014.

For Komandoor & Co.,

Chartered Accountants

FRN: 01420S

V C R Kumar

Place : Hyderabad Partner

Date : 01-09-2014 Membership No# 204289


Mar 31, 2013

To the Members of Gradiente Infotainment Limited Report on the Financial Statements

We have audited the accompanying financial statements of Gradiente Infotainment 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.

Auditor''s 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 Profit and Loss Account, of the profit/ 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 ("the Order") 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 [and proper returns adequate for the purposes of our audit have been received from branches not visited by us]

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 [and with the returns received from branches not visited by us]31;

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.

(Referred to in paragraph 3 of the Auditor''s Report to the Members of Gradients Infotainment Limited on the financial statements for the year ended 31st March, 2013)

(i) (a) The Company has not maintained proper records to show full particulars including quantitative details and situation of fixed assets.

(b) The Substantial portion of the fixed assets has been verified physically verified by the Management during the year and no material discrepancies between the book records and the physical inventory have been noticed. In our opinion the frequency of verification is reasonable.

(c) In our opinion and according to the information and explanations given to us, a substantial part of fixed assets has not been disposed off by the Company during the year.

(ii) The physical verification of inventory is not applicable to the company due to its nature of business.

(iii) (a) According to the information and explanations given to us, the Company has not granted any Loans, secured or unsecured to the Companies covered in the register maintained under section 301 of the Companies Act, 1956.

(b) According to the information and explanations given to us, the Company has taken unsecured loans from the parties covered under the register maintained under Sec 301 of the companies Act, 1956 and the outstanding amount as on 31/03/2013 is Rs. 3,09,65,259/- and the interest is paid at the rate of 14% which is not prejudicial to the interests of the company.

(iv) In our opinion and according to the information and explanations given to us, there are generally adequate internal control procedures commensurate with the size of the Company and nature of its business with regard to fixed assets and with regard to the production income. Further, on the basis of our examination 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 the aforesaid internal control procedures.

(v) (a) According to the information and explanations given to us, we are of the opinion that the transactions that need to be entered in the register maintained under section 301 of the Companies Act, 1956 have been entered.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956 and exceeding the value of rupees five lakhs in respect of any party during the year, have been made at prices which are reasonable having regard to prevailing market prices, except in the case of items stated to be of specialized nature for which as informed there are no alternate sources of supply to enable a comparison of the prices paid / charged.

(vi) The Company has not accepted any deposits from the public.

(vii) The Company has no internal audit system, which is commensurate with the size and nature of its business.

(viii) Pursuant to the Rules made by the Central Government, the maintenance of cost records has not been prescribed under section 209(1) (d) of the Companies Act, 1956.

(ix) (a) According to the information and explanations given to us and records of the Company examined by us, the

undisputed statutory dues payable in respect of Tax deducted at source is Rs. 2,03, 00,737/-, in respect of Service tax is Rs. 8,47,73,151/-, in respect of FBT of earlier years is Rs. 2,61,180/- and in respect of Income tax payable is Rs. 5,53,36,908/-.

(b) We are informed that there are no disputed statutory dues as at the yearend outstanding for a period of more than six months from the date they became payable.

(x) The Company has no accumulated losses as at March 31, 2013 and it has not incurred any cash losses in the financial year ended on that date or in the immediately preceding financial year.

(xi) According to the records of the Company examined by us and the information and explanations given to us, the Company has defaulted in repayment of dues to banks to the extent of Rs. 40,40,870/- of which Rs. 36,14,500/- is with Andhra Bank and Rs. 4,26,370/- with Indian Bank as per the books of accounts.

(xii) In our opinion and according to the information and explanations given to us, the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

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

(xiv) The Company is not dealing or trading in shares, securities, debentures and other investments.

(xv) According to the information and explanations given to us, the Company has not given any guarantee during the year for loans taken by others from banks or financial institutions.

(xvi) In our opinion and according to the information and explanations given to us, the company has not availed any term loan during the year hence this clause not applicable.

(xvii) According to the information and explanations given to us and on overall examination of the balance sheet of the Company, we report that short-term funds have not been used to finance long-term investments and vice-versa.

(xviii) As the Company has not made any preferential allotment of shares during the year paragraph 4 (xviii) of the Order is not applicable, however the company has received preferential share application money and the same is not covered in the register maintained under Sec 301 of the Companies Act, 1956.

(xix) As the Company has not issued any debentures during the year, paragraph 4(xix) of the Order is not applicable.

(xx) As the Company has not raised money by way of public issue paragraph 4 (xx) of the Order is not applicable.

(xxi) Based on the audit procedures performed and information and explanations given to us by the management, we report that, no fraud on or by the Company has been noticed or reported during the course of our audit for the year ended March 31, 2013.

For Komandoor & Co.,

Chartered Accountants

FRN:01420S

Komandoor Mohan Acharya

Place : Hyderabad Partner

Date: Membership No# 029082


Mar 31, 2012

1. We have audited the attached Balance Sheet of Gradiente Infotainment as at March 31, 2012, and the related Profit and Loss Account and Cash Flow Statement for the year ended on that date annexed thereto, which we have signed under reference to this report. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted the audit in accordance with the 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 of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the management, as well as evaluating the overall financial statement presentation. We believe that the audit provides a 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 (the 'Order'), 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 give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order, to the extent applicable.

4. Further to our comments in the Annexure referred to in paragraph 3 above, we report that:

(a) We have obtained the information and explanations, which to the best of our knowledge and belief were necessary for the purposes 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, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account;

(d) In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of Section 211 of the Act;

(e) On the basis of written representations received from the directors, as on March 31, 2012 and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2012 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act 1956;

(f) Provision of cess under Section 441A of the Companies Act 1956

The companies Act has not notified above provision hence no provision for cess under section 441 A of the Companies Act 1956 and the Central Government has not specified the manner of payment of cess.

(g) Regarding Sundry Debtors / Sundry Creditors / Loans and Advances and Bank Balances

Sundry Debtors, Sundry Creditors, Loans and advances and Bank balances are subject to confirmation by the parties. There are services provided to SEZ unit under other media Rs. 17.61 Lakhs on which Service Tax Liability is not recognized as the services to SEZ are exempted under service tax.

(h) In our opinion and to the best of our information and according to the explanations given to us, the said financial statements together with the notes thereon and attached thereto give in the prescribed manner the information required by the Act and give a true and fair view, subject to our comments and reservations, in conformity with the accounting principles generally accepted in India:

(I) In the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2012;

(ii) In the case of the Profit and Loss Account, of the profit for the year ended on that date; and

(iii) In the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

(Referred to in paragraph 3 of the Auditors' Report of even date to the members of Gradiente Infotainment Limited on the financial statements for the year ended March 31, 2012

1. a) The Company is not maintaining proper records showing full particulars including quantitative details and

situation of fixed assets.

b) A Substantial Portion of the fixed assets of the Company are physically verified by the Management during the year and no material discrepancies between the book records and the physical inventory have been noticed. In our opinion the frequency of verification is reasonable.

c) In our opinion and according to the information and explanations given to us, a substantial part of fixed assets has not been disposed of by the Company during the year.

2. a) The Company has not granted any loans, secured or unsecured, to companies, firms or other parties covered in

the register maintained under Section 301 of the Act. Accordingly, clauses (iii) (b) to (iii) (d) of paragraph 4 of the Order are not applicable to the Company for the current year.

b) The Company has taken loans, secured or unsecured, from companies, firms or other parties covered in the register maintained under Section 301 of the Act. Accordingly, clauses (iii) (f) and (iii) (g) of paragraph 4 of the Order are applicable to the Company for the current year as company failed to repay regular instalments.

3. In our opinion and according to the information and explanations given to us, the company has failed to have an adequate internal control system commensurate with the size of the Company and the nature of its business for the purchase of fixed assets and for the sale of services. Further, on the basis of our examination of the books and records of the Company, carried out in accordance with the auditing standards generally accepted in India and according to the information and explanations given to us, we have neither come across nor have been informed of any continuing effort to correct major weaknesses in the aforesaid internal control system.

4. According to the information and explanations given to us, there are no contracts or arrangements referred to in Section 301 of the Act that need to be entered in the register maintained under that section. As there are no contracts or arrangements referred to in Section 301 of the Act, clause (v) (b) of paragraph 4 of the Order is not applicable to the Company for the current year.

5. The Company has not accepted any deposits from the public within the meaning of Section 58A and 58AA of the Act and the rules framed there under.

6. In our opinion, the Company has failed to appoint an internal audit system commensurate with its size and nature of its business.

7. The Central Government of India has not prescribed the maintenance of cost records under clause (d) of sub- section (1) of Section 209 of the Act for any of the products of the Company.

8. a) According to the information and explanations given to us and the records of the Company examined by us, in

our opinion, the Company has failed regular in depositing undisputed statutory dues including, income-tax, wealth tax, service tax, customs duty, cess and other material statutory dues as applicable to it. As informed to us, investor education and protection fund, employees' state insurance, provident fund, sales tax and excise duty are not applicable to the Company for the current year. Company has failed to file Service Tax Returns and Income Tax Returns

Tax Particulars Cumulative Amount (Rs.)

Service Tax 8,45,14,637

TDS 1,97,75,909

FBT of Earlier Years 2,61,180

Earlier Year Provisions 4,97,57,486

Provision for Tax 55,79,422

b) According to the information and explanations given to us and the records of the Company examined by us, there are dues of income tax, wealth tax, service tax, customs duty and cess as at March 31, 2012, which have not been deposited till date.

9. The company has no accumulated losses as at March 31, 2012 and it has not incurred any cash losses in the financial year ended on that date or in the immediately preceding financial year.

10. According to the records of the Company examined by us and the information and explanations given to us, the Company has defaulted in repayment of dues to banks as at the balance sheet date.

11. The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

12. The provisions of any special statute applicable to chit fund/ nidhi/ mutual benefit fund/ societies are not applicable to the Company.

13. In our opinion, the Company is not a dealer or trader in shares, securities, debentures and other investments.

14. In our opinion and according to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions during the year.

15. In our opinion and according to the information and explanations given to us, on an overall basis, the term loans have been applied for the purposes for which they were obtained.

16. On the basis of an overall examination of the Balance Sheet of the Company, in our opinion and according to the information and explanations given to us, there are no funds raised on short-term basis, which have been used for long-term investment.

17. The Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Act during the year.

18. The Company has not issued any debentures during the year.

19. The Company has not raised any money by public issues during the year.

20. During the course of our examination of the books and records of the Company carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instance of material fraud by the Company, noticed or reported during the year, nor have we been informed of any such case by the Management during the year.

21. The Clause (ii) of paragraph 4 regarding inventory of the Order, is not applicable in the case of the Company for the year, since in our opinion there are no matters which arise to be reported in the aforesaid order.

For Komandoor & Co. Chartered Accountants

Sd/- K Mohanacharya

Date: 01-09-2012 Partner

Place : Hyderabad M.No. 029082 F. No. 001420S


Mar 31, 2011

1. We have audited the attached Balance Sheet of Gradiente Infotainment as at March 31, 2011, and the related Profit and Loss Account and Cash Flow Statement for the year ended on that date annexed thereto, which we have signed under reference to this report. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with the 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 of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a 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 (together the 'Order'), 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 give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order, to the extent applicable.

4. Further to our comments in the Annexure referred to in paragraph 3 above, 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 purposes 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, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account;

(d) In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of Section 211 of the Act;

(e) On the basis of written representations received from the directors, as on March 31, 2011 and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2011 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Act;

(f) Provision of cess under Section 441A of the Companies Act 1956 The companies Act has not notified above provision hence no provision for cess under section 441 A of the Companies Act 1956 and the Central Government has not specified the manner of payment of cess.

(g) Regarding Sundry Debtors / Sundry Creditors / Loans and Advances and Bank Balances Sundry Debtors, Sundry Creditors, Loans and advances and Bank balances are subject to confirmation by the parties.

(h) Change in Accounting Estimate

The company has committed error by over claiming depreciation on fixed assets in earlier years due to change in method of depreciation. The company has identified the error in estimates and revised the depreciation amounts and assets values following written down value method as stipulated under schedule XIV of the companies Act, 1956. The revisions were accounted for prospectively as a change in accounting estimates and as a result the income has been increased by Rs 19,78,233/-

(i) In our opinion and to the best of our information and according to the explanations given to us, the said financial statements together with the notes thereon and attached thereto give in the prescribed manner the information required by the Act and give a true and fair view in conformity with the accounting principles generally accepted in India.

(i) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2011.

(ii) in the case of the Profit and Loss Account, of the profit for the year ended on that date.

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

(Referred to in paragraph 3 of the Auditors' Report of even date to the members of Gradiente Infotainment Limited on the financial statements for the year ended March 31, 2011

1. a) The Company is maintaining proper records showing full particulars including quantitative details and situation of fixed assets.

b) The fixed assets of the Company are physically verified by the Management according to a phased program designed to cover all the items once in a period of three years, which in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. Pursuant to the program, the fixed asset has been physically verified by the Management during the year and no material discrepancies between the book records and the physical inventory have been noticed. The Policy of Depreciation of the company is WDV.

c) In our opinion and according to the information and explanations given to us, a substantial part of fixed assets has not been disposed of by the Company during the year.

2. a) The Company has not granted any loans, secured or unsecured, to companies, firms or other parties covered in the register maintained under Section 301 of the Act. Accordingly, clauses (iii)(b) to (iii)(d) of paragraph 4 of the Order are not applicable to the Company for the current year.

b) The Company has not taken any loans, secured or unsecured, from companies, firms or other parties covered in the register maintained under Section 301 of the Act. Accordingly, clauses (iii) (f) and (iii) (g) of paragraph 4 of the Order are not applicable to the Company for the current year.

3. In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business for the purchase of fixed assets and for the sale of services. Further, on the basis of our examination of the books and records of the Company, carried out in accordance with the auditing standards generally accepted in India and according to the information and explanations given to us, we have neither come across nor have been informed of any continuing failure to correct major weaknesses in the aforesaid internal control system.

4. According to the information and explanations given to us, there are no contracts or arrangements referred to in Section 301 of the Act that need to be entered in the register maintained under that section. As there are no contracts or arrangements referred to in Section 301 of the Act, clause (v) (b) of paragraph 4 of the Order is not applicable to the Company for the current year.

5. The Company has not accepted any deposits from the public within the meaning of Section 58A and 58AA of the Act and the rules framed there under.

6. In our opinion, the Company has an internal audit system commensurate with its size and nature of its business.

7. The Central Government of India has not prescribed the maintenance of cost records under clause (d) of sub- section (1) of Section 209 of the Act for any of the products of the Company.

8. a) According to the information and explanations given to us and the records of the Company examined by us, in our opinion, the Company is generally not regular in depositing undisputed statutory dues including, income-tax, wealth tax, service tax, customs duty, cess and other material statutory dues as applicable to it. As informed to us, investor education and protection fund, employees' state insurance, provident fund, sales tax and excise duty are not applicable to the Company for the current year.

Tax Particulars Amount (Rs)

TDS 1,32,88,815.00

Service Tax 5,01,88,805.00

FBT of Earlier Years 2,61,180.00

Earlier Year Provisions 1,03,71,630.00

Provisions for Tax 3,93,85,856.44

b) According to the information and explanations given to us and the records of the Company examined by us, there are dues of income tax, wealth tax, service tax, customs duty and cess as at March 31, 2011, which have not been deposited till date.

9. The company has no accumulated losses as at March 31, 2011 and it has not incurred any cash losses in the financial year ended on that date or in the immediately preceding financial year.

10. According to the records of the Company examined by us and the information and explanations given to us, the Company has defaulted in repayment of dues to banks as at the balance sheet date.

11. The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

12. The provisions of any special statute applicable to chit fund/ nidhi/ mutual benefit fund/ societies are not applicable to the Company.

13. In our opinion, the Company is not a dealer or trader in shares, securities, debentures and other investments.

14. In our opinion and according to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions during the year.

15. In our opinion and according to the information and explanations given to us, on an overall basis, the term loans have been applied for the purposes for which they were obtained.

16. On the basis of an overall examination of the Balance Sheet of the Company, in our opinion and according to the information and explanations given to us, there are no funds raised on short-term basis, which have been used for long-term investment.

17. The Company has made preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Act during the year.

18. The Company has not issued any debentures during the year.

19. The Company has not raised any money by public issues during the year.

20. During the course of our examination of the books and records of the Company carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instance of material fraud by the Company, noticed or reported during the year, nor have we been informed of any such case by the Management.

21. The Clause (ii) of paragraph 4 regarding inventory of the Order, is not applicable in the case of the Company for the year, since in our opinion there are no matters which arise to be reported in the aforesaid order.

Date: 30-08-2011 For Komandoor & Co.

Place : Hyderabad Chartered Accountants

Sd/-

K Mohanacharya

Partner

M.No. 029082 F. No. 001420S