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Auditor Report of Prime Focus Ltd.

Jun 30, 2015

We have audited the accompanying standalone financial statements of Prime Focus Limited ("the Company"), which comprise the Balance Sheet as at June 30, 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 Standalone Financial Statements

The Company's Board of Directors is responsible for the mat ers 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 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.

Auditors' Responsibility

Our responsibility is to express an opinion on these standalone financial statements based on our audit. We have taken into account the provisions of the Act, the accounting and auditing standards and maters 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 the disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company's preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on whether the Company has in place an adequate internal financial controls system over financial reporting and the operating effectiveness of such controls. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company's Directors, as well as evaluating the overall presentation of the financial statements.

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

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone 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, of the state of affairs of the Company as at June 30, 2015, and its 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 in terms of Section 143(11) of the Act, we give in the Annexure a statement on the maters specified in paragraphs 3 and 4 of the Order.

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

(a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit.

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

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

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

(e) On the basis of the writ en representations received from the directors as on June 30, 2015 taken on record by the Board of Directors, none of the directors is disqualified as on June 30, 2015 from being appointed as a director in terms of Section 164 (2) of the Act.

(f) With respect to the other matters to be included in the Auditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information 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 30 (i) to the financial statements;

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

(iii) There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.

Annexure to the Independent Auditors' Report

(Referred to in Paragraph 1 under "Report on Other Legal and Regulatory Requirements" section of our report of even date)

Having regard to the nature of the Company's business / activities/ result during the year, clauses (ii), (v), and (vi) of paragraph 3 of the Order are not applicable to the Company. In respect of other clauses, we report as under:

i. In respect of its fixed assets:

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

b) The Company has a program of verification of fixed assets to cover all the items in a phased manner over a period of three years which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. However, the fixed assets have not been physically verified by the management during the year, in the absence thereof, we are unable to comment on the discrepancies, if any.

ii. According to the information and explanations given to us, the Company has granted loans, secured or unsecured, to companies, firms or other parties covered in the Register maintained under Section 189 of the Companies Act, 2013. In respect of such loans:

(a) The receipts of principal amounts and interest have been as per stipulations.

(b) There is no overdue amount in excess of Rs, 1 lakh remaining outstanding as at the year-end.

iii. In our opinion and according to the information and explanations given to us, having regard to the explanations that some of the items purchased are of special nature and suitable alternative sources are not readily available for obtaining comparable quotations, the Company needs to strengthen the internal control system to make it commensurate with the size of the Company and the nature of its business for the purchases of fixed assets and sale of services. During the course of our audit, we have not observed any continuing failure to correct major weakness in such internal control system.

iv. According to the information and explanations given to us, in respect of statutory dues:

a) The Company has generally been regular in depositing undisputed statutory dues, including Provident Fund, Employees' State Insurance, Income- tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Value Added Tax, Cess and other material statutory dues applicable to it with the appropriate authorities, except for payment of Service Tax and Tax Deducted at Source, where Significant delays have been noted.

b) There were no undisputed amounts payable in respect of Provident Fund, Employees' State Insurance, Income-tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Value Added Tax, Cess and other material statutory dues in arrears as at June 30, 2015 for a period of more than six months from the date they became payable.

c) There are no cases of non- deposit with the appropriate authorities of disputed dues of Sales Tax, Wealth Tax, Service Tax, Customs Duty, Value Added Tax, and Cess. Details of dues of Income Tax which have not been deposited as on June 30, 2015 on account of disputes are given below:

Statute Nature of Dues Amount involved (Rs,) Period to which the amount relates Forum where dispute is pending

Income Tax Act, 1961 Income Tax 68,756,958 Assessment year Commissioner of Income Tax (Appeals) 2007-2008, 2009-2010 and 2010-2011 Income Tax Appellate Tribunal 653,294 Assessment year2008-2009

Total 69,410,252

d) There are no amounts that are due to be transferred by the Company to the Investor Education and Protection Fund.

v. The Company has no accumulated losses at the end of the financial year, and the Company has incurred cash losses during the current financial year but has not incurred any cash loss during the immediately preceding financial period.

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

vii. In our opinion and according to the information and explanations given to us, the terms and conditions of the guarantees given by the Company for loans taken by Others from banks or financial institutions are not, prima facie, prejudicial to the interests of the Company.

viii. In our opinion and according to the information and explanations given to us, the term loans have been applied by the Company during the year for the purposes for which they were obtained.

ix. To the best of our knowledge and according to the information and explanations given to us, no fraud by the Company and no material fraud on the Company has been noticed or reported during the year.

For DELOITTE HASKINS & SELLS

Chartered Accountants

(Firm Registration No. 117364W)



Abhijit A. Damle

(Partner)

Membership No. 102912

Mumbai, dated: September 16, 2015


Jun 30, 2014

We have audited the accompanying fi nancial statements of Prime Focus Limited ("the Company"), which comprise the Balance Sheet as at 30th June, 2014, the Statement of Profit and Loss and Cash Flow Statement for the period from 1st April, 2013 to 30th June, 2014, 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 fi nancial statements that give a true and fair view of the fi nancial position, fi nancial performance and cash fl ows of the Company in accordance with the Accounting Standards notifi ed under the Companies Act, 1956 ("the Act") (which continue to be applicable in respect of Section 133 of the Companies Act, 2013 in terms of General Circular 15/2013 dated 13th September, 2013 of the Ministry of Corporate Aff airs) and in accordance with the accounting principles generally accepted in India. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the fi nancial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors'' Responsibility

Our responsibility is to express an opinion on these fi nancial 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 fi nancial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the fi nancial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the fi nancial 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 fi nancial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the eff ectiveness of the Company''s internal control. 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 fi nancial statements.

We believe that the audit evidence we have obtained is suffi cient 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 fi nancial 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 aff airs of the Company as at 30th June, 2014;

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

(c) In the case of the Cash Flow Statement, of the cash fl ows of the Company for the period ended on that date.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2003 ("the Order") issued by the Central Government of India in terms of Section 227(4A) of the Act, we give in the Annexure a statement on the mat ers specifi ed in paragraphs 4 and 5 of the Order.

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

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

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

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

d. In our opinion, the Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement comply with the Accounting Standards notifi ed under the Act (which continue to be applicable in respect of Section 133 of the Companies Act, 2013 in terms of General Circular 15/2013 dated 13th September, 2013 of the Ministry of Corporate Aff airs).

e. On the basis of the writ en representations received from the directors as on 30th June, 2014, taken on record by the Board of Directors, none of the directors is disqualifi ed as on 30th June, 2014, from being appointed as a director in terms of Section 274(1) (g) of the Act.

ANNEXURE TO THE INDEPENDENT AUDITORS'' REPORT

(Referred to in Paragraph 1 under "Report on Other Legal and Regulatory Requirements" section of our report of even date

Having regard to the nature of the Company''s business/ activities/ result during the period clauses (ii), (vi) (viii), (xii), (xiii), (xiv), (xviii) and (xx) of paragraph 4 of the Order are not applicable to the Company.

i. In respect of its fi xed assets:

a) The Company has maintained proper records showing full particulars including quantitative details and situation of fi xed assets.

b) As explained to us, all the fi xed assets have been physically verifi ed by the management in a phased periodical manner, which in our opinion is reasonable, having regard to the size of the Company and nature of its assets. No material discrepancies were noticed on such physical verifi cation.

c) Although a substantial part of the fi xed assets have been disposed off during the period, in our opinion and according to the information and explanations given to us, the ability of the Company to continue as a going concern is not aff ected.

ii. In respect of the loans, secured or unsecured, granted or taken by the Company to / from companies, fi rms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956, according to the information and explanations given to us:

a) The Company has granted unsecured loans aggregating Rs. 874,202,742 to one party during the period. At the year end, the outstanding balances of such loans granted aggregated Rs. 6,530,990 and the maximum amount involved during the period was Rs. 255,021,968.

b) The rate of interest and other terms and conditions of such loans are, in our opinion, prima facie, not prejudicial to the interest of the Company.

c) The receipts of principal amounts and interest have been as per stipulations.

d) In respect of the said loans and interest thereon, there are no overdue amounts.

e) The Company has not taken loans secured or unsecured from companies, fi rms or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956.

iii. In our opinion and according to the information and explanations given to us, having regard to the explanations that some of the items purchased are of special nature and suitable alternative sources are not readily available for obtaining comparable quotations, the Company needs to strengthen the internal control system to make it commensurate with the size of the Company and the nature of its business for the purchases of fi xed assets and sale of services. In view of this being our fi rst year of audit, we are unable to comment on the continuing failure, if any, to correct major weaknesses in such internal control system.

iv. In respect of contracts or arrangements entered in the Register maintained in pursuance of Section 301 of the Companies Act, 1956, to the best of our knowledge and belief and according to the information and explanations given to us:

(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 or the prices at which transactions for similar services have been made with other parties or as per information available with the Company.

v. In our opinion, the internal audit function carried out during the period by a fi rm of Chartered Accountants appointed by the Management has not been commensurate with the size of the Company and the nature of its business. The scope of internal audit function and the extent of coverage needs to be enhanced to make it commensurate with the size of the Company and the nature of its business.

vi. According to the information and explanations given to us, in respect of statutory dues:

a) The Company has generally been regular in depositing undisputed statutory dues, including Provident Fund, Investor Education and Protection Fund, Employees'' State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and other material statutory dues applicable to it with the appropriate authorities, except for payment of Service Tax and Tax Deducted at Source, where delays have been noted.

b) There were 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, Customs Duty, Excise Duty, Cess and other material statutory dues in arrears as at 30th June, 2014 for a period of more than six months from the date they became payable.

c) There are no cases of non- deposit with the appropriate authorities of disputed dues of Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty and Cess. Details of dues of Income Tax which have not been deposited as on 30th June, 2014 on account of disputes are given below:

Statute Nature of Amount Period to which Dues involved (Rs) the amount relates

Income Tax Act, 1961 Income Tax 73,155,229 Assessment year 2007-2008, 2007-08 2009-2010 and 2010-2011 653,294 Assessment year 2008-2009 Total 2008-09 Total 73,808,523

Statute Forum where dispute is pending

Income Tax Act, 1961 Commissioner of Income Tax (Appeals)

Income Tax Appellate Tribunal

vii. The Company has no accumulated losses at the end of the fi nancial period, but has incurred cash loss during the immediately preceding fi nancial year.

viii. In our opinion and according to the information and explanations given to us, the Company has not defaulted in the repayment of dues to fi nancial institutions, banks and debenture holders.

ix. In our opinion and according to the information and explanations given to us, the terms and conditions of the guarantees given by the Company for loans taken by Others from banks or fi nancial institutions are not, prima facie, prejudicial to the interests of the Company.

x. In our opinion and according to the information and explanations given to us, the term loans have been applied by the Company during the period for the purposes for which they were obtained.

xi. 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 period for long-term investment.

xii. The Company has unsecured debentures outstanding during the period on which no security or charge is required to be created.

xiii. To the best of our knowledge and according to the information and explanations given to us, no fraud by the Company and no material fraud on the Company has been noticed or reported during the period.

For DELOITTE HASKINS & SELLS Chartered Accountants (Firm Registration No. 117364W)

Abhijit A. Damle (Partner) Membership No. 102912

Mumbai, August 28, 2014


Mar 31, 2013

Report on the Financial Statements

1. We have audited the accompanying fnancial statements of Prime Focus Limited ("the Company"), which comprises of the Balance Sheet as at March 31, 2013 and the Statement of Proft and Loss and the Cash Flow Statement for the year then ended and a summary of signifcant accounting policies and other explanatory information.

Management''s responsibility for the Financial Statements

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

Auditor''s responsibility

3. Our responsibility is to express an opinion on these fnancial 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 fnancial statements are free from material misstatement.

4. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the fnancial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the fnancial 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 fnancial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the fnancial statements.

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

opinion

6. In our opinion and to the best of our information and according to the explanations given to us, the fnancial 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:

(i) in the case of the Balance Sheet, of the state of afairs of the Company as at March 31, 2013;

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

(iii) in the case of the Cash Flow Statement, of the cash fows for the year ended on that date. report on other legal and regulatory maters

7. 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 maters specifed in paragraphs 4 and 5 of the Order.

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

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

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

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

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

e) on the basis of writen representations received from the directors as on March 31, 2013, and taken on record by the Board of Directors, none of the directors is disqualifed 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.

Re: Prime Focus Limited

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

(b) We have been informed that all the fxed assets have not been physically verifed by the management during the year. However, there is a regular programme of verifcation. For the assets physically verifed by the management during the year, the Company is in process of reconciling the assets physically verifed with the books of account.

(c) There was no substantial disposal of fxed assets during the year.

ii. The Company does not have any inventory. Accordingly, the provisions of clause 4(ii) (b) and (c) of the Companies (Auditor''s Report) Order, 2003 (as amended) ("CARO") are not applicable to the Company.

iii. (a) The company has granted unsecured loan to its subsidiary aggregating to Rs. 8,268.05 lacs covered in the register maintained under section 301 of the Companies Act, 1956. At the year end, the outstanding balances of such loans aggregated to Rs. 11,754.75 lacs and the maximum amount involved during the year was Rs. 12,683.17 lacs.

(b) In our opinion, the rate of interest at which loans have been given is, not prima facie, prejudicial to the interest of the Company.

(c) In the absence of any terms of agreement as to receipt of loan granted, we are not in a position to comment upon the clause (iii)(c ) and (iii) (d) of the order

iv. In our opinion and according to the information and explanations given to us, we have been explained that major purchase of fxed assets is of specialized equipments, for which comparative quotes cannot be obtained in all the case, considering the above, we believe that there is an adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of fxed assets and sales of services. During the course of our audit, no signifcant weakness has been noticed in the aforesaid internal control system.

v. (a) According to the information and explanations provided by the management, we are of the opinion that the particulars of contracts or arrangements referred to in section 301 of the Act that needs to be entered into the register maintained under section 301 have been so entered.

(b) In respect of transactions made in pursuance of such contracts or arrangements exceeding value of Rupees fve lakhs entered into during the fnancial year, because of the unique and specialized nature of the items involved and absence of any comparable prices, we are unable to comment whether the transactions were made at prevailing market prices at the relevant time.

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

vii. The Company has an internal audit system, the scope and coverage of which, in our opinion requires to be enlarged to be commensurate with the size and nature of its business.

viii. To the best of our knowledge and as explained, the Central Government has not prescribed maintenance of cost records under clause

(d) of sub-section (1) of section 209 of the Act for the services of the Company.

ix. (a) Undisputed statutory dues including provident fund, investor education and protection fund, or employees'' state insurance, income-tax, sales-tax, wealth-tax, service tax customs duty, cess have generally been regularly deposited with the appropriate authorities except for minor delays observed in case of payment of TDS. The provisions relating to excise duty are not applicable to the Company.

(b) 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, wealth-tax, service tax, sales-tax, customs 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. The provisions relating to excise duty are not applicable to the Company.

c) According to the records of the Company, there are no dues outstanding of income-tax, sales-tax, wealth-tax, service tax, customs duty and cess on account of any dispute. The provisions relating to excise duty are not applicable to the Company.

x. The Company has no accumulated losses at the end of the fnancial year. The company has incurred cash loss during the year, but has not incurred cash loss during the immediately preceding fnancial year.

xi. As per the information and explanations given to us by the management, we are of the opinion that the Company has not defaulted in repayment of dues to a fnancial institution, bank or debenture holders.

xii. According to the information and explanations given to us and based on the documents and records produced 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.

xiii. In our opinion, the Company is not a chit fund or a nidhi / mutual beneft fund / society Therefore, the provisions of clause 4(xiii) of the CARO are not applicable to the Company.

xiv. In our opinion, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the CARO are not applicable to the Company.

xv. According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from bank or fnancial institutions.

xvi. Based on information and explanations given to us by the management, term loans were applied for the purpose for which the loans were obtained.

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 no funds raised on short-term basis have been used for long-term investment.

xviii The Company has made preferential allotment of shares to the parties which are covered in the register maintained under section 301 of the Act. The terms and conditions of the issue are in accordance with the Guidelines for Preferential Issues contained in Chapter VII of the Securities and exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009 and hence we have been informed that the price at which shares have been issued is not prejudicial to the interest of the company.

xix. The Company has unsecured debentures outstanding during the year on which no security or charge is required to be created.

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

xxi. Based upon the audit procedures performed for the purpose of reporting the true and fair view of the fnancial statements and as per the information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the course of our audit.

For mzSk & associates

Chartered Accountants

Firm Registration no. 105047w

abuali darukhanawala

Partner

Membership No.108053

Mumbai May 30, 2013


Mar 31, 2012

1. We have audited the attached balance sheet of Prime Focus Limited ('the Company') as at March 31,2012 and also the related statement of profit and loss and the cash flow statement for the year ended March 31,2012 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 auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluatingthe overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

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

4. As more fully described in Note 5(a) to the financial statements the Company has not revalued the FCCB of$ 55 million at the exchange rate prevailing as at March 31,2012, March 31,2011, March 31,2010, March 31,2009 and March 31,2008, which in our opinion is not in accordance with Accounting Standard 11 "The Effects of Changes in Foreign Exchange Rates" and not provided for the premium payable on redemption of these FCCB. Had the Company revalued the bonds as at March 31,2012, the profit for the year ended March 31,2012 and the reserves as at that date wouldhave been lower by Rs.383.22 million andf636.19 million respectively and Foreign Currency Monetary Item Translation Difference account would have been Rs.NH. Further, had the Company provided for the premium on redemption, the securities premium as at March 31,2012 would have been lower byRs. 889.01 million. Consequent to the above, the FCCB balance at March 31,2012 would have been higher by ^1525.20 million. This had caused us to qualify our audit opinion on the financial statements relating to preceding year.

5. 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 the purposes of our audit;

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

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

iv. Subject to our comment in paragraph 4 above, in our opinion, the balance sheet, statement of profit and 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;

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

vi. In our opinion and to the best of our information and according to the explanations given to us, and subject to our comments in paragraph 4 above, the said 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 March 31,2012;

b. in the case of the statement of profit and loss, of the profit for the year ended March 31,2012; and

c. in the case of cash flow statement, of the cash flows for year ended March 31,2012.

ANNEXURE REFERRED TO IN PARAGRAPH [3] OF OUR REPORT OF EVEN DATE Re: Prime Focus Limited

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

(b) We have been informed that all the fixed assets have not been physically verified by the management during the year. However, there is a regular programme of verification. For the assets physically verified by the management during the year, the Company is in process of reconciling the assets physically verified with the books of account.

(c) There was no substantial disposal of fixed assets duringthe year.

ii. The Company does not have any inventory. Accordingly, the provisions of clause 4(ii) (b) and (c) of the Companies (Auditor's Report) Order, 2003 (as amended) ("CARO") are not applicable to the Company.

iii. (a) The company has granted interest free unsecured loan to its subsidiary aggregating toRs. 352.55 million covered in the register maintained under section 301 of the Companies Act, 1956. At the year end, the outstanding balances of such loans aggregated to Rs. 49.04 million and the maximum amount involved duringthe year wasRs. 216.86 million.

(b) In our opinion, the rate of interest at which loans have been given is not, prima facie, prejudicial to the interest of the Company.

(c) In the absence of any terms of agreement as to receipt of loan granted, we are not in a position to comment upon the clause (iii)(c) and (iii) (d) of the order.

iv. In our opinion and according to the information and explanations given to us, we have been explained that major purchase of fixed assets is of specialized equipments, for which comparative quotes cannot be obtained in all the case, considering the above, we believe that there is an adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of fixed assets. During the course of our audit, no significant weakness has been noticed in the internal control system in respect of these areas. However, the internal control system for the sale of film related services is inadequate since the Company does not have formal documentation with customers in few cases, which is an industry issue per management. In our opinion this is a continuing failure to correct major weakness in the internal control system.

v. (a) According to the information and explanations provided by the management, we are of the opinion that the particulars of contracts or arrangements referred to in section 301 of the Act that needs to be entered into the register maintained under section 301 have been so entered.

(b) In respect of transactions made in pursuance of such contracts or arrangements exceeding value of Rupees five lakhs entered into during the financial year, because of the unique and specialized nature of the items involved and absence of any comparable prices, we are unable to comment whether the transactions were made at prevailing market prices at the relevant time.

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

vii. The Company has an internal audit system, the scope and coverage of which, in our opinion requires to be enlarged to be commensurate with the size and nature of its business.

viii. To the best of our knowledge and as explained, the Central Government has not prescribed maintenance of cost records under clause (d) of sub-section (1) of section 209 of the Act for the services of the Company.

ix. (a) Undisputed statutory dues including provident fund, investor education and protection fund, or employees' state insurance, income-tax, sales-tax, wealth-tax, service tax customs duty, cess have generally been regularly deposited with the appropriate authorities except for slight delays observed in case of payment of JDS. The provisions relating to excise duty are not applicable to the Company.

(b) Accordingto the information and explanations given to us, no undisputed amounts payable in respect of providentfund, investor education and protection fund, employees' state insurance, income-tax, wealth-tax, service tax, sales-tax, customs 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. The provisions relating to excise duty are not applicable to the Company.

(c) According to the records of the Company, there are no dues outstanding of income-tax, sales-tax, wealth-tax, service tax, customs duty and cess on account of any dispute. The provisions relating to excise duty are not applicable to the Company.

x. The Company has no accumulated losses at the end of the financial year and it has also not incurred cash losses in the current and immediately preceding financial year.

xi. As per the information and explanations given to us by the management, we are of the opinion that the Company has not defaulted in repayment of dues to a financial institution, bank or debenture holders.

xii. According to the information and explanations given to us and based on the documents and records produced 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.

xiii. In 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 CARO are not applicable to the Company.

xiv. In our opinion, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the CARO are not applicable to the Company.

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

xvi. Based on information and explanations given to us by the management, term loans were applied for the purpose for which the loans were obtained.

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 no funds raised on short-term basis have been used for long-term investment.

xviii.The Company has not made any preferential allotment of shares to parties or companies covered in the register maintained under section 301 of the Act.

xix. According to the information and explanation given to us, the company has not issued debentures during the year.

xx. The Company has not raised money by public issues duringthe year.

xxi. Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and as per the information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported duringthe course of our audit.

For MZS & Associates

Chartered Accountants

Firm Registration No:106400w

Abuali Darukhanawala

Partner (M. No. 108053)

Mumbai

May 30,2012


Mar 31, 2011

1. We have audited the attached balance sheet of Prime Focus Limited ('the Company') as at March 31, 2011 and also the related profit and loss account and the cash flow statement for the year ended March 31, 2011 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 auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

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

4. As more fully described in Note 19 to Schedule 16 to the financial statements, the Company has not revalued the FCCB of $ 55 million at the exchange rate prevailing as at March 31, 2011, March 31, 2010, March 31, 2009 and March 31, 2008, which in our opinion is not in accordance with Accounting Standard 11 "The Effects of Changes in Foreign Exchange Rates" and has also not provided for the premium payable on redemption of these FCCB. Had the Company revalued the FCCB's as at March 31, 2011, the profit for the year ended March 31, 2011 and the reserves as at that date would have been lower by Rs. 13.48 million and Rs. 278.54 million respectively and Foreign Currency Monetary Item Translation Difference account would have been Rs. 13.48 million. Further, had the Company provided for the premium on redemption, the securities premium as at March 31, 2011 would have been lower by Rs. 598.16 million. Consequent to the above, the FCCB balance at March 31, 2011 would have been higher by Rs. 890.18 million. This had caused the previous auditors to qualify their audit opinion on the financial statements relating to preceding year.

5. 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 the purposes of our audit;

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

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

iv. Subject to our comment in paragraph 4 above, in our opinion, the balance sheet, profit and loss account and cash flow statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956;

v. On the basis of the written representations received from the directors, as on March 31, 2011, and taken on record by the Board of Directors, we report that none of the directors is disqualified as on March 31, 2011 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, I 1956;

vi. In our opinion and to the best of our information and according to the explanations given to us, and subject to our comments in paragraph 4 above, the said 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 March 31, 2011;

b. in the case of the profit and loss account, of the profit for the year ended March 31, 2011; and

c. in the case of cash flow statement, of the cash flows for year ended March 31, 2011.

ANNEXURE REFERRED TO IN PARAGRAPH [3] OF OUR REPORT OF EVEN DATE Re: Prime Focus Limited

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

(b) We have been informed that all the fixed assets have not been physically verified by the management during the year. however, there is a regular programme of verification. For the assets physically verified by the management during the year, the Company is in process of reconciling the assets physically verified with the books of account.

(c) There was no substantial disposal of fixed assets during the year.

ii. The Company does not have any inventory. Accordingly, the provisions of clause 4(ii) (b) and (c) of the Companies (Auditor's Report) Order, 2003 (as amended) ("CARO') are not applicable to the Company.

iii. As informed, the Company has neither granted nor taken any loans, secured or unsecured to/from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956 ('the Act'). Accordingly, clauses 4(iii) (b), (c), (d), (f) and (g) of CARO are not applicable to the Company.

iv. In our opinion and according to the information and explanations given to us, we have been explained that major purchase of fixed assets is of specialized equipments, for which comparative quotes cannot be obtained in all the case, considering the above, we believe that there is an adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of fixed assets. During the course of our audit, no significant weakness has been noticed in the internal control system in respect of these areas. However, the internal control system for the sale of film related services is inadequate since the Company does not have formal documentation with customers in few cases, which is an industry issue per management. In our opinion this is a continuing failure to correct major weakness in the internal control system.

v. (a) According to the information and explanations provided by the management, we are of the opinion that the particulars of contracts or arrangements referred to in section 301 of the Act that needs to be entered into the register maintained under section 301 have been so entered.

(b) In respect of transactions made in pursuance of such contracts or arrangements exceeding value of Rupees five lakhs entered into during the financial year, because of the unique and specialized nature of the items involved and absence of any comparable prices, we are unable to comment whether the transactions were made at prevailing market prices at the relevant time.

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

vii. The Company has an internal audit system, the scope and coverage of which, in our opinion requires to be enlarged to be commensurate with the size and nature of its business.

viii. To the best of our knowledge and as explained, the Central Government has not prescribed maintenance of cost records under clause (d) of sub-section (1) of section 209 of the Act for the services of the Company.

ix. (a) undisputed statutory dues including provident fund, investor education and protection fund, or employees' state insurance, income-tax, sales-tax, wealth-tax, service tax customs duty, cess have generally been regularly deposited with the appropriate authorities though there has been slight delay in a few cases. The provisions relating to excise duty are not applicable to the Company.

Further, since the Central Government has till date not prescribed the amount of cess payable under section 441A of the Companies Act, 1956, we are not in a position to comment upon the regularity or otherwise of the company in depositing the same.

(b) 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, wealth-tax, service tax, sales-tax, customs 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. The provisions relating to excise duty are not applicable to the Company.

(c) According to the books of accounts of the Company, there are no dues outstanding of income-tax, sales-tax, wealth-tax, service tax, customs duty and cess on account of any dispute. The provisions relating to excise duty are not applicable to the Company.

x. The Company has no accumulated losses at the end of the financial year and it has also not incurred cash losses in i the current and immediately preceding financial year.

xi. As per the information and explanations given to us by the management, we are of the opinion that the Company has not defaulted in repayment of dues to a financial institution, bank or debenture holders.

xii. According to the information and explanations given to us and based on the documents and records produced 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,

xiii. In 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 CARO are not applicable to the Company.

xiv. In our opinion, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the CARO are not applicable to the Company.

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

xvi. Based on information and explanations given to us by the management, term loans were applied for the purpose for which the loans were obtained.

xvii. According to the information and explanations given to us, and on an broad examination of the balance sheet of the Company, we report that no funds raised on short-term basis have been used for long-term investment.

xviii. The Company has not made any preferential allotment of shares to parties or companies covered in the register maintained under section 301 of the Act.

xix. The Company has unsecured debentures outstanding during the year on which no security or charge is required to be created,

xx. The Company has not raised money by public issues during the year, except for issue of shares through Qualified Institutional Placement to Qualified Institutional Buyers.

xxi. Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and as per the information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the course of our audit.

For MZS & Associates

Chartered Accountants

Firm Registration No: 106400w

Abuali Darukhanawala

Partner (M. No. 108053)

Place: Mumbai

Date : June 20, 2011

 
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