Home  »  Company  »  Jain Studios Ltd  »  Quotes  »  Auditor Report
Enter the first few characters of Company and click 'Go'

Auditor Report of Jain Studios Ltd.

Mar 31, 2015

We have audited the accompanying financial statements of JAIN STUDIOS LIMITED which comprise the Balance Sheet as at 31st March, 2015, the Statement of Profit and Loss, the Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information.

Management's Responsibility for the Financial Statements

The Company's Board of Directors is 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 and cash flows 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 the Companies(Accounts) Rules, 2014. This responsibility also 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; and design, implementation and maintenance of adequate internal financial controls, that were 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

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 thereunder. 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.

An audit involves performing procedures to obtain audit evidence about the amounts and the 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 the accounting policies used and the reasonableness of the accounting estimates made by the Company's Directors, 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 on the standalone financial statements.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid 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 31,2015;

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, 2015 ("the Order") issued by the Central Government of India in terms of sub- section (11) of section 143 of the Act, we give in the Annexure a statement on the matters specified in the paragraph 3 and 4 of the Order, to the extent applicable.

2. Further to our comments in the annexure, as required by Section 143 (3) of the Act, we 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 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 it appears from our examination of those books.

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

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

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

(f) With respect to the other matters to be included in the Auditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information, to the extent applicable and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations on its financial position in its financial statements -Refer note 2.27 to the financial statements.

ii. the Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long-term contracts.

iii. there has been no situation requiring transfer of funds to the Investor Education and Protection Fund by the Company.

(g) attention is invited to:

a. The company has made no provision in the accounts, for the custom duty saved amounting to Rs 351.48 lacs, interest thereon and penalties which may be levied by the office of Directorate General Of Foreign Trade on account of non fulfillment of the export obligation, as per EPCG scheme against which a sum of Rs 274.21 lacs are lying deposited with custom department.

b. One time settlement with SASF (OTS) -Refer note no. 2.3 to the financial statements.

In respect of one time settlement (OTS) arrived at with SASF, SASF vide its letter dated 12th February 2015 and 5th March 2015 respectively denied the further extension and revoked the OTS and subsequent modifications thereof including reversal of waiver of dues and restoration of the original liability as per the terms of loan agreement and adjustment of payment received by SASF from the company towards the dues. The same has not been effected in the accounts book as the company is hopeful to get the OTS restored. (Benefits availed under OTS amount Rs. 1120.59 lacs)

As explained to us the company is discussing the matter with SASF authority.

ANNEXURE TO INDEPENDENT AUDITORS' REPORT

The Annexure referred to in our report to the member s of JAIN STUDIOS LIMITED for the year ended on 31st March, 2015:

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

b. The company has a regular program of physical verification of its fixed assets by which these assets are verified in a phased manner over a period of three years.

In accordance with this certain assets are verified during the year and some discrepancies were found which were immaterial in nature. Having regard to nature of asset and size of company, periodicity of physical verification is reasonable.

ii. a. The company has a regular program of physical verification of inventory by which inventories are verified twice in a year. Having regard to nature of its business and size of company, periodicity of physical verification is reasonable.

b. The procedure of physical verification followed by company is reasonable having regard to nature of its business and size of the company.

c. According to explanation and information given to us and on examination of records,

The company is maintaining proper records of inventory and any material discrepancies which were observed on physical verification has been properly dealt in the books of account.

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 Companies Act 2013:

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 no outstanding on account unsecured loan as on 31-03-2015 to companies, firms or other parties covered in the register maintained under Section 189 of the Companies Act, 2013 ("the Act").

iv. In our opinion and according to information and explanation given to us, there is an adequate internal control system commensurate with its size of the company and inventory and fixed assets and for the sale of goods and services. We have not observed any major weakness in the internal control system during the course of our audit.

v. The Company has not accepted any deposits from the public covered under section 73 to 76 of the Companies Act, 2013 and the rules framed there under and the directives issued by RBI.

vi. In our opinion, maintenance of cost records under section 148(1) of the Act is not applicable to the company.

vii. a. According to our information and explanation given to us and from examination of records of the company, the company is not regular in depositing undisputed statutory dues including provident fund, employees' state insurance, income tax, duty of customs, service tax, value added tax, cess and any other statutory dues with the appropriate authorities and there are undisputed statutory dues which remain in arrear for a period of more than six month as on 31st March 2015.

Nature of Dues Amount of Dues

Central sales tax (UP) Rs.12,62,756

Provident Fund Rs.10,65,584

TDS Rs.48,31,413

Bonus Payable Rs.14,83,679

Interest on TDS Payable Rs. 5,19,484

b. Details of Sales Tax, Income Tax, Wealth Tax, Service Tax, Excise Duty and Cess which have not been deposited on account of dispute are given below:

viii. Accumulated losses of the Company at the end of the financial year do not exceed 50% of its net worth (as per Balance Sheet including Revaluation Reserve). However company has incurred cash loss of Rs.16896 thousand during the current financial year though there was cash profit of Rs. 20311.2 thousands in the immediate preceding financial year.

ix. In our opinion, and on the basis of our audit procedures and according to information and explanation given to us, the company has defaulted in repayment of Term Loan taken from IDBI (refer note no. 2.3).

x. The company has given Corporate guarantee on behalf of following companies for the loan taken from given below financial institutions or banks.

xi. The company has not obtained any term loan xii. No fraud was noticed, on or by the company from any financial institutions, Bank and during the year. NBFC.

For GIRI & BANSAL Chartered Accountants (N. P. BANSAL) Place: New Delhi Partner Date : 28th May, 2015 Membership No.: - 080319 FRN: 0877


Mar 31, 2014

1. We have audited the accompanying financial statements of Jain Studios 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.

Managements'' Responsibility for the Financial Statements

2. The Company''s 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 subsection (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

3. 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.

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 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, but not for the purpose of expressing an opinion on the effectiveness of the Company''s internal control. An audit also includes evaluating the appropriateness of ac count ing pol i c ies used and the reasonableness of the accounting estimates made by management, 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.

Opinion

6. In our opinion and to the best of our information and according to the explanations given to us, the aforesaid 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 Statement of Profit and Loss, of the profit of the Company for the year ended on that date; and

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

Report on Other Legal and Regulatory Requirements

7. 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 Act, (hereinafter referred to as the "Order") 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 Order

8. Further, 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 read with our comments in para 2(f) below.

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 (read with our comments in para 2(a) above).

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

d) in our opinion, the Balance Sheet, the Statement of Profit and Loss and the 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 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.

f) Attention is invited to:

a) Note Nos. 2.8 and 2.31 (B) of notes to the financial statements, in respect of custom duty saved Rs. 351.48 Lacs during earlier years as per EPCG Scheme, against which the company''s fund amount Rs. 274.21 Lacs are laying deposited with the custom department. No provision has been made for the custom duty saved and interest thereon.

As explained to us the company has made an application to DGFT for extension to fullfil the export application.

ANNEXURE TO THE AUDITORS'' REPORT

(Referred to in paragraph (7) under the heading of ‘Report on the other Legal and Regulatory Requirements'' of our Report, for Accounts of JAIN STUDIOS LIMITED for the year ended 31st March 2014.)

(i) In respect of its fixed assets:

(a) Fixed assets records showing full particulars including quantitative details and situation of fixed assets have been maintained.

(b) The company has a program of verification of fixed assets to cover all the items in a phased periodical manner which, in our opinion, is reasonable having regard to the size of the company and the nature of its assets. No material discrepancies were noticed on such physical verification.

As per the records and information and explanations given to us, fixed assets disposed off during the year were Nil.

(ii) In respect of its inventories:

(a) According to the information and explanations given to us, Physical verification has been conducted by the management at reasonable intervals during the year in respect of inventories of stock in trade in the company''s possession. In our opinion, the frequency of physical verification is reasonable.

(b) In our opinion and according to the information and explanations given to us, the procedures for physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the company and the nature of its business.

On the basis of our examination of the records of inventories, we are of the opinion that the company is maintaining proper records of inventories. The discrepancies noticed on physical verification of inventories as compared to book records were not material and have been properly dealt with in the books of accounts.

(iii) As per the information and explanations given to us, the company has neither granted nor taken any loans, secured or unsecured, to/from companies, firms or other parties listed in the Register maintained under section 301 of the Act. Accordingly, the provisions of clauses 4 (iii) (b) to (d), (f) & (g) of the Order are not applicable.

(iv) In our opinion and according to the information and explanation 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 purchases of inventory and fixed assets and for the sale of goods and services. During the course of our audit, we have not observed any major weakness in such internal control system.

(v) Based on the audit procedures performed and according to the information and explanations given to us, the contracts or arrangements referred to in section 301 of the Act which need to be entered into register required to be maintained under that section have been entered accordingly.

(vi) According to the information and explanations given to us, the company has not accepted any deposits from the public within the meaning of section 58A and 58AA or any other relevant provisions of the Act and rules framed thereunder and directives issued by Reserve Bank of India or any other relevant provisions of the Act. Therefore, the provisions of Clause

(vi) of paragraph 4 of the Order are not applicable to the Company.

(vii) In our opinion, the Company has an internal audit system, which need to be further strengthened to be made the same commensurate with the size of the Company and nature of its business.

(viii) We have broadly reviewed the books of accounts maintained by the company in respect of the activities where, pursuant to the rules made by the Central Government, the maintenance of cost records has been prescribed under section 209(1)(d) of the Companies Act, 1956 and are of the opinion that, prime facie, the prescribed accounts and records have been made and maintained. However, we have not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

(ix) In respect of statutory dues:

(a) According to the records and information and explanations given to us, the Company is generally regular in depositing undisputed statutory dues including Provident Fund, Employee'' State Insurance, Service Tax, Custom Duty, Cess and other material statutory dues with the appropriate authorities to the extent applicable and there are undisputed statutory dues payable for a period of more than six months from the date they became payable as at 31st March 2014 are given below:

S.No. Particulars In Rs. thousands

1. Provident Fund Rs. 1,065.58

2. Tax Deducted at Source Rs. 1,019.86

3. Sales Tax/VAT Rs. 366.54

4. Bonus Rs. 1483.68

5. According to the records and information & explanations given to us, there are no dues in respect of sales Tax, income tax, custom duty, wealth tax, service tax, excise duty and cess that have not been deposited with the appropriate authorities on account of any dispute.

(x) Accumulated losses of the Company at the end of the financial year do not exceed 50% of its net worth (as per Balance Sheet including Revaluation Reserve). It has earned cash profit of Rs. 20311.20 thousands in the current financial year, though there was a cash profit of Rs 444.03 thousands in the immediate preceding financial year.

(xi) In our opinion, on the basis of audit procedures and according to the information and explanations given to us, the company had defaulted on one time settlement (OTS) arrived at with SASF on 26th July, 2008, consequently, fresh OTS was made with SASF vide SASF letter dated 26th February, 2011, which also could not be complied with in full and on request of the company, SASF vide its letter dated 6th April 2013 has agreed to extend the OTS till 31st March 2014. On further request of the company the SASF vide its letter dated 29th March 2014 has agreed to extend the date of buy back of shares upto 30th September 2014 subject to payment of interest on or before 30th April 2014 (read with Note No.2.4 (i) & (ii) of Notes to the Financial Statements), which payment is not made and disputed by the company, as the amount payable is return on equity and not an interest.

(xii) Based on our examination of the records and the information and explanations given to us, the Company has not granted any loans and/or advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) The company is not a chit fund or a nidhi/ mutual benefit fund/society, therefore, provisions of clause 4(xiii) of the Order are not applicable to the company.

(xiv) In our opinion, the company is not dealing in or trading in shares, securities, debentures and other investments.

(xv) According to the information and explanation given to us, during the year the company has not raised any short term loans from any financial institutions.

(xvi) On the basis of information and explanations given to us and on an overall examination of the financial statements of the company, no funds raised during the year on short term basis have been used for long term investment.

(xvii) According to the information and explanations given to us, the Company has made preferential allotment of shares and warrants to promoters covered in the Register maintained under section 301 of the Act during the financial year 2012-13(refer Note no.2.1 and 2.3 of Notes to the Financial Statements), and the price at which the said allotment has been made is not prejudicial to the interest of the company.

(xviii) The company has not issued any debentures during the year.

(xix) The company has not raised any money through a public issue during the year.

(xx) Based on audit procedure performed and on the basis of information and explanations provided by the management and to the best of our Knowledge and belief, no material fraud on or by the company has been noticed or reported during the course of our audit nor we have been informed of any such case by the management.



For GIRI & BANSAL Chartered Accountants

(N. P. BANSAL) Place: New Delhi Partner Date : 28th May, 2014 Membership No.: - 80319


Mar 31, 2012

We have audited the attached Balance Sheet of JAIN STUDIOS LIMITED as at 31st March 2012, the Statement of Profit and Loss and also the Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

We 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 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 management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

1. As required by the Companies (Auditors' Report) Order, 2003 as amended by Companies (Auditors' Report) Order 2004 (together the "Order") issued by the Central Government of India in terms of Section 227 (4A) of the Companies Act, 1956 (The Act), and on the basis of such examination of books and records of the company as we considered proper and the information and explanations given to us during the course of our audit, we annex a statement on the matters specified in the paragraphs 4 and 5 of the said Order.

2. Further to our comments in the Annexure referred in Paragraph 1 above, we report that:

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 read with our comments in para 2 (vi) below.

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, read with our comments in para 2(i) above.

iii) The Balance Sheet and Statement of Profit and Loss dealt with by this report are in agreement with the books of accounts.

iv) In our opinion, the Balance Sheet and Statement Profit and Loss dealt with by this report comply with the mandatory Accounting Standards (AS) referred to in sub-section (3C) of section 211 of the companies Act, 1956.

v) As per the information and explanations given to us, none of the directors is disqualified from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

vi) Attention is invited to:

a) Note no. 2.5 (i) & (ii) of notes to the financial statements, in respect of secured loan of SASF (IDBI) which is the subject matter of One Time Settlement.

b) In respect of recognition and carry over of deferred tax assets (net) amounting to Rs.835.69 Lacs to the extent as stated in said note, based on management perception (Note no.2.13 of notes to the financial statements), and our inability to comment thereon.

c) Note no.2.33 of notes to the financial statements, in respect of custom duty saved as per EPCG Scheme, no provision has been made as the extension has been granted by concerned authorities.

Subject to the foregoing, in our opinion, and to the best of our information and according to the explanations given to us, the said accounts read together with Notes thereon, 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;

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

ii) In the case of the Statement of Profit and Loss, of the Profit for the year ended on that date.

ANNEXURE TO THE AUDITORS' REPORT (Referred to in paragraph (1) of our Report on Accounts of JAIN STUDIOS LIMITED for the period ended 31st March 2012).

(i) (a) Fixed assets records showing full particulars including quantitative details and situation of fixed assets have been maintained.

(b) According to the information and explanations given to us, the company has a phased programme of verification of its fixed assets, however physical verification of fixed assets carried out during the year is not as per the programme and also discrepancy, if any, on such verification has not been determined, hence cannot be commented upon by us. In our opinion, the frequency of verification needs to be further strengthened to be made the same reasonable with regard to the size of the Company.

(c) As per the records and information and explanations given to us, fixed assets disposed off during the year were not substantial.

(ii) The company has no inventory, hence provisions of clause 4(ii) (a) and (b) of the order are not applicable and records of inventory are updated.

(iii) As per the information and explanations given to us, the company has neither granted nor taken any loans, secured or unsecured, to/from companies, firms or other parties listed in the Register maintained under section 301 of the Act. Accordingly, the provisions of clauses 4 (iii) (b) to (d), (f) & (g) of the Order are not applicable.

(iv) According to the information and explanations given to us, having regard to the explanations that some of the items purchased/ contracts for services availed/ provided are of special nature and suitable alternative sources do not exists for obtaining comparable quotations (read with our comment in para 2(vi) above and note no.2.18(a) of Notes to the Financial Statements, internal control system needs to be further strengthened to be made the same commensurate with the size of the company and the nature of its business, for the purchase of inventory and fixed assets, expenditures and for the sale of services.

(v) Based on the audit procedures performed and according to the information and explanations given to us, the contracts or arrangements referred to in section 301 of the Act which need to be entered into register required to be maintained under that section have been entered accordingly.

(vi) According to the information and explanations given to us, the company has not accepted any deposits from the public within the meaning of section 58A and 58AA or any other relevant provisions of the Act and rules framed thereunder and directives issued by Reserve Bank of India or any other relevant provisions of the Act. We have been informed that no order has been passed by Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal in this regard.

(vii) In our opinion, the Company has an internal audit system, which need to be further strengthened to be made the same commensurate with the size of the Company and nature of its business.

(viii) We are informed that the Central Government has prescribed maintenance of Cost Records under section 209 (1)(d) of the Act. w.e.f. Financial Year 2011-12.

(ix) (a) According to the records and information and explanations given to us, the Company is generally regular in depositing undisputed statutory dues including Provident Fund, Employee' State Insurance, Service Tax, Custom Duty, Cess and other material statutory dues with the appropriate authorities to the extent applicable and there are undisputed statutory dues payable for a period of more than six months from the date they became payable as at 31st March 2012 are Provident Fund(Rs.1,067.09 thousands), Service Tax(Rs.2,039.33 thousands) and Bonus (Rs. 1483.68 thousands). It is to be read with note no.2.9 of Notes to the Financial Statements.

(b) According to the records and information & explanations given to us, there are no dues in respect of sales Tax, income tax, custom duty, wealth tax, service tax, excise duty and cess that have not been deposited with the appropriate authorities on account of any dispute. However this is to be read with note no 2.9 of Notes to the Financial Statements.

(x) Accumulated losses of the Company at the end of the financial year do not exceed 50% of its net worth (as per Balance Sheet including Revaluation Reserve). It has incurred cash loss of Rs. 39,145.28 thousands in the current financial year, though there was a cash profit of Rs 23,877.82 thousands in the immediate preceding financial year.

(xi) In our opinion, on the basis of audit procedures and according to the information and explanations given to us, the company had defaulted on one time settlement (OTS) arrived at with SASF on 26th July, 2008, consequently, fresh OTS was made with SASF vide SASF letter dated 26th February, 2011, which also could not be complied with in full and on request of the company, SASF vide its letter dated 24th April 2012 has agreed to extend the OTS till 31st July 2012 (read with Note No.2.5 (i) & (ii) of Notes to the Financial Statements).

Further, the company has not paid interest on the loan taken from Syndicate Bank against pledge of fixed deposits, and the cumulated interest payable amounts to Rs.588.74 thousands (P.Y. Rs. 481.43 thousands).

(xii) Based on our examination of the records and the information and explanations given to us, the Company has not granted any loans and/ or advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) The company is not a chit fund or a nidhi/ mutual benefit fund/society, therefore, provisions of clause 4(xiii) of the Order are not applicable to the company.

(xiv) In our opinion, the company is not dealing in or trading in shares, securities, debentures and other investments.

(xv) In our opinion, on the basis of information and explanations given to us, the short terms loans were applied for the purposes for which the loans were obtained during the year.

(xvi) On the basis of information and explanations given to us and on an overall examination of the financial statements of the company, no funds raised during the year on short term basis have been used for long term investment.

(xvii) According to the information and explanations given to us, the Company has not made preferential allotment of shares to parties / companies covered in the Register maintained under section 301 of the Act during the financial year 2011-12. However, the company has, during the financial year 2012- 13, made preferential allotment of shares and warrants to promoters, against the money received in the financial year 2011-12 (refer Note no.2.3 and 2.4 of Notes to the Financial Statements)

(xviii) The company has not issued any debentures during the year.

(xix) The company has not raised any money through a public issue during the year.

(xx) Based on audit procedure performed and on the basis of information and explanations provided by the management and to the best of our Knowledge and belief read with comments in audit report in Para 2(vi) above, no material fraud on or by the company has been noticed or reported during the course of our audit nor we have been informed of any such case by the management.

For GIRI & BANSAL Chartered Accountants

(N. P. BANSAL) New Delhi Partner

Date: 26th May 2012 Membership No.: - 80319


Mar 31, 2010

We have audited the attached Balance Sheet of JAIN STUDIOS LIMITED as at 31st March 2010, the Profit & Loss Account and also the Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of Companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

We 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 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 management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

1. As required by the Companies (Auditors Report) Order, 2004 (as amended) (The Order) issued by the Central Government of India in terms of Section 227 (4A) of the Companies Act, 1956 (The Act), and on the basis of such examination of books and records of the company as we considered proper and the information and explanations given to us during the course of our audit, we annex a statement on the matters specified in the paragraphs 4 and 5 of the said Order.

2. Further to our comments in the Annexure referred in Paragraph 1 above, we report that:

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 read with our comments in para 2 (vi) below.

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, read with our comments in para 2(i) above.

iii) The Balance Sheet, Profit & Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of accounts.

iv) In our opinion, the Balance Sheet, Profit & Loss Account and Cash Flow Statement dealt with by this report comply with the mandatory Accounting Standards (AS) referred to in sub section (3C) of section 211 of the companies Act, 1956 except as stated in para (vi)(a) below regarding accounting of income [AS 9-Revenue Recognition]

v) As per the information and explanations given to us, none of the directors is disqualified from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

vi) Attention is invited to:

a) In respect of non-provision against shortfall in recovery (amount-unascertainable) against overdue and other debts amounting to Rs 181,354.47 thousand; accounting of uplinking license fees amounting to Rs 24,000 thousands as per terms of agreement which is pending necessary approvals and our inability to comment on realisability/ recoverability thereof.

b) In respect of non confirmation/reconciliation and non availability of documents in support and audit trail of balances of debtors, loans and advances, sundry creditors and other current liabilities (including statutory dues), banks and secured loans and income and expenditure accounted for during the year and contingent liabilities considered as ascertained by the management, consequential impact where of presently cannot be ascertained and our inability to comment on correctness and completeness.

c) In respect of transfer of Provident Fund amount payable of Rs. 2286.78 thousands (net) to Social Security Fund A/c, and regarding write back of sundry balances/excess provision written back amounting to Rs.2217.33 thousands based on management perception and our inability to comment thereon. Further in respect of non-payment of certain statutory dues and non filing of certain statutory returns/ forms w.r.t. Employees state Insurance, Provident Fund, Tax deducted at source, Service tax, custom duty, Fringe Benefit tax and other and accounting of penalty, interest, etc. (amount unascer -tainable) and our inability to comment thereon.

d) In respect of recognition and carry over of deferred tax assets (net) to the extent as stated in said note, based on management perception (note no. 13 of schedule S) and MAT credit entitlement of amounting to Rs. 2645.30 thousands recognized and carried over based on management perception (note no. 17 of schedule S) and our inability to comment thereon.

e) In respect of management perception about recoverable amount of the fixed assets (including the assets held for disposal) (Impairment of assets: AS-28) and of investments (Accounting for Investments: AS- 13) of the company being more than carrying amount; and our inability to comment thereon.

f) In respect of non provision of the liability for Custom Duty saved as per EPCG Scheme, which becomes payable on account of shortfall of exports over the years; and our inability to comment thereon.

We further report that the profit for the year, balance in profit & loss account and respective assets and liabilities are without considering the impact of items referred to in paragraphs 2(vi) (a) to (e) a bo ve or otherwise, the effect of which could not be determined.

Subject to the foregoing, in our opinion, and to the best of our information and according to the explanations given to us, the said accounts read together with Notes thereon, 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;

i) In the case of Balance Sheet, of the state of affairs of the Company as at 31st March 2010;

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

iii) 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 (1) of our Report of even date of JAIN STUDIOS LIMITED for the year ended 31st March 2010.)

(i) (a) Fixed assets records showing full particulars including quantitative details and situation of fixed assets are under process of updation/ completion.

(b) According to the information and explanations given to us, the company has a phased programme of verification of its fixed assets, however physical verification of fixed assets carried out during the year is not as per the programme and also discrepancy, if any, on such verification has not been determined, hence cannot be commented upon by us. In our opinion, the frequency of verification needs to be further strengthened to be made the same reasonable with regard to the size of the Company.

(c) As per the records and information and explanations given to us, fixed assets disposed off during the year were not substantial.

(ii) The company has no inventory other than WIP (feature film), hence provisions of clause 4(ii)

(a) and (b) of the order are not applicable and records of inventory are updated.

(iii) As per the information and explanations given to us, the company has neither granted nor taken any loans, secured or unsecured, to/from companies, firms or other parties listed in the Register maintained under section 301 of the Act. Accordingly, the provisions of clauses 4 (iii) (b) to (d), (f) & (g) of the Order are not applicable.

(iv) According to the information and explanations given to us, having regard to the explanations that some of the items purchased/ contracts for services availed/ provided are of special nature and suitable alternative sources do not exists for obtaining comparable quotations (read with our comment in para 2(vi) above and note no. 13(b) of Schedule S), internal control system needs to be further strengthened to be made the same commensurate with the size of the company and the nature of its business, for the purchase of inventory and fixed assets, expenditures and for the sale of services.

(v) Based on the audit procedures performed and 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 into register required to be maintained under that section, accordingly provisions of clause 4 (v)(b) of the Order is not applicable.

(vi) According to the information and explanations given to us, the company has not accepted any deposits from the public within the meaning of section 58A and 58AA or any other relevant provisions of the Act and rules framed thereunder and directives issued by Reserve Bank of India or any other relevant provisions of the Act. We have been informed that no order has been passed by Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal in this regard.

(vii) In our opinion, the Company has an internal audit system, which need to be further strengthened to be made the same commensurate with the size of the Company and nature of its business.

(viii)We are informed that the Central Government has not prescribed maintenance of Cost Records under section 209 (1)(d) of the Act.

(ix) (a) According to the records and information and explanations given to us, the Company is generally regular in depositing undisputed statutory dues including Provident Fund, Employee State Insurance, Service Tax, Custom Duty, Cess and other material statutory dues with the appropriate authorities to the extent applicable (Sales Tax and Excise Duty are not applicable to the company) and there are undisputed statutory dues payable for a period of more than six months from the date they became payable as at 31st March 2010 are Employees State lnsurance(Rs.848.69 thousands), Tax Deduction at Source (Rs. 4,191.13 thousands), Fringe Benefit Tax (Rs. 340.94 thousands) and Bonus (Rs. 1415.01 thousands). It is to be read together with comments in Para no 2(vi) (b) & (c) above and note no. 6 of Schedule S.

(b) According to the records and information & explanations given to us, there are no dues in respect of sales Tax, income tax, custom duty, wealth tax, service tax, excise duty and cess that have not been deposited with the appropriate authorities on account of any dispute. However this is to be read with note no 6 of schedule S and our comments in para no 2(vi) (c) above.

(x) Accumulated losses of the Company at the end of the financial year do not exceed 50% of its net worth. It has incurred cash loss of Rs. 12,820.19 thousands in the current financial year , though there was a cash loss of Rs 41,988.68 thousands in the immediate preceding financial year . However, it is to be read together with comments in audit report in Para 2(vi) above in respect of unquantified qualifications, effect of which could not be determined.

(xi) In our opinion, on the basis of audit procedures and according to the information and explanations given to us, the company has not deposited the dues to Financial Institutions. The company has delayed (after restructuring on 26.07.2008) in repayment of principal amount of Rs.210,000.00 thousands and subsequent approval of SASF vide its letter dated 8th December 2009, wherein the SASF has relaxed payment of interest by way of capitalization of the interest with certain terms and conditions and therefore , the principal amount payable as on 31.03.2010 is Rs. 228,746.93thousands (after fresh approval) and maximum amount of interest of Rs.18,362.78 thousands for a maximum period of 114 days to SASF which since has been settled for one time settlement and fresh proposal for revised settlement of repayment terms has been forwarded to SASF (refer Note no. 3 of Schedule S).

Further, the company has not paid interest on the loan taken from Syndicate Bank against pledge of fixed deposits, and the cumulated interest payable amounts to Rs. 409.89 thousands (P.Y. Rs. 334.89 thousands).

(xii) Based on our examination of the records and the information and explanations given to us, the Company has not granted any loans and/ or advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiii)The company is not a chit fund or a nidhi/ mutual benefit fund/society, therefore, provisions of clause 4(xiii) of the Order are not applicable to the company.

(xiv) In our opinion, the company is not dealing in or trading in shares, securities, debentures and other investments.

(xv) In our opinion, on the basis of information and explanations given to us, the short terms loans were applied for the purposes for which the loans were obtained during the year.

(xvi)On the basis of information and explanations given to us and on an overall examination of the financial statements of the company, no funds raised during the year on short term basis have been used for long term investment.

(xvii) According to the information and explanations given to us, the Company has not made preferential allotment of shares to parties / companies covered in the Register maintained under section 301 of the Act, and we are of the opinion that the price at which shares have been issued is not prejudicial to the interest of the company.

(xviii) The company has not issued any debentures during the year.

(xix)The company has not raised any money through a public issue during the year.

(xx) Based on audit procedure performed and on the basis of information and explanations provided by the management and to the best of our Knowledge and belief read with comments in audit report in Para 2(vi) above, no material fraud on or by the company has been noticed or reported during the course of our audit nor we have been informed of any such case by the management.



For GIRI & BANSAL

Chartered Accountants



(N. P. BANSAL)

Partner

Membership No.: - 80319

New Delhi

Date: 27th May 2010