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Auditor Report of Pentamedia Graphics Ltd.

Mar 31, 2015

We have audited the accompanying financial statements of Pentamedia Graphics Limited (the Company), which comprise the Balance Sheet as at March 31,2015, 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

The Company's Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards notified under Section 133 of Companies Act, 2013 read with rule 7 of the Companies (Accounts) Rules, 2014 and in accordance with the account- ing principles generally accepted in India. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material mis-statement, whether due to fraud or error.

AUDITORS' RESPONSIBILITY

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

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by manage- ment, as well as evaluating the overall presentation of the financial statements.

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

OPINION

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

(a) In the case of the Balance Sheet, of the state of affairs of the Company as at March 31,2015;

(b) In the case of Statement of Profit and Loss, of the profit of the Company for the year ended on that date; and

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

OTHER MATTERS

The financial statements and other financial information include the company's write off of Rs. 52,52,30,000 towards advances and deposits and Rs.95,31,34,000 towards Capital Work In Progress and related disclosure in respect of the amount mentioned.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

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

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

b. In our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examina- tion of those books.

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

d. In our opinion, the Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement comply with Accounting Standards.

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

f. 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) Rule,2014, in our opinion and to the best of our information and according to the explanation given to us:

The Company has disclosed the impact of loss in Profit and Loss Account as referred to Note to the financial statements.

ANNEXURE TO AUDITORS' REPORT OF EVEN DATE

(Referred to in paragraph 8 under 'Report on other legal and Regulatory Requirements' section of our report of even date)

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

(b) The fixed assets are physically verified during the year by the management in accordance with a regular programme of verification which, in our opinion, provides for physical verification of the fixed assets at reasonable intervals. According to the information and explanation given to us, no material discrepancies were noticed on such verification.

(c) In our opinion and according to the information and explanations given to us, as substantial part of the fixed assets is not been disposed off by the company during the year

2. (a) As explained to us, the inventories were physically verified during the year by the management at reasonable intervals.

(b) In Our Opinion and according to the information and explanation given to us, the procedures of physical verification of inventories followed by the management were reasonable and adequate in relation to the size of the company and the nature of its business.

(c) In our opinion and according to the information and explanation given to us, the company has maintained proper records of its inventories and no material discrepancies were noticed on physical verification.

(d) The company has valued inventory at the lower of cost or net realisable value. The determination of realisable value of this inventory is based on the method adopted by the management. We have not conducted audit procedures for the same. Part of the stock were written off for which there is no value.

3. We have been informed by the company management that they have not granted/taken any loans, secured or unsecured to/from companies, firms and other parties covered in the register maintained under sec 189 of Companies Act 2013 and accordingly the provisions of clause(iii) of paragraph 3 of the order are not applicable to the company.

4. In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the company and the nature of its business with regard to purchases of inventory and fixed assets

and the sale of goods and services. During the course of our audit, we have not observed any major weakness in such internal control system.

5. In our opinion and according to the information and explanations given to us, the company has not accepted deposits from the public during the year, Therefore, the provisions of the Clause (V) of paragraph 3 of the order are not applicable to the company.

6. As per the information and explanations given to us, maintenance of cost records has not been prescribed by the central government under Section 148 of the companies Act 2013.

7. According to the information and explanations given to us there are no dues of Income Tax, Wealth Tax, Sales Tax, Customs duty, Excise Duty, Service Tax and Cess Which have not been deposited on account of any dispute except the following cases.

Pentasoft Technologies Limited has obtained a direction/stay order dated 18.12.2009 (W.P.No.25120/2009) from the High Court of Madras to dispose off all the issues and appeals pertaining to the Assessment Year 1998-99 to 2006-07 where Pentasoft Technologies Limited has claimed refunds. Also vide WP No.5174 / 2015 the company was able to life the attachment on its properties during February 2015.

The particulars of dues of Income Tax For Pentamedia Graphics Limited and Pentasoft Technologies which have not been deposited on account of a dispute for the following years as follows.

(i) Pentamedia

Assessment Year Amount in Crores

2008- 2009 1.96

2009- 2010 0.85

2010- 2011 5.72

2012-2013 1.20

(ii) Pentasoft

Assessment Year Amount in Crores

2001-2002 6.30

Pentamedia Graphics Limited has obtained a direction/order dated 15.07.2010 (W.P.No.2357/10) from the High Court of Madaras to dispose off all the issues and appeals pertaining to the Assessment Year: 1997-98 to 2007-2008 within 8 weeks where the company has claimed refunds.

For the AY 2005-06 a case against Pentamedia Graphics Limited was reopened by Income tax Department on 21/10/2014 u/s 144 r.w.s 147 of Income tax Act demanding an amount of Rs.25,38,54,740.The above said case was under dispute stay has been obtaining company and the appeal was pending in supreme court.

Consequent to the modified composite scheme of Amalgamation arrangement and compromise between Pentamedia Graphics Ltd, Media Dreams Ltd, Kris.Srikkanth Sports Entertainment Ltd, Intelevision and Mayajaal Entertainment Ltd and their respective creditors and shareholders.

The company filed its Revised return as per the Madras High Court Order dated 17th December 2007 wherein Rs.690 Cr of impaired assets has been written off and the matter is still pending with the department. This being not taken up immediately the company vide COMP. APPLN. No.330 to 333/2009 sort direction from Madras High Court and the same was given while order dated 11th January 2010.

SERVICE TAX CLAIMS

A case against M/s.Pentasoft Technologies Ltd. (stay order No.823/12 dt 10.12.12) is pending in CST, Chennai. Demand amount of which is Rs.11,38,904 out of which Rs.8,00,000 was deposited by the company on 11th January 2013. And the said case is still in process.

8. The company have an accumulated losses at the end of the financial year and the company has not incurred cash losses during the financial year covered by our audit.

9. In our opinion and according to the information and explanation given to us, the company has not defaulted in the repayment of dues to financial institutions, banks and debenture holders.

10. According to the information and explanations furnished to us, the company has not given guarantees, for loans taken by others from banks or financial institutions

11. In our opinion and 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 on short-term basis have prima facie not been used during the year for long-term purpose.

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

For Babuperam Associates, Chartered Accountants

CA. BABUPERAM Place : Chennai Membership No.200803 Date : 29.05.2015 Firm Registration No.012721S




Mar 31, 2014

We have audited the accompanying financial statements of M/s. PENTAMEDIA GRAPHICS LIMITED (the "Company"), which com- prise the Balance Sheet as at March 31,2014, the Statement of Profit and Loss and the Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information, which we have signed under reference to this report.

Management''s Responsibility for the Financial Statements

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

Auditors'' Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing and other applicable authoritative pronouncements 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 assur- ance about whether the financial statements are free from material misstatements.

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company''s internal control. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Management, as well as evaluating the overall presentation of the financial statements.

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

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial statements give the information required by the Act in the manner so required, 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 of the Company for the year ended on that date; and

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

Emphasis of matter

We draw attention to :

a. Note no.B(2) relating to amounts written off under exceptional items

b. The company has valued inventory at the lower of cost or net realizable value. The determination of realizable value of this inventory is a technical matter and we have relied on the valuation conducted by the technical experts in the management. We have not conducted audit procedure for the same.

c. The value of Long Term/Short Term Loans and Advances amounting to Rs.133.82 crores is based on confirmation from management as to recoverability and consequent implication of AS-28 is subject to confirmation.

Report on Other Legal and Regulatory Requirements

1. As required by "the Companies (Auditor''s Report) Order, 2003" "(the "Order") as amended by "the Companies (Auditor''s Report) (Amendment) Order, 2004" issued by the Central Government of India in terms of Section 227(4A) of the Act, (herein after referred to as the "Order") and on the basis of such checks of the books and records of the company as we considered appropriate and according to the information and explanations given to us, we give in the Annexure a statement on the matters specified in para- graphs 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 purposes of our audit.

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

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

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

(e) On the basis of the written representations received from the directors as on March 31,2014 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 Sec- tion 274(1)(g) of the Act.

ANNEXURE TO AUDITORS'' REPORT OF EVEN DATE (Referred to in paragraph 1 under ''Report on Other Legal and Regulatory Requirements'' section of our report of even date)

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

(b) The fixed assets are physically verified during the year by the Management in accordance with a regular programme of verification which, in our opinion, provides for physical verification of the fixed assets at reasonable intervals. According to the information and explanation given to us, no material discrepancies were noticed on such verification.

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

2. (a) As explained to us, the inventories were physically verified during the year by the Management at reasonable intervals.

(b) In our opinion and according to the information and explanation given to us, the procedures of physical verification of inven- tories followed by the Management were reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) In our opinion and according to the information and explanations given to us, the Company has maintained proper records of its inventories and no material discrepancies were noticed on physical verification.

(d) The company has valued inventory at the lower of cost or net realisable value. The determination of realisable value of this inventory is based on the method adopted by the management. We have not conducted audit procedures for the same.

3. We have been informed by the company management that they have not granted/taken any loans, secured or unsecured to/from companies, firms and other parties covered in the register maintained under Section 301 of the Companies Act, 1956.

4. In our opinion and according to the information and explanations given to us, there is an adequate internal control system com- mensurate with the size of the Company and the nature of its business with regard to purchases of inventory and fixed assets and the sale of goods and services. During the course of our audit, we have not observed any major weakness in such internal control system.

5. In respect of contracts or arrangements entered in the Register maintained in pursuance of Section 301 of the Act, to the best of our knowledge and belief and according to the information and explanations given to us:

(a) The particulars of contracts or arrangements referred to in Section 301 that needed to be entered in the Register maintained under the said Section have been so entered.

(b) Where each of such transaction is in excess of Rs.5 lakhs in respect of any party, the transactions have been made at prices which are prima facie reasonable having regard to the prevailing market prices at the relevant time.

6. In our opinion and according to the information and explanations given to us, the Company has not accepted deposits from the public during the year. Therefore, the provisions of the clause 4 (vi) of the Order are not applicable to the Company.

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

8. As per the information and explanations given to us, maintenance of cost records has not been prescribed by the central govern- ment under Section 209(1)(d) of the Companies Act, 1956.

9. According to the information and explanations given to us there are no dues of Income Tax, Wealth Tax, Sales Tax, Customs duty, Excise Duty, Service Tax and Cess which have not been deposited on account of any dispute except in the following cases.

Income Tax

Pentamedia Graphics Limited has obtained a direction/order dated 15.07.2010 (W.P No.2357/10) from the High court of Madras to dispose off all the issues and appeals pertaining to the Assessment Year : 1997-98 to 2007-2008 where the company have claimed refunds. The issues and appeals are on various stages with the Income Tax department. Pentasoft Technologies Limited has obtained a direction/order dated 18.12.2009 (W.P.No.25120/2009) from the High Court of Madras to dispose off all the issues and appeals pertaining to the Assessment Year : 1998-99 to 2006-07 where Pentasoft Technologies Limited have claimed refunds. The issues and appeals are on various stages with the Income Tax department.

The volume of Claims/Refunds cannot be quantified.

The particulars of dues of Income Tax which have not been deposited on account of a dispute for the following years as follows.

Assessment Year Amount in Crores

2008- 2009 1.96

2009- 2010 0.85

2010- 2011 5.72

10. The Company has accumulated losses as at the end of the financial year and incurred cash losses during the financial year covered by our audit. However, the company had not incurred any losses in the immediately preceding financial year.

11. In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to financial institutions and banks. The company has not issued any debentures.

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

13. I n our opinion and according to the information and explanations given to us, the Company is not dealing in shares, securities and debentures. Therefore, the provisions of clause 4(xii) of the Order are not applicable to the Company.

14. I n our opinion, the company is not a chit fund or a nidhi, mutual benefit fund/society. Therefore, the provisions of clause 4(xiii) of the Companies (Auditor''s Report) Order, 2003 are not applicable to the company.

15. According to the information and explanations furnished to us, the company has not given guarantees, for loans taken by others from banks or financial institutions.

16. The company has not raised any new term loan during the year.

17. I n our opinion and 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 on short-term basis have prima facie not been used during the year for long- term purposes.

18. According to the information and explanations given to us, during the year covered by our audit, the Company has not made preferential allotment of equity shares to parties and companies covered in the register maintained under Section 301 of the Act.

19. According to the information and explanations given to us, during the year covered by our report, the Company has not issued any secured debentures.

20. During the year covered by our report, the Company has not raised any money by way of public issue.

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

For Sudhindran & Co

Chartered Accountants

CA P.SUDHINDRAN

PARTNER

Place : Chennai Membership No.32100

Date : 27.06.2014 Firm Registration No.006019S


Mar 31, 2013

We have audited the attached the Balance Sheet of Pentamedia Graphics Limited as at 31st March 2013, the Statement of Profi t & Loss Account and also the Cash Flow Statement for the year ended on that date annexed thereto. These fi nancial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these fi nancial statements based on our audit.

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

As required by the Companies (Auditor’s Report) Order, 2003 (as amended) hereinafter referred to as "the order" issued by the Central Government of India in terms of sub section (4A) of section 227 of the Companies Act, 1956, hereinafter referred to as the "the Act" we enclose in the Annexure a statement on the matters specifi ed in paragraphs 4 and 5 of the said Order to the extent applicable.

Further to our comments in the annexure referred to 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 purpose of the audit;

ii. In our opinion, proper books of accounts have been kept as required by law so far as appears from our examination of those books;

iii. The balance sheet, statement of profi t and loss account and cash fl ow statement dealt with by this report are in agreement with books of account;

iv. In our opinion, balance sheet, statement of profi t and loss account and cash fl ow 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 to the extent applicable excepting the Note no. (vi) of the auditor’s report relating to Accounting Standard 2.

v. On the basis of written representations received from directors, as on 31st March 2013 and taken on record by the Board of Directors, we report that, none of the Directors are disqualifi ed as on 31st March 2013 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956;

vi. Attention is invited to:

a. The company has valued inventory at the lower of cost or net realizable value. The determination of realizable value of this inventory is a technical matter and we have relied on the valuation conducted by the technical experts in the management. We have not conducted audit procedure for the same.

b. The company valued long term investments at cost as per the present market conditions and as per valuation done by the valuer. Increase / decrease in value is provided for, where the management is of the opinion that the variation is permanent is nature. We have not conducted audit procedure for the same.

c. The value of long term / short term loans and advances amounting to Rs.150.84 crores is based on confi rmation from management as to recoverability and consequent implications of AS–28 and the value of Secured creditors amounting to Rs. Nil crores and Current Liabilities amounting to Rs.81.85 lacs is subject to confi rmation.

vii. The effect of the qualifi cations in Item (vi) above on the profi t of the company cannot be ascertained owing to the non quantifi able and non-ascertainable causes for the same.

viii. In our opinion and to the best of our information and according to the explanation given to us, subject to the effect on the fi nancial statements of the matter referred to in the preceding para vi & vii the said accounts given the information required by the Companies 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 Balance Sheet, the state of affairs of the company as at 31st March, 2013

b. in the case of Statement of Profi t and Loss account, of the profi t for the year ended on that date; and

c. in the case of cash fl ow statement, of the cash fl ows for the year ended on that date.

ANNEXURE TO AUDITORS’ REPORT OF EVEN DATE

1. FIXED ASSETS

a) The Company has maintained proper records showing full particulars including quantitative details and the situation of fi xed assets, on the basis of available information.

b) According to the explanations given to us, all the fi xed assets have been physically verifi ed by the management during the year, which in our opinion is reasonable, having regard to the size of the Company and the nature of its assets. Due to the fact that, the Company is in the process of reconciling physical assets with the book records, we have no comments to offer with regard to material discrepancies, if any, arising on such verifi cation.

2. INVENTORIES

The company has valued inventory at the lower of cost or net realizable value. The determination of realizable value of this inventory is a technical matter and is based on the estimates of management. We have not conducted audit procedures for the same.

3. LOANS TO/FROM 301 PARTIES

According to the records of the company and information and explanations given to us, the company has not taken any loans, secured or unsecured, from companies, fi rms or other parties listed in the register maintained under Section 301 of the Act. The company has not granted loan free of interest to company covered in the register maintained under section 301 of the Companies Act, 1956.

4. In our opinion and according to the information and explanations given to us, there are adequate internal control systems commensurate with the size of the company and the nature of its business with regard to purchase of inventory, fi xed assets and with regard to sale of the goods. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control.

5. TRANSACTIONS COVERED BY SECTION 301

a. Based on the audit procedure applied by us and according to the information and explanations provided by the management, we are of the opinion that the Company has entered all transactions that need to be entered into the register maintained under section 301 of the Companies Act, 1956.

b. In our opinion and according to the information and explanation given to us, the transaction made in pursuance of contract or arrangements entered in the registers maintained under section 301 of the Companies Act, 1956 and exceeding the value of Rs.5,00,000/-in respect of any party during the year have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

6. The Company has not accepted any deposit from the public and consequently, the directives issued by the Reserve Bank of India, the provisions of section 58A and 58AA of the Companies Act, 1956 and the rules framed there under are not applicable.

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

8. According to the information and explanation given to us, the Central Government has not prescribed the maintenance of cost records by the Company under section 209 (1) (d) of the Companies Act 1956.

9. STATUTORY DUES

According to the information and explanation given to us there are no dues of income tax, wealth tax, sales tax, custom duty, excise duty and cess which have not been deposited on account of any dispute except in the following cases.

Income Tax:

Pentamedia Graphics Limited has obtained a direction/order dt. 15.07.2010 (W.P. No.2357/10) from the High Court of Madras to dispose off all the issues and appeals pertaining to the AYs 1997-98 to 2007-08 where the Company have claimed refunds. The issues and appeals are on various stages with the Income Tax department. Pentasoft Technologies Limited has obtained a direction/order dt. 18.12.2009 (W.P. No.25120/2009) from the High Court of Madras to dispose off all the issues and appeals pertaining to the AYs 1998-99 to 2006-07 where Pentasoft have claimed refunds. The issues and appeals are on various stages with the Income Tax department.

The volume of claims /refunds cannot be quantifi ed.

10. The Company neither has accumulated losses at the end of the fi nancial year nor has it incurred any losses during the fi nancial year covered by our audit or in the immediately preceding fi nancial year.

11. As explained to us, the Company has not granted any loans & advances on the basis of security by way of pledge of shares, debentures and other securities.

12. The Company is not a chit fund or nidhi, mutual benefi t fund, society. Accordingly, clause 4(xiii) of Companies (Auditors Report) Order, 2003 is not applicable.

13. According to the information and explanation given to us, the Company is not dealing or trading in shares, securities, debentures and other investments. Accordingly, clause 4(xiv) of Companies (Auditors Report) Order, 2003 is not applicable.

14. According to the information and explanations given to us, the Company has given guarantee for loans taken by others from banks or fi nancial institutions, the terms and conditions whereof, in our opinion, are not prima-facie prejudicial to the interest of the company.

15. The Company has not raised any new term loan during the year.

16. According to the information and explanation given to us and on an overall examination of the Balance Sheet of the Company, we report that, short term funds have not been used for long term purposes.

17. The company has not issued any debentures. Accordingly clause 4(xix) of Companies (Auditors Report) Order, 2003 is not applicable.

18. No monies have been raised by way of public issue.

19. In our opinion and according to the information and explanation given to us, no fraud on or by the Company has been noticed or reported during the year, that causes the fi nancial statement to be materially misstated.

For Sudhindran & Co

Chartered Accountants

CA P.SUDHINDRAN

PARTNER

Place : Chennai Membership No.32100

Date : 29.05.2013 Firm Registration No.006019S


Mar 31, 2012

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

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

As required by the Companies (Auditor's Report) Order, 2003 (as amended) hereinafter referred to as "the order" issued by the Central Government of India in terms of sub section (4A) of section 227 of the Companies Act, 1956, hereinafter referred to as the "the Act" we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order to the extent applicable.

Further to our comments in the annexure referred to 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 purpose of the audit;

ii. In our opinion, proper books of accounts have been kept as required by law so far as appears from our examination of those books;

iii. The balance sheet, profit and loss account and cash flow statement dealt with by this report are in agreement with books of account;

iv. In our opinion, balance sheet, profit and loss account and cash flow statement dealt with by this report comply with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 to the extent applicable excepting the Note no. (vi) of the auditor's report relating to Accounting Standard 2.

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

vi. Attention is invited to:

a. The company has valued inventory at the lower of cost or net realizable value. The determination of realizable value of this inventory is a technical matter and we have relied on the valuation conducted by the technical experts in the management. We have not conducted audit procedure for the same.

b. The company valued long term investments at cost as per the present market conditions and as per valuation done by the valuer. Increase / decrease in value is provided for, where the management is of the opinion that the variation is permanent is nature. We have not conducted audit procedure for the same.

c. The value of long term / short term loans and advances amounting to Rs.163.02 crores is based on confirmation from management as to recoverability and consequent implications of AS-28 and the value of Secured creditors amounting to Rs. Nil crores and sundry creditors amounting to Rs.0.17 crores is subject to confirmation.

vii. The effect of the qualifications in Item (vi) above on the profit of the company cannot be ascertained owing to the non quantifiable and non-ascertainable causes for the same.

viii. In our opinion and to the best of our information and according to the explanation given to us, subject to the effect on the financial statements of the matter referred to in the preceding para vi & vii the said accounts given the information required by the Companies 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 Balance Sheet, the state of affairs of the company as at 31st March, 2012,

b. in the case of Profit and Loss account, of the profit for the year ended on that date; and

c. in the case of cash flow statement, of the cash flows for the year ended on that date.

1. FIXED ASSETS

a) The Company has maintained proper records showing full particulars including quantitative details and the situation of fixed assets, on the basis of available information.

b) According to the explanations given to us, all the fixed assets have been physically verified by the management during the year, which in our opinion is reasonable, having regard to the size of the Company and the nature of its assets. Due to the fact that, the Company is in the process of reconciling physical assets with the book records, we have no comments to offer with regard to material discrepancies, if any, arising on such verification.

2. INVENTORIES

The company has valued inventory at the lower of cost or net realizable value. The determination of realizable value of this inventory is a technical matter and is based on the estimates of management. We have not conducted audit procedures for the same.

3. LOANS TO/FROM 301 PARTIES

According to the records of the company and information and explanations given to us, the company has not taken any loans, secured or unsecured, from companies, firms or other parties listed in the register maintained under Section 301 of the Act. The company has granted loan free of interest to company covered in the register maintained under section 301 of the Companies Act, 1956. However the terms & condition under which the loan has been granted are not prima-facie prejudicial to the interest of the company.

4. In our opinion and according to the information and explanations given to us, there are adequate internal control systems commensurate with the size of the company and the nature of its business with regard to purchase of inventory, fixed assets and with regard to sale of the goods. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control.

5. TRANSACTIONS COVERED BY SECTION 301

a. Based on the audit procedure applied by us and according to the information and explanations provided by the management, we are of the opinion that the Company has entered all transactions that need to be entered into the register maintained under section 301 of the Companies Act, 1956.

b. In our opinion and according to the information and explanation given to us, the transaction made in pursuance of contract or arrangements entered in the registers maintained under section 301 of the Companies Act, 1956 and exceeding the value of Rs.5,00,000/-in respect of any party during the year have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

6. The Company has not accepted any deposit from the public and consequently, the directives issued by the Reserve Bank of India, the provisions of section 58A and 58AA of the Companies Act, 1956 and the rules framed there under are not applicable.

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

8. According to the information and explanation given to us, the Central Government has not prescribed the maintenance of cost records by the Company under section 209 (1) (d) of the Companies Act 1956.

9. STATUTORY DUES

According to the information and explanation given to us there are no dues of income tax, wealth tax, sales tax, custom duty, excise duty and cess which have not been deposited on account of any dispute except in the following cases.

Income Tax:

The Company has obtained stay orders against Income Tax demands and have been in touch with the Income Tax Department to settle the issues regarding demands and refunds. The volume of claims/ refunds cannot be quantified now.

10. The Company neither has accumulated losses at the end of the financial year nor has it incurred any losses during the financial year covered by our audit or in the immediately preceding financial year.

11. The settlement due to EXIM Bank (CP No. 243 of 2008), Dhanalakshmi Bank assigned to Pridhvi Assets Reconstruction vide O.A No. 95 of 2003 and AXIS Bank assigned to Phoenix Assets Recovery Construction vide OA Nos. 7 of 2004 & 76 of 2005 which is pending before the Debt Recovery Tribunal (DRT) have been settled by using the proceeds from the dis- investment of Mayajaal Entertainment Ltd equity shares as per the order of Company Law Board, Chennai, dated 01.03.2011 and said shares have been extinguished vide corporate action taken by the company through NSDL on 21.04.2011.

12. As explained to us, the Company has not granted any loans & advances on the basis of security by way of pledge of shares, debentures and other securities.

13. The Company is not a chit fund or nidhi, mutual benefit fund, society. Accordingly, clause 4(xiii) of Companies (Auditors Report) Order, 2003 is not applicable.

14. According to the information and explanation given to us, the Company is not dealing or trading in shares, securities, debentures and other investments. Accordingly, clause 4(xiv) of Companies (Auditors Report) Order, 2003 is not applicable.

15. According to the information and explanations given to us, the Company has given guarantee for loans taken by others from banks or financial institutions, the terms and conditions whereof, in our opinion, are not prima-facie prejudicial to the interest of the company.

16. The Company has not raised any new term loan during the year.

17. According to the information and explanation given to us and on an overall examination of the Balance Sheet of the Company, we report that, short term funds have not been used for long term purposes.

18. The company has not issued any debentures. Accordingly clause 4(xix) of Companies (Auditors Report) Order, 2003 is not applicable.

19. No monies have been raised by way of public issue.

20. In our opinion and according to the information and explanation given to us, no fraud on or by the Company has been noticed or reported during the year, that causes the financial statement to be materially misstated.

for M/s.Sudhindran & Co

Chartered Accountants

CA. P.Sudhindran,

Partner

Place: Chennai Mem No.032100

Date : 27.07.2012 Firm Registration No. 006019S


Mar 31, 2010

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

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

As required by the Companies (Auditors Report) Order, 2003 (as amended) hereinafter referred to as "the order" issued by the Central Government of India in terms of sub section (4A) of section 227 of the Companies Act, 1956, hereinafter referred to as the "the Act" we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order to the extent applicable.

Further to our comments in the annexure referred to 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 purpose of the audit;

ii. In our opinion, proper books of accounts-have been kept as required by law so far as appears from our examination of those books;

iii. The balance sheet, profit and loss account and cash flow statement dealt with by this report are in agreement with books of account;

iv. In our opinion, balance sheet, profit and loss atcount and cash flow statement dealt with by this report comply with the Accounting SttMldards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 to the extent applicable excepting the Note no. (vi) of the auditors report relating to Accounting Standard 2.

v. On the basis of written representations received from directors, as on 31st March 2010 and taken on record by the Board of Directors, we report that, none of the Directors are disqualified as on 31st March 2010 from being appointed as a director in terms of era use (g) of sub-section (1) of section 274 of the Companies Act, 1956;

vi. Attention is invited to:

a. The company has valued inventory at the lower of cdst or net realizable value. The determination of realizable value of this inventory is a technical matter and we have relied on the valuation conducted by the technical experts in the management. We have not conducted audit procedure for the same.

b. The value of loans and advances amounting to Rs. 4 2 crores (S based on confirmation from management

as to recoverability and consequent implications of A§-28 arid the value of Secured creditors amounting to Rs.19 crores and sundry creditors amounting to Rs.8 crores is subject to confirmation.

vii. The effect of the qualifications in Item (vi) above on the profit of the company cannot be ascertained owing to the nonquantifiable and non-ascertalrtable causes for the same.

viii.In our opinion and to the best of our inforrhation and according to the explanation given to us, subject to the effect on the financial statements of the matter referred to in the preceding para vi & vii the said accounts given the information required by the Companies 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 Balance Sheet, the state of affairs of the company as at 31st March, 2010,

b. in the case of Profit and Loss account, of the profit for the year ended on that date; and

c. in the case of cash flow statement, of the cash flows for the year ended on that date.

ANNEXURE TO AUDITORS REPORT OF EVEN DATE

1. FIXED ASSETS

a) The Company has maintained proper records showing full particulars including quantitative details and the situation of .fixed assets, on the basis of available information.

b) According to the explanations given to us, all the fixed assets have been physically verified by the management during the year, which in our opinion is reasonable, having regard to the size of the Company and the nature of its assets. Due to the fact that, the Company Is in the process of reconciling physical assets with the book records, we have no comments to offer with regard to material discrep- ancies, if any, arising on such verification.

2. INVENTORIES

The company has valued inventory at the lower of cost or net realizable value. The determination of realizable value of this inventory is a technical matter and is based on the estimates of management. We have not conducted audit procedures for the same.

3. LOANS TO/FROM 301 PARTIES

According tothe records of the company and information and explanations given to us, the company has not taken any loans, secured or unsecured, from companies, firms or other parties listed in the register maintained under Section 301 of the Act. The company has granted loan free of interest to company covered in the register maintained under section 301 of the Companies Act, 1956. However the terms & condition under which the loan has been granted are not prima-facie prejudicial to the Interest of the company.

4. In our opinion and according to the information and explanations given to us, there are adequate Internal control systems commensurate with the size of the Company and the nature of Its business with regard to purchase of Inventory, fixed assets and with regard to sale of goods. During the course of our audit, we have not observed any continuing failure to correct major weaknesses In internal control.

5. TRANSACTIONS COVERED BY SECTION 301

a) Based on the audit procedure applied by us and according to the information and explanations pro- vided by the management, we are of the opinion that the Company has entered all transactions that need to be entered into the register maintained under section 301 of the Companies Act, 1956.

b) In our opinion and according to the information and explanation given to us, the transaction made in pursuance of contract or arrangements entered In the registers maintained under section 301 of the Companies Act, 1956 and exceeding the value of Rs.00,000/-in respect of any party during the year have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

6. Scheme of Amalgamation

Consequent to the merger of Pentasoft Technologies Limited with the company as per the order of Honble High Court of Madras dated 3rd August 2009 (w.e.f. 01.10.2008) after the approval of the shareholders, creditors, court held EGM dated on 11th February 2009 and 24(f) approved by Bombay Stock Exchange Limited dated 25th November 2008, the company issued 38511595 equity shares of Rs/- each to the shareholders of Pentasoft Technologies Limited and 128760443 equity shares of Rs.1 each to the agreed secured creditors of Pentasoft Technologies Limited on 18th September 2009. These shares were listed in Bombay Stock Exchange on 6th February 2010.

7. The Company has not accepted any deposit from the public and consequently, the directives issued by the Reserve Bank of India, the provisions of Section 58A and 58AA of the Companies Act, 1956 and the rules framed there under are not applicable.

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

9. According to the information and explanation given to us, the Central Government has not prescribed the maintenance of cost records by the Company under section 209 (1) (d) of the Companies Act 1956.



10. STATUTORY PUES

i. As per the notice dated 05.02.2.009 issued by the Income Tax Department Chennai the total Tax demand of Pentamedia Graphics Ltd amounts to ?112,51 crores. The company being an 100% EOU under STPI/EHTP scheme has contested various issues and has obtained stay order from the High Court of Madras restraining the Income Tax department from taking any action till the disposal of all issues/appeals. The company has also obtained the Court order from the High Court of Madras, directing the Income Tax department to process the revised returns filed by the company pursuant to the Court order dated 17.12.2007. ii. As per the notice dated 19.01,2009 issued by the Income Tax Department Chennai the total tax demand of Pentasoft Technologies Ltd amounts to Rs.89.97 crores. The Company being an 100% EOU under STPI/EHTP scheme had gone on appea? against the various issues and has subsequently obtained stay brderfrom the High Court of Madras restraining the Income Tax department from taking any action till the disposal of all issues/appeals. It is not possible to ascertain the contingent liability in this regard with respect to Accounting Standard 29.

11. The Company neither has accumulated losses at the end of the financial year nor has it incurred any losses during the financial year covered by our audit or in the immediately preceding financial year.

12. Though the Company has defaulted in repayment of the following dues ,with interest to banks, it has contested in DRT / High Court towards settlement of Loans.

i) Dhanalakshrni Bank has approached the Debts Recovery Tribunal (DRT) to settle the dues. The claim of Dhanalakshmi Bank in respect of Pentasoft Technologies Ltd amounting to Rs. 10.80 crores is being con- tested by the company.

ii) The claim of Axis Bank (UTI) is Rs. 24.97 crores and Rs. 14.85 crores with regard to Pentamedia &

Pentasoft Technologies Ltd respectively are being contested by the company.

iii) FIB (EXIM BANK) is claiming an amount of Rs. 19.85 crores in respect of Pentamedia Graphics Ltd. In this connection the companys petition is pending with High Court of Madras and is being actively defended by the company.

The above amount due to Banks/Institutions.,does not include any interest that may accrue on the principal amount due from 01.04.2005.

The representations are based on information provided by the management. The ultimate liability that may arise is not ascertainable.

Further it is not possible to ascertain the contingent liability in this regard with respect to Accounting Standard 29

13. As explained to us, the Company has not granted any loans & advances on the basis of security by way of pledge of shares, debentures and other securities.

14. The Company is not a chit fund or nidhi, mutual benefit fund, society. Accordingly, clause 4(xlli) of Companies (Auditors Report) Order, 2003 is not applicable.

15. According to the information and explanation given to us, the Company is not dealing or trading In shares, securities, debentures and other investments. Accordingly, clause 4(xiv) of Companies (Auditors Report) Order, 2003 is not applicable.

16. In our opinion, the terms and conditions on which, the Company has not given guarantee for loans taken by others from banks or financial institution.

17. The Company has not raised any new term loan during the year.

18. According to the information and explanation given to us and on an overall examination of the Balance Sheet of the Company, we report that, short term funds have not been used for long term purposes.

19. The company has not issued any debentures. Accordingly clause 4(xix) of Companies (Auditors Report) Order, 2003 is not applicable.

20. No monies have been raised by way of public issue.

21. In our opinion and according to the information and explanation given to us, no fraud on or by the Company has been noticed or reported during the year, that causes the financial statement to be materially misstated.

for M/s.Sudhindran & Co Chartered Accountants Place : Chennai CA. P.Sudhindran Date : 10.08.2010 Partner Mem. No. 032100

 
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