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Auditor Report of JCT Electronics Ltd.

Mar 31, 2015

We have audited the accompanying standalone financial statements of JCT Electronics 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 then ended, and a summary of significant accounting policies and other explanatory information.

Management's Responsibility for the Standalone 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 standalone 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 referred 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 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.

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 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 control 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 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 adverse audit opinion on the standalone financial statements.

Basis for Adverse Opinion

(i) We have analyzed following factors :-

(a) The financial statements have been drawn and are based on the successful implementation of rehabilitation scheme announced by Board for Industrial and Financial Reconstruction (BIFR) for the company. As per Sanctioned BIFR Scheme, the revival of the company is dependent on sale of land and building at Mohali Unit. As envisaged in sanctioned scheme in 2007, the company's net worth could not turn positive in the 4th year of its implementation due to delay in sale of land & building which is still pending. The tenure of scheme is ending in the year 2017. The Company has defaulted in payment of principal amount of Loans of Rs. 10,670.42 Lacs (previous year Rs 6,977.43 Lacs) to Banks / Financial Institutions for sixteen quarters starting from 1st April, 2011 to 31st March, 2015. This is in contravention of rehabilitation scheme announced by BIFR vide its order dated 12th March, 2007. The Company was unable to meet its obligations towards repayment of quarterly installments due in respect of term/working capital term loans as per BIFR sanctioned scheme, due to non availability of working capital limits as envisaged in the sanctioned scheme and sluggish market conditions during the year. As per the BIFR scheme, if the company commits default towards repayment of principal installments as per the sanctioned scheme or any combination, FIs / Banks reserves the right to charge interest on the defaulted amount at top of the band together with liquidated damages of 2% p.a. thereon till the date of clearance of default or FIs / Banks shall have the right to convert its entire overdue into fully paid up equity shares of JCTEL during the currency of the loans as per SEBI guidelines, or otherwise but with the permission of Hon'ble BIFR also reserve the right to revoke the package of rehabilitation. In case FIs / Banks exercise the right of revocation, the financial rehabilitation sanctioned or granted to JCTEL shall be treated as withdrawn and the terms and the conditions of the original loan agreements or documents shall come into force as if no such financial rehabilitation were ever granted to JCTEL.

Further, FIs / Banks shall have the right to adjust payment received under the present package of financial rehabilitation against outstanding dues in terms of the original loan agreements/documents.

However with the consent of secured creditors, a Modified Debt Restructuring Scheme (MDRS) has been submitted to the Hon'ble BIFR in the month of October, 2012 requesting for reschedulement of repayment of principal amount of secured loans within the scheme period. The same was under consideration of the Hon'ble BIFR as at 31st March, 2014. During the year ended 31st March, 2015, the matter has been referred to Larger Bench to be headed by Chairman, BIFR & is pending.

Considering the magnitude of default coupled with delay in sale of assets raises a doubt on the chances of recovery.

(b) The Company incurred a net loss of Rs. 7,263.97 Lacs for the year ended 31st March, 2015 (Previous year Rs. 6,248.19/ Lacs) and accumulated loss as on 31st March, 2015 stands to Rs. 69,828.84 Lacs. As on 31st March, 2015, the Company's current liabilities exceeded its current assets by Rs. 42,463.96 Lacs (Previous year Rs. 32,644.78/ Lacs) and its total liabilities exceeded its total assets by Rs. 55,307.79 Lacs (Previous year Rs. 48,035.70/ Lacs). In view of these, the Company had been reporting negative operating cash flows for few years which have also contributed to constraints of working capital. These conditions have resulted into acute working capital deficit & have casted material uncertainty on functioning of Company.

(c) The Company had stopped production from August, 2013 onwards at its only working plant at Vadodara, Gujarat and there has been no production during the year ended 31st March, 2015, on account of non availability of working capital for importing critical raw materials. Considering aforesaid factors, the availability of requisite working capital to commence its operations is doubtful.

(d) We understand that due to technological changes, there has been a declining market for color picture tubes.

(e) Due to non release of need based working capital as envisaged in the sanctioned scheme, the Company has not been able to settle dues of running creditors.

(f) There has been constant reduction in the strength of staff.

The management of the company is however hopeful that its request for Modified Debt Restructuring Scheme (MDRS) would be accepted by Hon'ble BIFR and the Company would be able to arrange requisite working capital for importing critical raw materials to start its production lines. The management is confident that it would be able to dispose of its assets as sanctioned in BIFR Scheme. The Accounts have been compiled by the management on the basis of going concern. Please refer Note Number-29 to the financials.

Appropriateness of the "going concern basis" is dependent on the ability of the company to generate adequate finances to meet its obligations and to operate profitably which in our opinion after considering aforesaid factors indicate material uncertainty which further raises significant and substantial doubt on the ability of the Company to continue as a going concern and therefore, it may be unable to realize its assets and discharge its liabilities in the normal course of business. If the Company is treated not to be a going concern, then the valuation of assets has to be not merely on the basis of historical cost less depreciation or impairment but at a value which the assets would fetch, if the same are lower than the value presently shown. The Company has not attempted to assess the realizable value of the assets and therefore financial results for the year ended 31st March, 2015 have been prepared on a going concern basis and do not include any adjustments relating to the recoverability and classification of recorded asset amounts or to amounts or classification of liabilities that may be necessary if the Company is unable to continue as a going concern.

(ii) In the opinion of the management, accounts receivable, loans and advances have a value on realization in the ordinary course of business, at least equal to the amount at which they are stated in the Balance sheet unless specifically provided for. During the financial year ended 31st March 2015, company has not sought confirmations on margin money account, trade receivable, trade payable and other receivables/ payables. Accordingly the balances appearing under margin money account, trade payables, trade receivables and other receivables/ payables are subject to reconciliation & confirmation and are described in Note 33(a) to the financial statements. The financial impact of same is not ascertainable and to that extent we do not have any information in respect of such balances.

(iii) The Company is engaged only in manufacture of Color Picture Tubes and Deflection Yokes at Vadodara Unit, Gujarat. This is the only Business Segment of the Company. As per Accounting Standard-28 on Impairments of as prescribed under Section 133 of the Companies Act, 2013 ('Act') read with Rule 7 of the Companies (Accounts) Rules, 2014 and as prescribed in the Companies (Accounting Standards) Rules, 2006, it is imperative to determine impairment in respect of cash generating unit as per the methodology prescribed under the said Standard. However the Management of the Company vide Note No- 30(d) states that there is no impairment in respect of cash generating unit at Vadodara, Gujarat since it has not completed its useful life and that the production will be taken up when working capital is made available after the sale of assets approved by BIFR. Further there is lot of appreciation in the value of the land available at Vadodara. In light of the above we are unable to ascertain financial impact of same.

Emphasis of Matter

The Company had received an unsecured loan from its holding company namely Team Plus Securities Limited during the FY 2011-12 which is outstanding as at 31st March, 2015. Section 185 of The Companies Act, 2013 stipulates that no company shall directly or indirectly advance any loan to any person in whom the director is interested. Mr Arjun Thapar is a director in both Team

Plus Securities Limited, the promoter and holding company, which has advanced the loan and the Company (i.e. JCT Electronics Limited), its subsidiary which had accepted the loan. The said loan of Rs 50 lacs is still outstanding as at 31st March, 2015 and has not been returned by the company. As explained by the Company, the amount was funded by the promoter company to meet the shortfall in the resources of the company for servicing the secured debts in terms of BIFR order which stipulates that the promoters should meet any shortfall in the fund requirements of the company for servicing the debts of the secured creditors. As stated by Company, the said loan has not been returned by the company as it cannot do so without the prior written approval of the lenders. Further Team Plus Securities Limited is an NBFC and is authorized to give loans as per its objects. However said NBFC is not charging any interest at a rate not less than the bank declared by Reserve Bank of India as stipulated by Section 186 of Companies Act, 2013. In our opinion this is in contravention of the provisions of Section 185 of Companies Act, 2013 which could attract penalties. Please refer Note - 38.

Our opinion is not modified in respect of this matter.

Adverse Opinion

In our opinion, because of the aforesaid factors mentioned in the Basis for Adverse Opinion paragraph, the aforesaid standalone financial statements do not give the information required by the Companies Act, 2013 in the manner so required and also do not give a true and fair view in conformity with the accounting principles generally accepted in India of the state of affairs of the Company as at 31st March, 2015, its profit/loss and its 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 Companies Act, 2013, we give in the Annexure a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.

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

a. We have sought and, except for the matters described in the Basis for Adverse Opinion paragraph, obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit;

b. Except for the possible effects of the matter described in the Basis for Adverse Opinion paragraph above, in our opinion proper books of account as required by law have been kept by the Company so far as appears from our examination of those books;

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

d. Except for the impact of the matter described in the Basis for Adverse Opinion paragraph above, in our opinion, the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement comply with the Accounting Standards specified under section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014;

e. The going concern matter described in sub-paragraph 1 (a) under the Basis of Adverse Opinion paragraph above, in our opinion, may have an adverse effect on the functioning of the Company.

g. 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.

h. The adverse remarks relating to the maintenance of accounts and other matters connected therewith are as stated in the Basis for Adverse Opinion paragraph above.

i. 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 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 26 to the financial statement.

ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses.

iii. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.

ANNEXURE TO INDEPENDENT AUDITORS' REPORT

(Referred to in paragraph (1) of our report on other legal and regulatory requirements of even date)

Annexure referred to in paragraph (1) of our report on other legal and regulatory requirements of Independent Auditor's Report to the members of JCT Electronics Limited on the financial statements for the year ended March 31, 2015

i) (a) The Company has maintained records showing full particulars including quantitative details and situation of fixed assets of all its units.

(b) The fixed assets have been physically verified by the management of the Company at reasonable intervals. No material discrepancies were noticed on such verification

(ii) (a) Inventories have been physically verified during the year by the management and in our opinion, the frequency of verification is reasonable.

(b) 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.

(c) The company is maintaining proper records of its inventories. The discrepancies noticed during the course of physical verification between the physical stocks and the book records were not material. However the same have been properly dealt with in the books of account

(iii) (a) 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 during the financial year ended 31st March, 2015.

(b) Company had given two interest free unsecured loans of Rs 117.41 Lacs to two companies covered in the register maintained under section 189 of the Companies Act, 2013 in earlier years. The amount is overdue for payment. During the year Rs 10 Lacs were recovered from one of such Company. Company should take reasonable steps including legal recourse to recover the outstanding balance. Being doubtful of recovery, provision for doubtful debts has been created during the year ended 31st March, 2015.

(c) Accordingly the remaining clauses of the Order are not applicable to the Company.

(iv) In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the company and the nature of its business for the purchase of fixed assets, purchase of Inventory & sale of goods. The activities of the Company do not involve sale of services. Further, on the basis of our examination of the books and the records of the company, and according to the information and explanations given to us, we have neither come across nor have been informed about any continuing failure on the part of the management to correct major weaknesses in the aforesaid internal control procedures.

(v) The Company has not accepted any deposits from the public and consequently, the directives issued by Reserve Bank of India, the provisions of sections 73 to 76 of the Companies Act, 2013 and rules framed there under are not applicable during the year ended 31st March, 2015.

However Company did have credit balance of some customers which is outstanding and pertain to the period prior to 1st April, 2014. Such credit had arisen due to goods returned by customers for quality issues and company has issued credit note in lieu of same till replacements are made. Since there was no production, replacements have not been made and such customers continued to have credit balances which the company is holding in trust. In terms of Companies (Acceptance of Deposits) Rules, 2014, pursuant to Section 73 & Section 74 of the Companies Act, 2013, such balances are money received or held by the Company in trust.

(vi) We have broadly reviewed the books of account relating to materials, labour and other items of cost maintained by the company pursuant to the rules made by the Central Government for the maintenance of cost records under Section 148(1)(d) of the Companies Act, 2013 and we are of the opinion that prima facie the prescribed accounts and records have been kept and maintained.

(vii) (a) According to the information and explanations given to us, no undisputed amounts payable in respect of Provident

Fund, Investor Education and Protection Fund, Employees' State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and other undisputed statutory dues were outstanding at the year end, for a period of more than six months from the date they became payable.

(b) According to information and explanations given to us, the following dues in respect of income tax, central sales tax, service tax, wages under labour law, excise, PF & ESI have not been deposited by the company on account of appeals pending for disposal at different forums

Name of the Statute Nature of Dues Amount (in Lacs.)

Central Excise Act, 1944 Excise duty & Penalty 12.30

Central Excise Act, 1944 Excise duty & Penalty 14.45

Central Excise Act, 1944 Excise duty & Penalty 21.16

Central Excise Act, 1944 Excise duty & Penalty 4.14

Central Excise Act, 1944 Excise duty & Penalty 1.50

Central Excise Act, 1944 Excise duty & Penalty 10.50

Central Excise Act, 1944 Excise duty & Penalty 340.76

Income Tax Act, 1961 Income Tax & FBT 52.65

Labour Law Act, 1970 Unpaid Wages 277.84

Labour Law Act, 1970 Unpaid Wages 28.00

Labour Law Act, 1970 Unpaid Wages 180.50

Labour Law Act, 1970 Unpaid Wages 822.00

'Provident Fund Act, 1925 Unpaid Provident Fund 748.50

Employee State Insurance Unpaid ESI 19.00 Act, 1948

Name of the Statute Forum where dispute is pending

Central Excise Act, 1944 Commissioner ( Appeals ), Mohali

Central Excise Act, 1944 Commissioner ( Appeals ), Vadodara

Central Excise Act, 1944 Assistant Commissioner, Mohali

Central Excise Act, 1944 CESTAT Ahmedabad

Central Excise Act, 1944 CESTAT Delhi

Central Excise Act, 1944 Allahabad High Court

Central Excise Act, 1944 Show Cause Notice Vadodara Commissionerate-II

Income Tax Act, 1961 Commissioner ( Appeals )

Labour Law Act, 1970 Presiding Officer Labour Court, Vadodara

Labour Law Act, 1970 Labour Court Patiala

Labour Law Act, 1970 Industrial Tribunal Punjab At Chandigarh/Labour Court

Labour Law Act, 1970 Punjab & Haryana High Court - Chandigarh

'Provident Fund Act, 1925 PF Appellate Tribunal At New Delhi.

Employee State Insurance ESI Cases at Chandigarh And High Act, 1948 Court

'In respect of the Provident fund dues, the Delhi High Court has directed that BIFR shall utilize the sale proceeds of the Mohali Unit at the first instance for clearing the Provident fund dues.

Name of the Statue Nature of Dues Amount Forum where dispute (in Lacs) is pending Punjab State Electricity District Court, Board Dues 40.00 Mohali

(c) There is no amount which is required to be transferred to investor education and protection fund in accordance with relevant provisions of the Companies Act, 1956 and rules there-under.

(viii) The accumulated losses at the end of the financial year are more than hundred percent of its net worth and as stated earlier the Company is in BIFR. The company has incurred cash losses in the current financial year as well as in the financial year immediately preceding the current financial year.

(ix) The Company has defaulted in payment of principal amount of Loans of Rs 3,692.99 Lacs to Banks / Financial Institutions for the year ended 31st March, 2015. The total amount of default for sixteen quarters starting from 1st April, 2011 to 31st March, 2015 comes to Rs 10,670.42 Lacs (previous year Rs 6,977.43 Lacs).

In terms of the rehabilitation scheme approved by Board for Industrial and Financial Reconstruction (BIFR) in March, 2007, the company had made quarterly payments of principal amount of loans from January 2009 till March 2011.

The company with the consent of the secured lenders submitted a Modified Debt Restructuring Scheme (MDRS) before Hon'ble BIFR in the month of October, 2012 which envisages re-schedulement of repayment of secured loan within the scheme period besides other requests and is pending for approval before Larger Bench of BIFR as 31st March, 2015. Please Refer Note-28A(b).

(x) The company has not given any guarantee for loans taken by others from bank or financial institutions and therefore rest of the sub-clause is inapplicable and has not been commented upon.

(xi) According to the information and explanations given to us and on an overall examination of the books of accounts of the company, we report that no term loan was taken during the year ended 31st March, 2015. However, the term loans taken by company in earlier years were applied for the purpose for which such loans obtained.

(xii) According to the information and explanations given to us, no fraud on or by the company has been noticed or reported during the course of our audit.

for V. SAHAI TRIPATHI & Co. Chartered Accountants Firm's Registration Number : 000262N

Place : New Delhi Manish Mohan, Partner Dated :30th May, 2015 Membership No. 091607




Mar 31, 2014

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

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 is 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 entity''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 entity''s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of 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 for Qualified Opinion

(i) The Company entered into a Memorandum of Settlement with the worker''s unions at Mohali, Punjab crystallizing their dues at Rs 40 Crores as per directions of Hon''ble BIFR. The settlement has been registered before the concerned authorities and submitted to BIFR. The Company has not made any provision of crystallized dues of Rs 40 Crores of workers/staff at Mohali and the same are to be settled out of the sale proceeds of the Mohali assets as per the orders of Hon''ble BIFR. Company states that the same shall be provided upon sale of Mohali Assets. We are of the opinion that in view of Memorandum of Settlement with the workers the company should make a provision of crystallized dues of Rs 40 Crores, irrespective of sale of Mohali Assets in accordance with Accounting Standard-28 on Provisions, Contingent Liabilities and Contingent Assets issued by Ministry of Corporate Affairs, Government of India and as prescribed in the Companies (Accounting Standards) Rules, 2006. Accordingly, the net loss for the year, accumulated losses & non current liabilities are understated to that extent.

(ii) We have analyzed following factors :-

a) As per Sanctioned BIFR Scheme, the revival of the company is dependent on sale of land and building at Mohali Unit. As envisaged in sanctioned scheme, the company''s net worth could not turn positive in the 4th year of its implementation due to delay in sale of land & building which is still pending.

b) The Company has temporarily suspended its production of Color Picture Tubes from August, 2013 onwards at Vadodara Unit at Gujarat & there has been no production till 31st March, 2014, on account of non availability of Working Capital for importing critical raw materials.

c) The gross carrying amount of product development under progress of Rs. 140.95 Lacs being shown as Intangible under development has been written off during the year ended 31st March, 2014 as Company did not expect any commercial use.

d) The Company has defaulted in payment of principal amount of Loans of Rs. 6,977.43 Lacs (previous year - Rs. 4,105.33 Lacs) to Banks / Financial Institutions for twelve quarters starting from 1st April, 2011 to 31st March, 2014. The Company was unable to meet its obligations towards repayment of quarterly installments due in respect of term/working capital term loans as per BIFR sanctioned scheme. In the event, the company defaults in its obligations towards repayment of quarterly installments, the banks/FIs reserve the rights given in the sanctioned scheme as mentioned in Para ''E'' of Note 27 regarding levying of penalty. As referred in Note Number 28A (b), Modified Debt Restructuring Scheme (MDRS) has been submitted to the Hon''ble BIFR in the month of October, 2012 with the consent of secured lenders which envisages re- schedulement of repayment of secured loan within the scheme period besides other requests, which is pending approval before BIFR as at 31st March, 2014.

The Accounts have been compiled by the management on the basis of going concern as stated in Note Number-29, however after considering aforesaid factors, in our opinion the continuity of the Company as a Going Concern is doubtful. However, if the Company is treated not to be a going concern, then the valuation of assets has to be not merely on the basis of historical cost less depreciation or impairment but at a value which the assets would have fetched, if such values were to be lower than the value presently shown. The Company has not attempted to assess the realizable value of the assets and therefore, we are unable to express our opinion on the impact on the accounts.

(iii) In the opinion of the management, Accounts Receivable & Loans and Advances have a value on realization in the ordinary course of business, at least equal to the amount at which they are stated in the Balance sheet. During the financial year ended 31st March 2014 confirmatory letters have been sent to the sundry debtors requesting them to confirm the account balances as on 31st March, 2014. A number of parties have not yet confirmed the balances as on the date of signing the financials. Accordingly accounts payable, other receivables and payables and balances appearing under account receivables are subject to reconciliation & confirmation and are described in Note 33(a) to the financial statements. The financial impact of this is not ascertainable and to that extent we do not have any information in respect of such balances. Besides, no confirmation is available for margin money account with Allahabad Bank & PNB amounting to Rs. 39.14 Lacs. Accordingly the same is also subject to confirmation & reconciliation.

(iv) Company made provision for diminution in value of Investment made in the Equity Shares of India International Airways Limited in previous years. Similarly Company has given short term loans & advances of Rs 57.24 Lacs to India International Airways Limited which is outstanding for quite a long period. Management is of the view that such advance is good & recoverable. However, besides diminution in value of shares, such short term loan is outstanding for quite a long period, we are of the opinion that a provision for doubtful debts should be made for against this short term loan/ advances. Accordingly, the net loss for the year, accumulated losses & current liabilities are understated to that extent.

(v) Company is engaged only in manufacture of Color Picture Tube, and Deflection Yoke at Vadodara Unit, Gujarat. This is the only Business Segment of the Company. As per Accounting Standard-28 on Impairments of Assets issued by Ministry of Corporate Affairs, Government of India and as prescribed in the Companies (Accounting Standards) Rules, 2006, it is imperative to determine impairment in respect of cash generating unit as per the methodology prescribed under the said Standard. Management of the Company states that there is no impairment in respect of cash generating unit at Vadodara Unit, Gujarat. We are unable to express an opinion on this in the absence of any attempt having been made by the Board of the Company to assess the recoverable value of these cash generating unit by determining the higher of net selling price of such cash generating unit and value in use determined by computing present value of estimated future cash flows expected to arise from the continuing use of cash generating unit and from its disposal at the end of its useful life.

(vi) The financial statements have been drawn and are based on the successful implementation of rehabilitation scheme announced by Board for Industrial and Financial Reconstruction (BIFR) for the company. Company has defaulted in payment of principal amount of Loans of Rs. 6,977.43 Lacs (previous year - Rs. 4,105.33 Lacs) to Banks / Financial Institutions for twelve quarters starting from 1st April, 2011 to 31st March, 2014. This is in contravention of rehabilitation scheme announced by Board for Industrial and Financial Reconstruction (BIFR) vide its order dated 12th March, 2007. The Company was unable to meet its obligations towards repayment of quarterly installments due in respect of term/working capital term loans as per BIFR sanctioned scheme, due to non availability of working capital limits as envisaged in the sanctioned scheme and sluggish market conditions during the year. As per the BIFR scheme, if the company commits default towards repayment of principal instalments or payment of interest as per the sanctioned scheme or any combination, FIs / Banks reserves the right to charge interest on the defaulted amount at top of the band together with liquidated damages of 2% p.a. thereon till the date of clearance of default or FIs / Banks shall have the right to convert its entire overdue into fully paid up equity shares of JCTEL during the currency of the loans as per SEBI guidelines, or otherwise but with the permission of Hon''ble BIFR, FIs / Banks also reserves the right to revoke the package of rehabilitation with the prior approval of BIFR and in such event of revocation, the decision of FIs / Banks shall be final and binding on the borrower and/or guarantors. In case FIs / Banks exercise the right of revocation, the financial rehabilitation sanctioned or granted to JCTEL shall be treated as withdrawn and the terms and the conditions of the original loan agreements or documents shall come into force as if no such financial rehabilitation were ever granted to JCTEL. Further, FIs / Banks shall have the right to adjust payment received under the present package of financial rehabilitation against outstanding dues in terms of the original loan agreements/docum -ents. However with the consent of secured creditors, a Modified Debt Restructuring Scheme (MDRS) has been submitted to the Hon''ble BIFR in the month of October, 2012 towards re-schedulement of repayment of secured loan and interest thereon within the scheme period The same is under consideration of the Hon''ble BIFR as at 31st March, 2014. The same is described in Note 28A(b) to the Financials Statements. Our opinion is subject to approval of re- schedulement of repayment of secured loan and interest thereon within the scheme period submitted in the said MDRS by Hon''ble BIFR.

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 matter described in the Basis for 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 Statement of Profit and Loss, of the loss for the year ended on that date; and

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

Emphasis of Matter

We draw your attention to Note No. 5 on actuarial valuation of Gratuity. The Company has obtained its actuarial valuation done from LIC of India from where the Company has taken policy. The actuarial valuation conducted by LIC though has been carried out by using Projected Unit Cost Method however the same is not in accordance with the disclosure requirements prescribed by Accounting Standard-15 on Employee Benefits issued by Companies (Accounting Standard), Rules, 2006. The disclosures required for categorizing liability as Current and Non Current Liability is not determined by LIC. Hence total amount of provision towards gratuity has been kept as Non Current by the Company. There are no monetary implications on the financials statements. Our opinion is not qualified in respect of this matter.

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) except for the matter described in the Basis for Qualified Opinion paragraph and Emphasis of matter paragraph, in our opinion proper books of account as required by law have been kept by the Company so far as appears from our examination of those books;

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

d) except for the effects of the matter described in the Basis for Qualified Opinion paragraph and Emphasis of matter paragraph, in our opinion, the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement comply with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956; and

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

(Referred to in paragraph (1) of our report on other legal and regulatory requirements of even date) Annexure referred to in paragraph (1) of our report on other legal and regulatory requirements of Independent Auditor''s Report to the members of JCT Electronics Limited on the financial statements for the year ended March 31,2014 i) a) The company has generally maintained records showing full particulars including quantitative details and situation of fixed assets of all its units.

b) All the fixed assets including capital work in progress of the company (other than fixed assets of Rs 588 Lacs, the book value lying at Mohali units as at 31st March, 2014), have been physically verified by the management in a phased manner so that the entire assets are covered within a period of three years. There is a program of verification of fixed assets 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 verification. No physical verification has been carried out in respect of Fixed Assets at Mohali units since the plant is not in operations.

c) The company has disposed off a substantial part of its fixed assets during the year in pursuance of its plan to discontinue Mohali Unit.

The said disposal does not itself affect or impact the status of the company as a going concern which otherwise does not appear to be going concern after considering various factors listed in our Auditor''s Report. Land, Building & remaining Worker''s Flats at Mohali unit are yet to be sold as per the orders of the Hon''ble BIFR.

(ii) a) Inventories of the Company, other than Inventory of Rs 61.57 Lacs (after provision of Rs 1314.87 Lacs) lying at Mohali Unit, have been physically verified during the year in a phased manner by the management and in our opinion, the frequency of verification is reasonable. Production at Mohali unit has been stopped since 2002 and Plant is not in operation since then. Inventory at Mohali unit has not been verified by the management. Please Refer Note No. 30(c).

b) The procedures for physical verification of inventories, other than Inventory of Rs 61.57 Lacs (after provision of Rs 1314.87 Lacs) at Mohali unit, followed by the management are reasonable and adequate in relation to the size of the company and the nature of its business. Please Refer Note No. 30(c).

c) The company is maintaining proper records of its inventories at Vadodara unit. The discrepancies noticed on verification between the physical stocks and the book records were not material. There is no change in balances of Inventory at Mohali unit since 2005 except write off Rs.1314.87 Lacs by the management during the financial year ended 31st March, 2014. Please Refer Note No. 30(c).

(iii) In respect of loans, secured or unsecured, granted or taken by the company to/ from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956: -

a) To the best of our knowledge and according to the information and explanations given to us, during the financial year ended 31st March, 2014, the Company has taken unsecured loan of Rs. 103 Lacs from one company covered in the register maintained under Section 301 of the Companies Act, 1956. The maximum amount involved during the year is Rs. 325 Lacs and the year-end balances of such advances aggregates to Rs 50 Lacs.

b) The Company has taken interest free as well as interest bearing unsecured loans. The rate of interest in case of interest bearing loan along-with other terms and conditions of unsecured loan taken by the company are prima-facie not prejudicial to the interest of the company.

c) As regards the said unsecured loan, the payment of principal amount and interest payment on interest bearing loan shall be made as per terms of the agreement.

d) There are no overdue amount which is more than Rs. 1 Lac, pending to be payable towards principal and interest;

e) To the best of our knowledge and according to the information and explanations given to us, the Company has not granted any unsecured loan(s) to any party, firms or Companies covered in the register maintained under Section 301 of the Companies Act, 1956.

f) Accordingly, the rest of the sub-clauses are not applicable to the Company during the reporting period ending 31st March, 2014.

(iv) In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the company and the nature of its business with regard to the purchase of inventories, fixed assets and the sale of goods. During the course of our audit, we did not observe any major weaknesses in internal controls.

(v) In respect of transactions covered under Section 301 of the Companies Act, 1956:-

a) In our opinion and according to the information and explanations given to us, the particulars of contracts or arrangements referred to in section 301 of the Act have been entered in the register required to be maintained under that section.

b) In our opinion and according the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements exceeding the value of Rs. Five Lakhs in respect of any party during the year have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

(vi) The company has not accepted deposits from the public during the year and there are no outstanding deposits.

(vii) According to the information and explanations given to us and the records of the company examined by us, company having an average annual turnover exceeding five crore rupees for a period of three consecutive financial years immediately preceding the financial year concerned. The company should have an internal audit system as required under this clause. No Internal Audit as mandated by this clause has been conducted by the management of the Company since suspension of operations and accordingly, we are unable to comment on the same.

(viii) We have broadly reviewed the books of account relating to materials, labour and other items of cost maintained by the company pursuant to the rules made by the Central Government for the maintenance of cost records under Section 209(1) (d) of the Companies Act, 1956 and we are of the opinion that prima facie the prescribed accounts and records have been kept and maintained. The cost audit for the financial year is yet to be completed for current financial year.

(ix) (a) According to the information and explanations given to us, no undisputed amounts payable in respect of Provident Fund, Investor Education and Protection Fund, Employees'' State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and other undisputed statutory dues were outstanding at the year end, for a period of more than six months from the date they became payable.

(b) The dues on account of excise duty which have not been deposited on account of disputes are given below:-

Forum where dispute is pending Amt. involved (Rs. Lacs)

Allahabad High Court 10.50

Commissioner Appeal 12.30

Asstt. Commissioner 21.16

Total 43.96

(x) The accumulated losses at the end of the financial year exceed its net worth. The company has incurred cash losses in this financial year as against cash losses in the financial year immediately proceeding the current financial year.

(xi) The company had defaulted in the repayment of dues to financial institutions, banks and privately placed debenture holders, however, as per the rehabilitation scheme sanctioned by the Hon''ble BIFR, the interest dues of secured lenders accrued till 31st March 2007 has been waived and the principal amount is scheduled to be paid commencing from quarter ended January-March 2009. The Company has approached IFCI-The Operating Agency with Modified Debt Restructuring Scheme (MDRS) in the month of February, 2012. A meeting of secured lenders was held in the month of April, 2012 & secured lenders whose interest is being affected have given their consent for the proposed Modified Debt Restructuring Scheme (MDRS). IFCI-The Operating Agency has submitted the aforesaid Modified Debt Restructuring Scheme (MDRS) to the Hon''ble BIFR in the month of October, 2012. Besides sale of Land & Building at Mohali, and workers Flats at Mohali, and sale/mortgage of surplus land at Vadodara, re-schedulement of repayment of secured loan within the scheme period. The amount collected from disposal of such surplus assets shall be used to address the dues of secured lenders as per original sanctioned

scheme and dues of workers as per Memorandum of Settlement. Hon''ble BIFR after hearing all concerned parties vide its interim order dated 29.01.2013, approved the sale of surplus assets as envisaged in MDRS namely 168 flats at Mohali, idle Plant & Machinery at Mohali which is no longer required to be relocated to Vadodara, Other Miscalleneous Assets such as Electrical Installation, Storage & Water System, Office Equipment, Factory Equipment, Furniture & Fittings, Vehicles etc and also the surplus land up to 175 acres at the company''s unit at Vadodara. Assets Sale Committee (ASC) has been entrusted and authorized to work on the modalities for conducting sale of aforesaid surplus assets. The matter of re-schedulement of repayment of secured loan is under consideration of Hon''ble BIFR. During the year ended 31st March, 2014, few Worker''s Flats, Idle Plant & Machinery including Electrical Installation, Storage & Water System, Office Equipment, Factory Equipment, Furniture & Fittings, Vehicles etc were sold by the Asset Sale Committee and the proceeds were deposited with IFCI (i.e. The Operating Agency). The Fixed Assets at Mohali as at 31st March, 2014 consist of Land, Building & remaining Worker''s Flats which are yet to be sold. Please Refer Note-28A(b).

(xii) The company has not granted any loans and advances and therefore clause (xii) is inapplicable and has not been commented upon.

(xiii) The company is not a chit fund or a nidhi/mutual fund/society. Therefore, the provisions of clause 4(xiii) of the Companies (Auditor''s Report) Order, 2003 are not applicable.

(xiv) According to the information and explanations given to us, the Company is not dealing or trading in shares, securities, debentures and other investments. Accordingly, clause 4(xiv) of the order is not applicable. However, the shares, securities, debentures and other long-term investments have been held by the company in its own name.

(xv) The company has not given any guarantee for loans taken by others from banks or financial institutions.

(xvi) No term loan has been availed by the Company during the financial year ended 31st March 2014 and accordingly rest of the disclosures of this clause is not applicable.

(xvii) According to the information and explanations given to us and on an overall examination of the Balance Sheet of the company, we report that funds raised during the year on short-term basis have not been used for long term investments.

(xviii) According to the information and explanations given to us, the company has not made any preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Companies Act, 1956 during the current financial year. However, equity shares of Rs.7502.26 lakhs and Rs 34.78 Lacs were issued to promoters/ banks and FIs under the BIFR sanctioned scheme during the financial year ended 31st March, 2008 and 31st March, 2010 respectively.

(xix) The company has not issued any debentures during the current financial year.

(xx) The company has not made any public issue during the current financial year.

(xxi) According to the information and explanations given to us, no fraud on or by the company has been noticed or reported during the course of our audit.

for V. SAHAI TRIPATHI & Co. Chartered Accountants Firm''s Registration Number : 000262N

Place : New Delhi Manish Mohan, Partner Dated : 28th May, 2014 Membership No. 091607


Mar 31, 2013

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

Management 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 Stan- dards 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.

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 state- ments 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.

(i) The Company has not made any provision i''or dues of Rs 40 Crores of JCT Electronics Employees Union at Mohali. The same has been described in Note 29A(f) to the Financials Statements. The net loss for the year, accumu- lated losses & non current liabilities are understated to that extent.

(ii) It has been assumed that the revival of the company will take place in near future. The accounts of the company have been prepared on a "going concern" basis on an assumption made by the management that adequate finances and opportunities would be available in the foreseeable future to enable the company to operate on a profitable basis. The same has been described in Note 30 to the Financials Statements.

(iii) The Company has not made any provision of likely substantial loss on impairment of inventory of Rs 1,376.44 lacs at Mohali unit. The same is described in Note 31(c) to the Financials Statements. The net loss for the year and accumulated losses are understated to that extent & Inventory is overstated to that extent.

(iv) Sundry Debtors, Sundry Creditors, other receivables and payables are subject to reconciliation & confirmation. The same is described in Note 34(a) to the Financials Statements. The financial impact on the same is not ascertainable to that extent.

(v) The financial statements have been drawn and are based on the successful implementation of rehabilitation scheme announced by Board for Industrial and Financial Reconstruction (BIFR) for the company. The Company has defaulted in payment of principal amount of Loans of Rs 4105.33 Lacs to Banks / Financial Institutions for eight quarters starting from 1st April, 2011 to 31st March, 2013. This is in contravention of rehabilitation scheme announced by Board for Industrial and Financial Reconstruction (BIFR) vide its order dated 12th March, 2007. The Company was unable to meet its obligations towards repayment of quarterly installments due in respect of term/working capital term loans as per BIFR sanctioned scheme, due to non availability of working capital limits as envisaged in the sanctioned scheme and sluggish market conditions during the year. As per the BIFR scheme, if the company commits default towards repayment of principal instalments or payment of interest as per the sanctioned scheme or any combination, FIs / Banks reserves the right to charge interest on the defaulted amount at top of the band together with liquidated damages of 2% p.a. thereon till the date of clearance of default or FIs / Banks shall have the right to convert its entire overdue into fully paid up equity shares of JCTEL during the currency of the loans as per SEBI guidelines, or otherwise but with the permission of Hon''ble BIFR, FIs / Banks also reserves the right to revoke the package of rehabilitation with the prior approval of BIFR and in such event of revocation, the decision of FIs / Banks shall be final and binding on the borrower and/or guarantors. In case FIs / Banks exercise the right of revocation, the financial rehabilitation sanctioned or granted to JCTEL shall be treated as withdrawn and the terms and the conditions of the original loan agreements or documents shall come into force as if no such financial rehabilitation were ever granted to JCTEL. Further, FIs / Banks shall have the right to adjust payment received under the present package of financial rehabilitation against outstanding dues in terms of the original loan agreements/documents. After taking consent of secured creditors, a Modified Debt Restructuring Scheme (MDRS) has been submitted to the Hon''ble BIFR in the month of October, 2012 towards re-schedulement of repayment of secured loan and interest thereon within the scheme period The same is under consideration of the Hon''ble BIFR as at 31st March, 2013. The same is described in Note 29A(b) to the Financials Statements. Our opinion is subject to approval of said MDRS by Hon''ble BIFR. 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 matter described in the Basis for 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, 2013;

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

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

We draw your attention to Note No. 5 on actuarial valuation of Gratuity. The Company has obtained its actuarial valuation done from LIC of India from where the Company has taken policy. The actuarial valuation conducted by LIC though has been carried out by using Projected Unit Cost Method however the same is not in accordance with die disclosure requirements prescribed by Accounting Standard-15 on Employee Benefits issued by Companies (Ac- counting Standard), Rules, 2006. The disclosures required for categorizing liability as Current and Non Current Liability is not determined by LIC. Hence total amount of provision towards gratuity has been kept as Non Current by the Company. There are no monetary implications on the financials statements. Our opinion is not qualified in respect of this matter. 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. except for the matter described in the Basis for Qualified Opinion paragraph and Emphasis of matter paragraph, in our opinion proper books of account as required by law have been kept by the Company so far as appears from our examination of those books;

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

d. except for the matter described in the Basis for Qualified Opinion paragraph and Emphasis of matter paragraph, in our opinion, the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement comply with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956;

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

ANNEXURE TO INDEPENDENT AUDITORS REPORT FOR THE YEAR ENDING MARCH 31, 2013

(Referred to in paragraph (1) of our report on other legal and regulatory requirements of even date) Annexure referred to in paragraph (1) of our report on other legal and regulatory requirements of Independent Auditor''s Report to the members of JCT Electronics Limited on the financial statements for the year ended March 31, 2013 Referred to in paragraph 3 of our report of even date

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

(b) All the fixed assets including capital work in progress of the company other than fixed assets of Rs 2,149.89 Lacs (book value) lying at Mohali unit have been physically verified by the management in a phased manner so that the entire assets are covered within a period of three years. There is a programme of verification of fixed assets 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 verification. No physical verification has been carried out in respect of Fixed Assets at Mohali unit since the plant is not in operations.

(c) The company has not disposed off a substantial part of its fixed assets during the year to affect the status of the company as a going concern. Land & Building at Mohali unit which was to be sold as per the rehabilitation scheme sanctioned by the Hon''ble BIFR has yet to be sold.

(ii) (a) Inventories of the Company, other than Inventory of Rs 1376.44 Lacs lying at Mohali Unit, have been physically verified during the year in a phased manner by the management and in our opinion, the frequency of verification is reasonable. Production at Mohali unit has been stopped since 2002 and Plant is not in operation since then. Inventory at Mohali unit has not been verified by the management. Please Refer Note No 31 (c).

(b) The procedures for physical verification of inventories, other than Inventory of Rs 1376.44 Lacs at Mohali unit, followed by the management are reasonable and adequate in relation to the size of the company and the nature of its business. Please Refer Note No 31 (c).

(c) The company is maintaining proper records of its inventories at Vadodara unit. The discrepancies noticed on verification between the physical stocks and the book records were not material. There is no change in balances of Inventory at Mohali unit since 2005.

(iii) In respect of loans, secured or unsecured, granted or taken by the company to/ from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956: -

a) To the best of our knowledge and according to the information and explanations given to us, during the financial year ended 31st March 2013, the Company has taken unsecured loan of Rs. 93 Lacs from two companies covered in the register maintained under Section 301 of the Companies Act, 1956. The maximum amount involved during the year is Rs. 258 Lacs and the year-end balances of such advances aggregates to Rs 230 Lacs.

b) The Company has taken interest free as well as interest bearing unsecured loans. The rate of interest in case of interest bearing loan along-with other terms ana conditions of unsecured loan taken by the company are prima-facie not prejudicial to the interest of the company.

c) As regards the said unsecured loan, the payment of principal amount and interest payment on interest bearing loan shall be made as per terms of the agreement.

d) There are no overdue amount which is more than Rs. 1 lakh, pending to be payable towards principal and interest;

e) To the best of our knowledge and according to the information and explanations given to us, the Company has not granted any unsecured loan(s) to any party, firms or Companies covered in the register maintained under Section 301 of the Companies Act, 1956.

f) Accordingly, the rest of the sub-clauses are not applicable to the Company during the reporting period ending 31 - March-2013.

(iv) In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the company and the nature of its business with regard to the purchase of inventories, fixed assets and the sale of goods. During the course of our audit, we did not observe any major weaknesses in internal controls.

(v) In respect of transactions covered under Section 301 of the Companies Act, 1956:-

a) In our opinion and according to the information and explanations given to us, the particulars of contracts or arrangements referred to in section 301 of the Act have been entered in the register required to be maintained under that section.

b) In our opinion and according the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements exceeding the value of Rs. Five Lakhs in respect of any party during the year have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

(vi) The company has not accepted deposits from the public during the year and there are no outstanding deposits.

(vii) In our opinion, the company has an internal audit system commensurate with the size and nature of its business. However, it needs to be strengthened further.

(viii) We have broadly reviewed the books of account relating to materials, labour and other items of cost maintained by the company pursuant to the rules made by the Central Government for the maintenance of cost records under Section 209(1) (d) of the Companies Act, 1956 and we are of the opinion that prima facie the prescribed accounts and records have been kept and maintained. The cost audit for the financial year is yet to be completed.

(ix) (a) According to the information and explanations given to us, no undisputed amounts payable in respect of Provident Fund, Investor Education and Protection Fund, Employees'' State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and other undisputed statutory dues were outstanding at the year end, for a period of more than six months from the date they became payable.V

(b) The dues on account of excise duty which have not been deposited on account of disputes are given below: -

Forum where dispute is pending Amt. involved (Rs. Lacs)

Allahabad High Court 10.50

Commissioner Appeal 12.30

Asstt. Commissioner 21.16

Total 43.96

(x) The accumulated losses at the end of the financial year exceed its net worth. The company has incurred cash losses in this financial year as against cash losses in the financial year immediately proceeding the current financial year.

(xi) The company had defaulted in the repayment of dues to financial institutions, banks and privately placed debenture holders, however, as per the rehabilitation scheme sanctioned by the Hon''ble BIFR, the interest dues of secured lenders accrued till 31 st March 2007 has been waived and the principal amount is scheduled to be paid commencing from quarter ended January-March 2009.

The Company has started paying principal outstanding on deferral basis in accordance with the scheme sanctioned by Hon''ble BIFR. However, the Company has defaulted in payment of principal amount of Loans of Rs 4105.33 Lacs to Banks / Financial Institutions for eight quarters starting from 1st April, 2011 to 31st March, 2013. This is in contravention of rehabilitation scheme announced by Board for Industrial and Financial Reconstruction (BIFR) vide its order dated 12th March, 2007. The Company was unable to meet its obligations towards repayment of quarterly installments due in respect of term/working capital term loans as per BIFR sanctioned scheme, due to non availability of working capital limits as envisaged in the sanctioned scheme and sluggish market conditions during the year. The Company has approached IFCI- The Operating Agency with Modified Debt Restructuring Scheme (MDRS) in the month of February, 2012. A meeting of secured lenders was held in the month of April, 2012 & secured lenders whose interest is being affected have given their consent for the proposed Modified Debt Restructuring Scheme (MDRS). IFCI-The Operating Agency has submitted the aforesaid Modified Debt Restructuring Scheme (MDRS) to the Hon''ble BIFR in the month of October, 2012. Besides sale of Land & Building, MDRS envisages sale of surplus assets such as Plant & Machinery along-with Other Miscellaneous Assets and Flats, and sale/mortgage of vacant land at Vadodara, also contains re-schedulement of repayment of secured loan and interest thereon within the scheme period. The amount collected from disposal of such surplus assets shall be used to address the dues of secured lenders as per original sanctioned scheme and dues of workers as per Memorandum of Settlement. Hon''ble BIFR after hearing all concerned parties vide its interim order dated 29.01.2013, has approved the sale of surplus assets as envisaged in MDRS namely 168 flats at Mohali, idle Plant & Machinery at Mohali which is no longer required to be relocated to Vadodara and also the surplus land up to 175 acres at the company''s unit at Vadodara. Assets Sale Committee (ASC) has been entrusted and authorized to work on the modalities for conducting sale of aforesaid surplus assets. The matter of re-schedulement of repayment of secured loan and interest thereon is under consideration of Hon''ble BIFR. It was not feasible to determine the area & relevant value of Surplus Land at Vadodara. Accordingly the same is shown as part of Fixed Assets. Please Refer Note-29A(b).

(xii) The company has not granted any loans and advances and therefore clause (xii) is inapplicable and has not been commented upon.

(xiii) The company is not a chit fund or a nidhi/mutual fund/society. Therefore, the provisions of clause 4(xiii) of the Companies (Auditor''s Report) Order, 2003 are not applicable.

(xiv) According to the information and explanations given to us, the Company is not dealing or trading in shares, securities, debentures and other investments. Accordingly, clause 4(xiv) of the order is not applicable. However, the shares, securities, debentures and other long-term investments have been held by the company in its own name.

(xv) The company has not given any guarantee for loans taken by others from banks or financial institutions.

(xvi) No term loan has been availed by the Company during the financial year ended 31 st March 2013 and accordingly rest of the disclosures of this clause is not applicable.

(xvii) According to the information and explanations given to us and on an overall examination of the Balance Sheet of the company, we report that funds raised during the year on short-term basis have not been used for long term investments.

(xviii) According to the information and explanations given to us, the company has not made any preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Companies Act, 1956 during the financial year ended 31 st March, 2013. However, equity shares of Rs.7502.26 lakhs and Rs 34.78 Lacs were issued to promoters/ banks and Fis under the BIFR sanctioned scheme during the financial year ended 31 st March 2008 and 31 st March, 2010 respectively.

(xix) The company has not issued any debentures during the current financial year.

(xx) The company has not made any public issue during the current financial year.

(xxi) According to the information and explanations given to us, no fraud on or by the company has been noticed or reported during the course of our audit.

for V. SAHAITRIPATHJ & Co.

Chartered Accountants

Firm''s Registration Number: 000262N



Place : New Delhi Mahesh Sahai, Partner

Dated : 28th May, 2013 Membership No. 6730


Mar 31, 2012

1. We have audited the attached balance sheet of JCT Electronics Limited as at 31st March, 2012, the statement of profit & loss and cash flow statement for the year ended on that date, annexed thereto. These financial statements are the responsibility of the company's management. Our responsibility is to express an opinion on these finan- cial 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 state-ments 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 presentation of financial statements. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditor's Report) Order, 2003 issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4. Further to our comments in the Annexure referred to in paragraph 3 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 purpose of our audit.

(ii) In our opinion, proper books of account as required by law have been kept by the company as far as appears from our examination of these books.

(iii) The company's balance sheet, statement of profit & loss and cash flow statement dealt with by this report are in agreement with the books of accounts.

(iv) In our opinion, the balance sheet, statement of profit & loss 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 Companies Act, 1956 except for non-provision of employees dues (Refer Note No. 29 (h)) & impairment of inventory (Refer Note No. 31(c)).

(v) On the basis of declarations made by the Directors and certificate obtained from the Company Secretary, none of the Directors are disqualified as on March 31, 2012 from being appointed as a Director under clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

(vi) In our opinion and to the best of our information and according to the explanations given to us, the said balance sheet and statement of profit & loss subject to Wore 29(h) towards non provision of crystallizing of dues at Rs 40 Crores of JCT Electronics Employees Union at Mohali and payment of same upon sale proceeds of assets from Mohali unit, net loss for the year, accumulated losses & non current liabilities are understated to that extent, Note 30 on assumption of going concern, Note 31(c) on likely substantial loss on impairment of inventory of Rs 1,376.44 at Mohali unit which shall be estimated upon transfer of this inventory to the Vadodara unit as per the scheme, net loss for the year and accumulated losses are understated to that extent & Inventory is overstated to that extent, Note 34(a) on reconciliation & confirmation in case of Sundry Debtors, Sundry Creditors, other receivables and payables and Note 34(b) on issuance of credit notes of Rs 1,244.14 by a few parties and considering that the financial impact of Note No-34(a) & 34(b) is not ascertainable, in our opinion and to the best of our information and according to the explanations given to us, the said accounts read with significant accounting policies and the remaining notes to the accounts give the information required by the Companies Act, 1956, 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 31st March; 2012.

(b) in the case of the statement of profit and loss of the company, of the loss 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.

ANNEXURE TO AUDITORS REPORT FOR THE YEAR ENDING MARCH 31, 2012

Referred to in paragraph 3 of our report of even date

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

(b) All the fixed assets including capital work in progress of the company other than fixed assets of Rs. 2155.81 lacs (book value) lying at Mohali unit have been physically verified by the management in a phased manner so that the entire assets are covered within a period of three years. There is a programme of verification of fixed assets 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 verification. No physical verification has been carried out in respect of Fixed Assets at Mohali since the plant is not in operation.

(c) The company has not disposed off a substantial part of its fixed assets during the year to affect the status of the company as a going concern. Land & Building at Mohali unit is to be sold as per the rehabilitation scheme sanctioned by the Hon'ble BIFFS.

(ii) (a) Inventories of the Company, other than Inventory of Rs. 1376.44 lacs lying at Mohali Unit, have been physically verified during the year in a phased manner by the management and in our opinion, the frequency of verification is reasonable. Production at Mohali unit has been stopped since 2002 and Plant is not in operation since then. Inventory at Mohali unit has not been verified by the management. Please Refer Note Number 31 (c).

(b) The procedures for physical verification of inventories, other than Inventory of Rs. 1376.44 lacs at Mohali unit, followed by the management are reasonable and adequate in relation to the size of the company and the nature of its business. Please Refer Note Number 31 (c).

(c) The company is maintaining proper records of its inventories at Vadodara unit. The discrepancies noticed on verification between the physical stocks and the book records were not material. There is no change in balances of Inventory at Mohali unit since 2002.

(iii) In respect of loans, secured or unsecured, granted or taken by the company to/from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956: -

a) To the best of our knowledge and according to the information and explanations given to us, the Company has taken unsecured loan from two parties i.e. its holding & associate companies covered in the register maintained under Section 301 of the Companies Act, 1956. The maximum amount involved during the year and the year-end balances of such advances aggregates to Rs. 303 lacs & Rs. 200 lacs respectively.

b) The Company has taken interest free as well as interest bearing unsecured loans. The rate of interest in case of interest bearing loans alongwith other terms and conditions of unsecured loan taken by the company are prima-facie not prejudicial to the interest of the company.

c) As regards the said unsecured loan from holding & associate company, the payment of principal amount and interest payment on interest bearing loan shall be made as per terms of the agreement..

d) There are no overdue amount which is more than Rs. 1 lakh, pending to be payable towards principal and interest;

e) To the best of our knowledge and according to the information and explanations given to us, the Company has not granted any unsecured loan(s) to any party, firms or Companies covered in the register maintained under Section 301 of the Companies Act, 1956.

f) Accordingly, the rest of the sub-clauses are not applicable to the Company during the reporting period ending 31 -March-2012.

(iv) In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the company and the nature of its business with regard to the purchase of inventories, fixed assets and the sale of goods. During the course of our audit, we did not observe any major weaknesses in internal controls.

(v) In respect of transactions covered under Section 301 of the Companies Act, 1956:-

a. In our opinion and according to the information and explanations given to us, the particulars of contracts or arrangements referred to in section 301 of the Act have been entered in the register required to be maintained under that section.

b. In our opinion and according the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements exceeding the value of Rs. Five Lakhs in respect of any party during the year have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

(vi) The company has not accepted deposits from the public during the year and there are no outstanding deposits.

(vii) In our opinion, the company has an internal audit system commensurate with the size and nature of its business. However, it needs to be strengthened further. (

viii) We have broadly reviewed the books of account relating to materials, labour and other items of cost maintained by the company pursuant to the rules made by the Central Government for the maintenance of cost records under Section 209(1) (d) of the Companies Act, 1956 and we are of the opinion that prima facie the prescribed accounts and records have been kept and maintained.

(ix) (a) According to the information and explanations given to us, no undisputed amounts payable in respect of Provident Fund, Investor Education and Protection Fund, Employees' State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and other undisputed statutory dues were outstanding at the year end, for a period of more than six months from the date they became payable. (b) The dues on account of excise duty which have not been deposited on account of disputes are given below:- Forum where dispute is pending

Amt. involved Rs. in Lacs

Allahabad High Court 10.50

Commissioner Appeal 12.30

Asstt. Commissioner 21.16

Total 43.96

(x) The accumulated losses at the end of the financial year exceed its net worth. The company has incurred cash losses in this financial year as against cash profit in the financial year immediately preceeding the current financial year.

(xi) The company had defaulted in the repayment of dues to financial institutions, banks and privately placed debenture holders, however, as per the rehabilitation scheme sanctioned by the Hon'ble BIFR, the interest dues of secured lenders accrued till 31st March 2007 has been waived and the principal amount is scheduled to be paid commencing from quarter ended January-March 2009.

The Company has started paying principal outstanding on deferral basis in accordance with the scheme sanctioned by Hon'ble BIFR. However, the Company has defaulted in payment of principal amount of Loans of Rs. 1846.49 Lacs to Banks/ Financial Institutions for four quarters starting from 1st April, 2011 to 31st March, 2012. This is in contravention of rehabilitation scheme announced by Board for Industrial and Financial Reconstruction (BIFR) vide its order dated 12th March, 2007. The Company was unable to meet its obligations towards repayment of quarterly installments due in respect of term/working capital term loans as per BIFR sanctioned scheme, due to non availability of working capital limits as envisaged in the sanctioned scheme and sluggish market conditions during the year. The Company has approached IFCI- The Operating Agency with Modified Debt Restructuring Scheme (MDRS) in the month of February, 2012. A meeting of secured lenders was held in the month of April, 2012 & secured lenders whose interest are being affected have given their consent for the proposed Modified Debt Restructuring Scheme (MDRS). IFCI-The Operating Agency has submitted the aforesaid Modified Debt Restructuring Scheme (MDRS) to the Hon'ble BIFR in the month of June, 2012 and the same is under consideration. Please Refer Note-29(b).

(xii) The company has not granted any loans and advances and therefore clause (xii) is inapplicable and has not been commented upon.

(xiii) The company is not a chit fund or a nidhi/mutual fund/society. Therefore, the provisions of clause 4(xiii) of the Companies (Auditor's Report) Order, 2003 are not applicable.

(xiv) According to the information and explanations given to us, the Company is not dealing or trading in shares, securities, debentures and other investments. Accordingly, clause 4(xiv) of the order is not applicable. However, the shares, securities, debentures and other long-term investments have been held by the company in its own name.

(xv) The company has not given any guarantee for loans taken by others from banks or financial institutions.

(xvi) In our opinion the term loans have been applied for the purpose for which they were raised.

(xvii) According to the information and explanations given to us and on an overall examination of the Balance Sheet of the company, we report that funds raised during the year on short-term basis have not been used for long term investments.

(xviii) According to the information and explanations given to us, the company has not made any preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Companies Act, 1956 during the financial year ended 31st March, 2012. However, equity shares of Rs. 7502.26 lakhs and Rs 34.78 Lacs were issued to promoters/banks and FIs under the BIFR sanctioned scheme during the financial year ended 31st March 2008 and 31st March, 2010 respectively.

(xix) The company has not issued any debentures during the current financial year.

(xx) The company has not made any public issue during the current financial year.

(xxi) According to the information and explanations given to us, no fraud on or by the company has been noticed or reported during the course of our audit.



for V. SAHAI TRIPATHI & Co. Chartered Accountants Firm's Registration Number : 000262N

Mahesh Sahai, Partner Membership No. 6730

Place : New Delhi Dated : 16th August, 2012


Mar 31, 2011

1. We have audited the attached balance sheet of JCT Electronics Limited as at 31st March, 2011 and also the profit & loss account and cash flow statement for the year ended on that date, annexed thereto. 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 presentation of financial statements. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditor's Report) Order, 2003 issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4. Further to our comments in the Annexure referred to in paragraph 3 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 purpose of our audit.

(ii) In our opinion, proper books of account as required by law have been kept by the company so far as appears from our examination of these books.

(iii) The company's 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 accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956.

(v) On the basis of declarations made by the Directors and certificate obtained from the Company Secretary, none of the Directors are disqualified as on March 31, 2011 from being appointed as a Director under clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

(vi) Subject to Note 6(h) regarding crystallizing of dues of workers at Mohali at Rs 4000 lacs and payment of same upon sale proceeds of assets at Mohali unit, Note 7 on assumption of going concern, Note 8(a) on management contention for not considering any impairment on Fixed Assets of Rs 2250 lacs and capital work in progress of Rs 33.20 lacs at Mohali in view of expected higher realization of the value of Land Building upon sale, Note 8(b) on likely substantial loss on impairment of inventory of Rs 1,376.44 lacs at Mohali unit which shall be estimated upon transfer of this inventory to the Vadodara unit as per the scheme, Note 11(a) on reconciliation & confirmation in case of Sundry Debtors, Sundry Creditors, other receivables and payables and Note 11(b) on issuance of credit notes of Rs 3,563.35 lacs by few parties and considering that the financial impact of Note No- 8(a), 8(b), 11(a) & 11(b) is not ascertainable, in our opinion and to the best of our information and according to the explanations given to us, the said accounts read with significant accounting policies and the remaining notes to the accounts contained in Schedule V give the information required by the Companies Act, 1956, 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 31st March, 2011.

(b) in the case of the profit and loss account of the company, of the loss 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.

ANNEXURE TO AUDITORS REPORT FOR THE YEAR ENDING MARCH 31, 2011 Referred to in paragraph 3 of our report of even date

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

(b) All the fixed assets of the company have been physically verified by the management in a phased manner so that the entire assets are covered within a period of three years. There is a programme of verification of fixed assets 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 verification.

(c) The company has not disposed off a substantial part of its fixed assets during the year to affect the status of the company as a going concern. Land & Building at Mohali unit is to be sold as per the rehabilitation scheme sanctioned by the Hon'ble BIFR.

(ii) (a) Inventories of the Company have been physically verified during the year in a phased manner by the management and in our opinion, the frequency of verification is reasonable.

(b) The procedures for physical verification of inventories, other than Inventory of Rs 1376 lacs at Mohali unit, followed by the management are reasonable and adequate in relation to the size of the company and the nature of its business. Please refer note number - 8(b) of Notes to accounts in Schedule U.

(c) The company is maintaining proper records of its inventories at Vadodara unit. The discrepancies noticed on verification between the physical stocks and the book records were not material. There is no change in balances of Inventory at Mohali unit since 2002.

(iii) (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 & therefore paras (iii) (a) to (d) are not applicable and have therefore not been commented upon.

(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 & therefore paras (iii) (e) to (g) are not applicable and have therefore not been commented upon.

(iv) In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the company and the nature of its business with regard to the purchase of inventories, fixed assets and the sale of goods. During the course of our audit, we did not observe any major weaknesses in internal controls.

(v) (a) According to the information and explanations given to us, we are of the opinion that there are no transactions which are required to but have not been entered in the register maintained under section 301 of the Companies Act, 1956.

(b) In our opinion and according to the information and explanations given to us there were no transactions during the year exceeding the value of rupees five lacs in respect of any party made in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956.

(vi) The company has not accepted deposits from the public during the year and there are no outstanding deposits.

(vii) In our opinion, the company has an internal audit system commensurate with the size and nature of its business. However, it needs to be strengthened further.

(viii) We have broadly reviewed the books of account relating to materials, labour and other items of cost maintained by the company pursuant to the rules made by the Central Government for the maintenance of cost records under Section 209(1) (d) of the Companies Act, 1956 and we are of the opinion that prima facie the prescribed accounts and records have been kept and maintained.

(ix) (a) According to the information and explanations given to us, no undisputed amounts payable in respect of Provident Fund, Investor Education and Protection Fund, Employees' State Insurance, Income Tax

Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and other undisputed statutory dues were outstanding at the year end, for a period of more than six months from the date they became payable, except Rs 26.50 lacs pertaining to Mohali unit, which are outstanding since the year 2002.

(b) The dues on account of excise duty which have not been deposited on account of disputes are given below:-

Forum where dispute is pending Amt. involved (Rs. lacs)

Allahabad High Court 10.50

Commissioner Appeal 12.30

Asstt. Commissioner 21.16

Total 43.96

(x) The accumulated losses at the end of the financial year exceed its net worth. The company has incurred cash losses in this financial year and also in the financial year immediately proceeding the current financial year.

(xi) The company had defaulted in the repayment of dues to financial institutions, banks and privately placed debenture holders, however, as per the rehabilitation scheme sanctioned by the Hon'ble BIFR, the interest dues of secured lenders accrued till 31st March 2007 has been waived and the principal amount is scheduled to be paid commencing from quarter ended January-March 2009.

The Company has started paying principal outstanding on deferral basis in accordance with the scheme sanctioned by Hon'ble BIFR.

(xii) The company has not granted any loans and advances and therefore clause (xii) is inapplicable and has not been commented upon.

(xiii) The company is not a chit fund or a nidhi/mutual fund/society. Therefore, the provisions of clause 4(xiii) of the Companies (Auditor's Report) Order, 2003 are not applicable.

(xiv) The company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4{xiv) of the Companies (Auditor's Report) Order, 2003 are not applicable.

(xv) The company has not given any guarantee for loans taken by others from banks or financial institutions.

(xvi) In our opinion the term loans have been applied for the purpose for which they were raised.

(xvii) According to the information and explanations given to us and on an overall examination of the Balance Sheet of the company, we report that funds raised during the year on short-term basis have not been used for long term investments.

(xviii) According to the information and explanations given to us, the company has not made any preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Companies Act, 1956. However, equity shares of Rs.7502.26 lakhs and Rs 34.78 lacs were issued to promoters/ banks and FIs under the BIFR sanctioned scheme during the financial year ended 31a March 2008 and 31st March, 2010 respectively.

(xix) The company has not issued any debentures during the current financial year.

(xx) The company has not made any public issue during the current financial year.

(xxi) According to the information and explanations given to us, no fraud on or by the company has been noticed or reported during the course of our audit.

for V. SAHAI TRIPATHI & Co.

Chartered Accountants

Firm's Registration Number : 000262N

Manish Mohan

3lace : New Delhi Partner

Dated : 4th August, 2011 Membership No. 091607


Mar 31, 2010

1. We have audited the attached balance sheet of JCT Electronics Limited as at 31st March, 2010 and also the profit & loss account and cash flow statement for the year ended on that date, annexed thereto. These financial statements are the responsibility of the companys 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 state- ments 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 prin- ciples used and significant estimates made by the management, as well as evaluating the overall presentation of financial statements. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditors Report) Order, 2003 issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said order.

4. Further to our comments in the Annexure referred to in paragraph 3 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 purpose of our audit.

(ii) In our opinion, proper books of account as required by law have been kept by the company so far as appears from our examination of these books.

(iii) The companys 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 accounting standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956.

(v) On the basis of declarations made by the Directors and certificate obtained from the Company Secretary, none of the Directors are disqualified as on March 31, 2010 from being appointed as a Director under clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956.

(vi) Subject to Note 7 on assumption of going concern, Note 8 on impairment of Assets & Inventory at Mohali, Note 11 (a) on confirmation of balance of debtors, creditors and Note 11 (b) on issuance of credit notes by a party, in our opinion and to the best of our information and according to the explanations given to us, the said accounts read with significant accounting policies and the remaining notes to the accounts contained in Schedule U give the information required by the Companies Act, 1956, 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 31st March, 2010.

(b) in the case of the profit and loss account of the company, of the loss 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.



ANNEXURETO AUDITORS REPORT FOR THE YEAR ENDING MARCH 31, 2010

Referred to in paragraph 3 of our report of even date

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

(b) All the fixed assets have been physically verified by the management in a phased manner so that the entire assets are covered within a period of three years. There is a programme of verification of fixed assets 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 verification.

(c) The company has not disposed off a substantial part of its fixed assets during the year to affect the status of the company as a going concern.

(ii) (a) Inventories have been physically verified during the year in a phased manner by the management and in our opinion, the frequency of verification is reasonable.

(b) 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.

(c) The company is maintaining proper records of its inventories. The discrepancies noticed on verification between the physical stocks and the book records were not material.

(iii) (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 & therefore paras (iii) (a) to (d) are not applicable and have therefore not been commented upon.

(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 & therefore paras (iii) (e) to (g) are not applicable and have therefore not been commented upon.

(iv) In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the company and the nature of its business with regard to the purchase of inventories, fixed assets and the sale of goods. During the course of our audit, we did not observe any major weaknesses in internal controls.

(v) (a) According to the information and explanations given to us, we are of the opinion that there are no transactions which are required to but have not been entered in the register maintained under Section 301 of the Companies Act, 1956.

(b) In our opinion and according to the information and explanations given to us there were no transactions during the year exceeding the value of rupees five lakhs in respect of any party made in pursuance of contracts or arrangements entered in the register maintained under Section 301 of the Companies Act, 1956.

(vi) The company has not accepted deposits from the public during the year and there are no outstanding deposits.

(vii) In our opinion, the company has an internal audit system commensurate with the size and nature of its business. However, it needs to be strengthened further.

(viii) We have broadly reviewed the books of account relating to materials, labour and other items of cost maintained by the company pursuant to the rules made by the Central Government for the maintenance of cost records under Section 209(1) (d) of the Companies Act, 1956 and we are of the opinion that prima facie the prescribed accounts, and records have been kept and maintained.

(ix) (a) According to the information and explanations given to us, no undisputed amounts payable in respect of Provident Fund, Investor Education and Protection Fund, Employees State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and other undisputed statutory dues were outstanding at the year end, for a period of more than six months from the date they became payable.

(b) The dues on account of excise duty which have not been deposited on account of disputes are given below:-

Forum where dispute is pending Amount involved

(Rs. lacs) Allahabad High Court . 10.50

Commissioner Appeal 12.30

Asstt. Commissioner 21.16

Total 43.96

(x) The accumulated losses at the end of the financial year exceed its net worth. The company has earned cash profits during this financial year as against cash losses in the immediately preceding financial year.

(xi) The company.had defaulted in the repayment of dues to financial institutions, banks and privately placed debenture holders, however, as per the rehabilitation scheme sanctioned by the Honble BIFR, the interest dues of secured lenders accrued till 31s1 March 2007 has been waived and the principal amount is scheduled to be paid commencing from quarter ended January-March 2009.

The Company has started paying principal outstanding on deferral basis in accordance with the scheme sanctioned by Honble BIFR.

(xii) The company has not granted any loans and advances and therefore Clause (xii) is inapplicable and has not been commented upon.

(xiii) The company is not a chit fund or a nidhi/tnutual fund/society. Therefore, the provisions of Clause 4(xiii) of the Companies (Auditors Report) Order, 2003 are not applicable.

(xiv) The company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Companies (Auditors Report) Order, 2003 are not applicable.

(xv) The company has not given any guarantee for loans taken by others from banks or financial institutions.

(xvi) In our opinion the term loans have been applied for the purpose for which they were raised.

(xvii) According to the information and explanations given to us and on an overall examination of the Balance Sheet of the company, we report that funds raised during the year on short-term basis have not been used for long term investments.

(xviii) According to the information and explanations given to us, the company has not made any preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Companies Act, 1956. However, equity shares of Rs.7502.26 lacs and Rs.34.78 lacs has been issued to promoters/ banks and FIs under the BIFR sanctioned scheme during the financial year ended 31st March 2008 and 31st March, 2010 respectively.

(xix) The company has not issued any debentures during the current financial year.

(xx) The company has not made any public issue during the current financial year.

(xxi) According to the information and explanations given to us, no fraud on or by the company has been noticed or reported during the course of our audit.

for V. SAHAITRIPATHI & Co. Chartered Accountants Firms Registration Number : 000262N

Mahesh Sahai Partner Membership No. 6730

Place : New Delhi Dated : 18th August, 2010



 
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