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Auditor Report of Samtel Color Ltd.

Mar 31, 2015

We have audited the accompanying Financial Statements of Samtel Color Limited("the Company") which comprises the Balance Sheet as at 31st March, 2015, 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.

Management's Responsibility for the Financial Statements

The Company's Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013("the Act") with respect to the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgements 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 misstatements, whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit.

We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder.

We conducted our audit in accordance with the Standards on Auditing specified under section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from materia! 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 the material misstatement of the financial statements, whether due to error or fraud. In making those risk assessments, the auditor considers interna! 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 circumstancesjmt not for the purpose of expressing an opinion on whether the Company has in place an adequate internal controls system over financial reporting and the operating effectiveness of such controls. An audit also includes evaluating the appropriateness of accounting policies used and 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 qualified audit opinion on standalone financial statements.

Basis for Qualified Opinion

Auditor's Responsibility

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

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of the material misstatement of the financial statements, whether due to error or fraud. 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 effectiveness of the entity's internal controls. An audit also includes evaluating the appropriateness of accounting policies used and reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

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

Basis for Qualified Opinion

(A) The financial statements have been prepared by the Company on the going concern basis as fully elaborated in Note 37 of the financial statements even though the Board of Industrial and Financial Reconstruction under section 3(1) of the Sick Industrial Companies(Speciai Provisions) Act 1985 has declared the Company as a sick industrial company via order dated 3rd December, 2014 against case no. 58/2012.

(B) We had reported in our audit report for the year ended 31st March 2012 as under:-

(i) The entire net worth of the Company has eroded completely; (ii) the Company has initiated the bidding process for the disposal of production lines 1 and 4(non -core assets) out of 4 production lines at plant situated at Gautam Budh Nagar(Uttar Pradesh) after obtaining approval of CDR lenders and consequently impaired those production lines by Rs. 3,866.91 Lacs and related stores 8i spares by Rs. 512.28 Lacs; (iii) the manufacturing operations at other production lines at plants situated at Ghaziabad (Uttar Pradesh) & Parwanoo (Himachal Pradesh) could not be resumed in the financial year due to non-participation of labour in production process reasoning to their over-dues; (iv) the Company has defaulted in repayment of loans as per CDR scheme and borrowings of other lenders, as elaborated in note no. 38 of the financial statements; (v)there is diminution in the value of long term investments; (vi) reconciliation and confirmations of balances of certain major creditors and acceptances are pending; (vii) non- redemption of 969,163, 0% redeemable preference shares of RslOO each amounting to Rs. 969.16 lacs already due for redemption; and (viii) non payment of preference dividend for the period from 31st March 2008 to 31st March 2012 aggregating^ Rs. 773.61 Lacs on 21,10,116 8% Non Convertible Cumulative Redeemable Preference Shares.

(C) We further reported in our audit report for the year ended on 31st March, 2013 as under:-

(i) In view of the continued failure of the Company to disburse the legitimate dues of the workmen, Hon'ble High Court of Himachal Pradesh (Shimla) has settled the dispute by passing an order for the closure of Deflection Yoke unit at Parwanoo (H.P) and thereby, pay off the corresponding outstanding dues by selling the industrial undertaking/Company assets etc., (ii) the operations have been suspended in all locations by the mid of November 12, S have not been resumed till date and consequently, management has impaired the production lines 3 & 5, located at Gautam Buddh Nagar (UP) & Deflection Yoke unit located at Parwanoo (HP) by Rs.27,977.06 lacs and related stores & spares by Rs. 410.35 lacs etc.; (Hi) the impairment of assets of production line 2, located at GautamBuddh Nagar (U.P.), and gun division at Meerut has not been considered by the management on the rationale of its revival plan of running the operations by restructuring them even though in our opinion considering the liquidity crunch, the probability of running these lines seems remote; (iv) the balances outstanding as on 31st March, 2013 of receivables & inventory are subject to confirmation & physical verification respectively due to temporary suspension of operations & non access to inventories, (v) raw material & finished goods inventory amounting to Rs. 311.90 lacs and Rs. 55 lacs respectively have been seized by the excise authorities due to non-payment of excise dues; (vi) there is nonsubmission of various statutory returns acknowledged by the respective authorities, non provision/deposition of various overdue statutory liabilities iike PF/Service Tax/TDS/Excise/Vat & CST/WCT/TCS/ESi/Gratuity/Bonus/ Preference dividend & related over dues (interest and penalty), non deduction of TDS on provisional expenses; and as explained by management exact amount of which could not be ascertained in present scenario; (viii)there is increase in diminution of investments in current year of Rs.841.48 lac;, (ix) Assets lying with the Provident Fund trust have been transferred to Regional Provident Fund Commissioner and those related to Gratuity Trust have been settled by adjustment of employees dues. However, as per the management, related liability has been accounted for completely and there will be no demand over and above the same; (x) Company has accounted for its gratuity and leave encashment liability on actual basis rather than on actuarial valuation method which has been prescribed in Accounting Standard AS-15, "Employee Benefits".

(D )We further report that during the year ended 31st March, 2014 the facts and situation mentioned above continues:-

Further the Company has not complied with the provisions of clause 35 of listing agreement (submission of shareholding pattern) and requirements of SEBI circular no. D & CC/ FITTC/CIR-16/2002 dated 31.12.2002 regarding Reconciliation of Share Capital Audit Report, for the quarter ended 31st December 2013. This default was made good on 23 June, 2014.However due to delay NSE has imposed a penalty of Rs. 9.32 lacs vide notice no. FINES/2013-14/230721-T dated 17 February, 2014 which is still unpaid.

(E) We further reports that during the year ended 31st March, 2015 the facts and situation mentioned above continues

Further (i) the Company has not appointed any Chief financial officer as per the requirement of section 203 of the Companies Act 2013, in respect of the key managerial personnel; (ii) the balances outstanding in banks (except one operative bank) are subject to confirmation; (Hi) during the financial year 2013-14, the Company had provided further diminution in long term investment in Samtel Glass Limited of Rs. 937.87 lacs, diminution of investment in current year has not been considered by the management since, as explained to us, the realisation value of land during disposal of Samtel Glass Limited will be higher after setting off all liabilities [refer note no. 37(g)]; (iv) the shares against subscription money received from Promoters Group Company of Rs. 3000 lacs, in terms of CDR Scheme, could not be issued due to non approval from Stock Exchange. After the lapse of extended period as provided in MCA N/N the Company may be in default of provision of section 73 to 76 of the Companies Act, 2013 read with Companies (Acceptance of Deposits) Rules, 2014 and relevant Amendment Rules 2015

These factors raise substantial doubts as to the Company's ability to continue as going concern and therefore, the Company may not be able to realise its assets and discharge its liabilities in the normal course of business. The financial statements do not include any adjustment relating to the recoverability and classification of recorded assets amounts.

Based on the above facts we are of the opinion that going concern assumption has been affected and the financials should have been stated at net realisable value.

0pinton

In our opinion and to the best of our information and according to the explanations given to us, except for the effects of the matter described in the Basis for Qualified Opinion paragraph regarding erosion of net-worth coupled with other events and inability in realization of assets and discharge of liabilities based on going concern assumptions and clauses (1), (2), (5), (6), (7), (8) and (9) of annexure to Auditor's Report referred in paragraph 1 of "Report on Other Legal and Regulatory Requirements" below being non provision of physical verification due to restricted access of fixed assets and inventories, unpaid public deposit, maintenance of cost records, unpaid statutory dues, cash loss in the current financial year and default in the payment of dues to financial institutions and banks, the financial statement give the information required by the Act in the manner so required and gives a true and fair view in conformity with the accounting principles generally accepted in India of the state of affairs of the Company as on 31st March, 2015, and its loss and its cash flow for the year ended on that date.

Other Matter

Without qualifying, we draw attention to note no. 48 of the financial statement stating the reason for variation in useful life of fixed assets from those as specified in schedule II of the Companies Act, 2013

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order, 2015 ('the Order') issued by the Central Government of india in terms of section 143 of the Act, we give in the Annexure a statement on the matters 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 purpose of our audit;

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

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

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

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

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

i) The Company has disclosed the impact of pending litigation on its financial position in its financial statements- Refer Note 27to the financial statements;

ii) As there is notany material foreseeable losses, on long term contracts, therefore the Company has not made any provision, required under the applicable law or accounting standards;

iii) As informed to us, there is no outstanding balance to be transferred to the Investor Education and Protection Fund, hence this clause is not applicable.

ANNEXURE TO THE AUDIT REPORT TO THE SAMTEL COLOR LIMITED

Referred to in paragraph 1 of report on other legal and regulatory requirement's paragraph of our report on the financial statement of even date,

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

(b) During the year, due to suspension of the operations and non-access of the fixed assets at all plant locations, the physical status of the assets as at the reporting date and till the date of signing of this report could not be confirmed by the management. Consequently, we are unable to comment on the accounting of any material discrepancy noticed on physical verification, if any.

(ii) (a)The inventory could not be physically verified by the management during the year, as the factories at all locations were closed due to temporary suspension and access to inventories were not available. Thus the inventories have been taken on the basis of management certification.

(b) We are unable to comment on the procedures of physical verification of inventory followed by the management for the reason 2(a) above.

(c) Due to the reasons mentioned in 2(a) above, we are unable to comment on the inventory records and discrepancies thereto.

(iii) (a) The Company has not given any loan, secured or unsecured to Companies, firms or other parties covered in the register maintained under section 189 of the Companies Act, 2013.

(b) Since there are no such loans during the current financial year, comments on repayment of the principal amount and overdue amount at the yea rend are not required. However overdue interest of Rs. 77 lacs on loan given in earlier years is recovered in current year.

(iv) in our opinion and according to the information and explanations given to us, having regard to the explanation that certain items purchased are of special nature for which suitable alternative sources does not exist for obtaining comparative quotations, there are an adequate internal control systems commensurate with the size of the Company and the nature of its business for the purchase of inventory and fixed assets and for the sale of goods and services. Further, on the basis 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 nor have been informed of any instance of a continuing failure to correct major weaknesses in the aforesaid internal control system.

(v) The Company has fail to repaid or issue the shares against the subscription money received of Rs. 3,000 lacs and hence the provisions of provisions of section 73 to 76 of Companies Act 2013 and Companies (Acceptance of Deposit) Rules 2014, read with Amendment rules 2015 has not been complied with.

(vi) Pursuant to the rules made by the Central Government of India, the maintenance of cost records has been prescribed under clause (d) of sub-section (1) of Section 209 of the Act, we are of the opinion that the prescribed accounts and records have not been maintained. Therefore we are unable to comment on the accuracy and completeness of these records.

(vii) (a) According to the information and explanations given to us and the records of the Company examined by us, in our opinion, the Company had been irregular in depositing undisputed statutory dues 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 as applicable with the appropriate authorities. Further, there were no undisputed amounts outstanding at the year-end for a period of more than six months from the date they became payable except Rs. 258.74 lacs of Provident Fund, Rs. 95.13 lacs of ESI, Rs. 141.16 lacs of VAT and CST, Rs. 122.37 lacs of TDS, Rs. 0.40 lacs of TCS, Rs. 259.93 lacs of Excise, Rs. 0.50 lacs of WCT and Rs. 481.07 lacs as interest on unpaid / delayed payment of various statutory dues.

(b) According to the information and explanations given to us and the records of the Company examined by us, the particulars of dues of income tax, sales tax, custom duty, wealth tax, excise duty, service tax, value added tax and cess, which have not been deposited on account of any dispute, are as follows: -

Rs. In Lacs

Name of Nature of Related Forum where the Amount the Statute Dues Period dispute is pending

Central Trade Tax F. Y, 1995-96 Hon'bleSupreme 431.60 Sales Tax to 1998-99 Court Act, 1956 Trade Tax F. Y. 1995-96 Tribunal, Ghaziabad 1.95 Trade Tax F. Y. 1996-97 Tribunal, Noida 2.10 Trade Tax F. Y. 1996-97 Tribunal, Noida 1.30 Trade Tax F. Y. 1996-97 Hon'ble High Court, 6.00 Allahabad

Trade Tax F. Y. 1997-98 Hon'ble High Court, 201.56 Allahabad

Trade Tax F.Y 1997-98 Hon'ble High Court 120.27 and 1998- 1999

Trade Tax F. Y. 1999-00 Hon'ble High Court, 47.28 Allahabad

Entry Tax F. Y. 2000-01 Hon'ble High Court, 55.92 Allahabad

Entry Tax F. Y. 2002-03 Hon'ble High Court, 21.59 Allahabad

Entry Tax F. Y. 2003-04 Hon'ble High Court, 0.82 Allahabad

Trade Tax F.Y. 2004-05 Hon'ble Tribunal, 1.50 Ghaziabad

Entry Tax F. Y.2008-09 Addl. Commissioner 1.75 Appeals

Sales tax F. Y. 2008-09 Commercial Tax 10.45 officer, Kota

Sales Tax F.Y. 2009-10 Commercial Tax 58.75 officer,Kota

Sales Tax F.Y. 2010-11 Commercial Tax 1810.4 officer,Kota

Sales Tax F.Y. 2009-10 Commercial Tax 6.93 Kota officer,

Central Customs F.Y. 2003-04 Commissioner 7.4 Customs Duty Customs Act, 1962 Customs F.Y. 2005-06 Customs, Excise & 758.80 Duty to F.Y. 2007- Service Tax Appellate 08 Tribunal

U.P. VAT Sales Tax F.Y. 2007-08 Hon'ble High 343.33 Act Court, Allahabad

Sales Tax F. Y, 2009-10 Joint commissioner 383.14 of Commercial Taxes, Noida

Central Excise Duty F. Y. 1994-99 Hon'ble Supreme 109.00 Court Excise Act, Excise Duty F. Y. 1996-97 Customs, Excise & 1.99 1944 Service Tax Appellate Tribunal

Excise Duty F. Y. 1996-97 Hon'ble High Court, 86.50 Allahabad

Excise Duty F. Y. 1997-98 Hon'ble High Court, 66.38 Allahabad

Excise Duty F.Y. 1998-99 Customs, Excise & 0.73 Service Tax Appellate Tribunal

Excise Duty F. Y. 2000-01 Hon'ble High Court, 64.25 Allahabad

Excise Duty F. Y. 2001-02 Customs, Excise & 1419.97 Service Tax Appellate Tribunal

Excise Duty F. Y. 2002-03 Hon'ble High 3.03 Court,Allahabad

Service Tax , F.Y. 2002-07 Customs, Excise & 9.19 Service Tax Appellate Tribunal

Excise Duty F. Y. 2003-04 Hon'ble High 8.64 Court, Allahabad

Excise Duty F.Y 2004-05 Commissioner - 6.40 to 2007-08 Excise

Service Tax F.Y. 2004-08 Commissioner - 400.65 Excise

Excise Duty F. Y. 2004-05 Customs, Excise & 10.00 Service Tax Appellate Tribunal

Excise Duty F. Y. 2004-05 Dy. Commissioner 1.68 Excise

Excise Duty F. Y. 2005-06 Customs, Excise & 314.32 Service Tax Appellate Tribunal

Excise Duty F. Y. 2005-06 Customs, Excise & 81.04 Tribunal

Excise Duty F.Y 2005-06 CESTAT 7.20

Excise Duty F. Y. 2006-07 Jt. Secretary, 27.6 Ministry of Finance

Excise Duty F.Y. 2006-07 Commissioner 9.0 of Central Excise

Excise Duty F.Y. 2008-09 Joint 47.94 Commissioner of Appeal

Commissioner Excise Duty F.Y. 2008-09 (Appeal) 6.11 Central Excise

Service Tax F.Y. 2009-10 Commissioner 31.26 - Excise

R VAT Sales tax F. Y. 2008-09 Commercial Tax 4.95 Act, 2003 Officer, Kota

Deputy Commissioner M VAT Sales Tax F.Y. 2009-10 of Sales Tax 339.02 Act, 2002 -Aurangabad

Income Tax Income Tax A.Y. 2005-06 Commissioner 245.03 Act, 1961 of Income Tax (Appeal)

Income Tax F.Y. 2006-07 Commissioner of 0.49 (TPS) Income Tax (Appeal)

Income Tax A.Y. 2008-09 Commissioner of 46.23 Tax (Appeal) Income

Income Tax F.Y. 2008-09 Rectification 134.01 (TPS) application for amendment of

Income Tax F.Y. 2009-10 assessment order 12.69 (TDS) is being filed before the Assessing Officer.

Income Tax F.Y. 2009-10 Commissioner of 6.68 (TDS) Income Tax (Appeal)

(c) As informed to us, there has been no outstanding balance to be transfer to Investor Education and Protection Fund and hence this clause in not applicable.

(viii) The Company has accumulated losses as at 31st March, 2015 of Rs. 76058.42 lacs. The accumulated losses at the end of the financial year are not less thanfifty percent of its net- worth. The net-worth of the Company has eroded completely at the end of the financial year. The Company has incurred cash losses during the current financial year and immediately preceding financial year.

^According to the records of the Company examined by us and the information and explanations given to us, in our opinion, the Company has defaulted in repayment of its dues to banks/financial institution as per details given below:-

Nature Of Amount Due Date Payment Amount Delay Days as on Dues (Rs. m Lacs) Date paid 31st Mar, 30th (Rs.in 2015 May, lacs) 2015

93.48 31-Mar-ll 1462 1523

2726.58 30-Jun-ll 1371 1432

2234 15-Aug-ll 1325 1386

2427.28 30-5ep-ll 1279 1340

31-55 31-Oct-ll 1248 1309

17.5 15-Nov-ll 1233 1294

766'39 31-Dec-ll 1187 1248

173 15-Feb-12 1141 1202

860.81 31-Mar-12 1096 1157

17.5 15-May-12 1051 1112

829.26 30-Jun-12 1005 1066

17.5 15-Aug-12 959 1020

829.26 30-Sep-12 913 974

Principal Not Yet Not Paid Applicable 17.5 15-Nov-12 867 928

829.27 31-Dec-12 821 882

17.5 15-Feb-13 775 836

829.27 31-Mar-13 731 792

17.5 31-May-13 670 731

552.42 30-Jun-13 640 701

17.5 31-Aug-13 578 639

552.42 30-Sep-13 548 609

17.5 30-Nov-13 487 543

552.42 31-Dec-13 456 517

17.5 28-Feb-14 397 453

554.07 31-Mar-14 366 427

1921,21 31-Mar-15 1 62

15-Apr-ll 15

15-Apr-ll 15

15-Apr-ll 15

1.32 31-Mar-ll

04-May-11 5

04-Jun-ll 6

04-Jul-ll 7

. 0.56 31-May-ll 1401 1462

Interest 1.17 30-Jun-ll 1371 1432

107.21 31-Jul-ll 1340 1401

107-21 31-Aug-ll 1309 1370

134.18 30-Sep-ll Not Not 1279 1340 Yet Appl- Paid icable 144.18 31-Oct-ll 1248 1309

144.18 30-Nov-ll 1218 1279

144.18 31-Dec-ll 1187 1248

154,21 31-Jan-12 1156 1217

154.21 28-Feb-12 1128 1189

154.21 31-Mar-12 1096 1157

203.61 30-Apr-12 1066 1127

203.61 31-May-12 1035 1096

203-61 30-Jun-12 1005 1066

203.61 31-Jul-12 974 1035

203.61 31-Aug-12 943 1004

203.61 30-Sep-12 913 974

203.61 31-Oct-12 882 943

203.61 30-NOV-12 852 gig

203.61 31-Dec-12 821 882

203.61 31-Jan-13 790 851

203.61 28-Feb-13 762 823

232.22 31-Mar-13 731 792

614.71 30-Jun-13 640 701

629.28 30-Sep-13 548 609

9-09 31-Dec-13 456 517

7.65 31-Mar-14 366 427

39.6 31-Mar-15 1 62

Penal 700.61 upto 31st More than March 1460 days Interest 2014 not on Apil to yet not Default 17.01 March paid Applicable 0-365 of 2015 Principal

(x) As per the information and explanations given to us and on the basis of our examination of the records, the Company has not given any guarantee for loans taken by others from banks or financial institutions.

(xi}As per the information and explanations given to us and on the basis of our examination of the records, in our opinion, the term loans taken by the Company have been applied for the purpose f for which they were obtained.

(xii) 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, we have neither come across any instance of fraud on or by the Company noticed or reported during the year, nor have we been informed of such case by the management.

For S. S. KOTHARI MEHTA & CO. Chartered Accountants Firm Registrationon 000756N

K. K. Tulshan Partner Date: 30.05.2015 Membership No.: 85033


Mar 31, 2014

We have audited the accompanying financiai statements of Samtel Color Limited (''the Company1), which comprise the Balance Sheet as at 31st March 2014, the Statement of Profit and Loss and the Cash Flow Statement for the year then ended, and Notes to Financial Statements comprising of a summary of significant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements

Management is responsible for the preparation of these financial statements that gives a true and fair view of ; the financial position, financial performa nce and cash flows of the Company in accordance with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 (''the Act'') read with the General Circular 15/2013 dated 13th September 2013 of the Ministry of Corporate Affairs in respect of section 133 of the Companies Act, 2013.This responsibility includes the design, implementation and maintenance of internal controls relevant to the preparation and presentation of the financial statements that gives a true and fair view and are free from material misstatements, whether due to fraud or error.

Auditor''s Responsibility

Our responsibility is to express an opinion on these financiai 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 the material misstatement of the financial statements, whether due to error or fraud. 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 effectiveness of the entity''s internal controls. An audit also includes evaluating the appropriateness of accounting policies used and reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

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

Basis for Qualified Opinion

(A) The financial statements have been prepared by the Company on the going concern basis os fully elaborated in Note 38 of the financial statements even though the proceedings are going on before the Board of Industrial and Financial Reconstruction under the Sick Industrial Companies(Special Provisions) Act 1985. . . . . - . . .

(B) We had reported in our audit report for the year ended 31s'' March 2012 as under:-

(i) The entire net worth of the Company has eroded completely; (ii) the Company has initiated the bidding process for the disposal of production lines 1 and 4(non -core assets) out of 4 production lines at plant situated at Gautam Budh NagarfUttar Pradesh) after obtaining approval of CDR lenders and consequently impaired those production lines by Rs. 3,865.91 Lacs and related stores & spares by Rs. 512.28 Lacs; (Hi) the manufacturing operations at other production lines at plants situated at Ghaziabad (Uttar Pradesh) & Parwanoo (Himachal Pradesh) could not be resumed in the financial year due to non-participation of labour in production process reasoning to their over-dues; (iv) the Company has defaulted in repayment of loans as per CDR scheme and borrowings of other lenders, as elaborated in note no. 38 of the financial statements; (v)there is diminution in the value of long term investments; (vi) reconciliation and confirmations of balances of certain major creditors and acceptances are pending; (vii) non- redemption of 969,163, 0% redeemable preference shares of RslOO each amounting to Rs. 969.16 lacs already due for redemption; and (viii) non payment of preference dividend for the period from 31st March 2008 to 31st March 2012 aggregating to Rs. 773.61 Lacs on 21,10,116 8% Non Convertible Cumulative Redeemable Preference Shares.

(C) We further reported in our audit report for the year ended on 31st March, 2013 as under:- -

(I) In view of the continued failure of the Company to disburse the legitimate dues of the workmen, Hon''bie High Court of Himachal Pradesh (Shimla) has settled the dispute by passing an order for the closure of

- Deflection Yoke unit at Parwanoo (H.P) and thereby, pay off the corresponding outstanding dues by selling the industrial undertaking/Company assets etc., (ii) the operations have been suspended in all locations by the mid of November 12, & have not been resumed till date and consequently, management has impaired the production lines 3 & 5, located at Gautam Buddh Nagar (UP) & Deflection Yoke unit located at Parwanoo (HP) by Rs.27,977.06 lacs and related stores & spares by Rs. 410.35 lacs etc.; (iii) the impairment of assets of production line 2, located at GautamBuddh Nagar (U.P.), and gun division at Meerut has not been - considered by the management on the rationale of its revival plan of running the operations by restructuring them even though in our opinion considering the liquidity crunch, the probability of running these lines seems remote;

(iv) the balances outstanding as on 31stMarch, 2013 of receivables & inventory are subject to confirmation & physical verification respectively due to temporary suspension of operations & non access to inventories, (v) raw material & finished goods inventory amounting to Rs. 311.90 lacs and Rs. 55 lacs respectively have been seized by the excise authorities due to non-payment of excise dues; (vi) there is non- submission of various statutory returns acknowledged by the respective authorities, non provision/deposition of various overdue statutory liabilities like PF/Service Tax/TDS/Excise/Vat & CST/WCT/TCS/ESI/ Gratuity/Bonus/ Preference dividend & related over dues (interest and penalty), non deduction of TDS on provisional expenses; and as explained by management exact amount of which could not be ascertained in present scenario;

(viii)there is increase in diminution of investments in current year of Rs.841.48 lac;, (ix) Assets lying with the Provident Fund trust have been transferred to Regional Provident Fund Commissioner and those related to Gratuity Trust have been settled by adjustment of employees dues. However, as per the management, related liability has been accounted for completely and there will be no demand over and above the same;

(x) Company has accounted for its gratuity and leave encashment liability on actual basis rather than on actuarial valuation method which has been prescribed in Accounting Standard AS-15, "Employee Benefits".

(D) We further report that during the year ended 31st March, 2014 the facts and situation mentioned above continues Further the Company has not complied with the provisions of clause 35 of listing agreement (submission of shareholding pattern) and requirements ofSEBI circular no. D & CC/ FITTC/CIR-16/2002 dated 31.12.2002 regarding Reconciliation of Share Capital Audit Report, for the quarter ended 31s1 December 2013. Default still continues.

These factors raise substantial doubts as to the Company''s ability to continue as going concern and therefore, the Company may not be able to realise its assets and discharge its liabilities in the normal course of business. The financial statements do not include any adjustment relating to the recoverability and classification of recorded assets amounts.

Based on the above facts we are of the opinion that going concern assumption has been affected and the financials should have been stated at net realisable value.

Qualified Opinion

In our opinion and to the best of our information and according to the explanations given to us, except for the effects of the matter described in the Basis for Qualified Opinion paragraph regarding erosion of net-worth coupled with other events and inability in realisation of assets and discharge of liabilities based on going concern assumptions and clauses (1), (2), {3), (7),(8) ,{9),(10j, (11) & (17) of annexure to Auditor''s Report referred in clause 1 of paragraph of ''Report on other Legal and Regulatory requirements'' below; being non- provision of physical verification due to restricted access of fixed assets & Inventories, irregular in payment or principal and interest to certain parties, internal audit system, maintenance of cost records, non payment of outstanding statutory dues, cash loss in the current financial year,. default in payment of dues to financial institutions and banks and utilization of short - term funds for long term purposes, the financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

a) In the.case of the Balance Sheet, of the state of affairs of the Company as at 31" March 2014;

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

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

Report on Other Legal and Regulatory Requirements

1) As required by the Companies (Auditor''s Report) Order, 2003 (''the Order1) issued by the Central Government of India in terms of section 227 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

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

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

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

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

d) Except for the effects of the matter described in the Basis for Qualified Opinion paragraph, in our opinion, the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement comply with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956, read with the General circular 15/2013 dated 13th September 2013 of the Ministry of Corporate Affairs in respect of section 133 of the Companies Act, 1956,

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

Re: Samtel Color Limited

Referred to in clause 1 of paragraph on ''Report on Other Legal and Regulatory Requirements'' of our report of even date,

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

(b) During the year, due to suspension of the operations and non-access of the fixed assets at all plant locations, the physical status of the assets as at the reporting date and till the date of signing of this report could not be confirmed by the management. Consequently, we are unable to comment on the accounting of any material discrepancy noticed on physical verification, if any.

(c) In our opinion and according to the information and explanations given to us, substantial part of fixed assets has not been disposed of by the Company that impacts the going concern. It may be noted that certain tangible assets of the Company are not in its possession due to various disputes.

2) (a) The inventory could not be physically verified by the management during the year, as the factories at all locations were closed due to temporary suspension and access to inventories were not available. Thus the inventories have been taken on the basis of management certification.

(b) We are unable to comment on the procedures of physical verification of inventory followed by the management for the reason 2(a) above.

(c) Due to the reasons mentioned in 2(a) above, we are unable to comment on the inventory records and discrepancies thereto.

3) {a)The Company had granted unsecured loan to a Company covered in the register maintained under Section 301 of the Act. The maximum amount outstanding at any time during the year and year-end balance from them is Rs.100 lacs and Rs.Nil lacs respectively.

(b) The rate of interest and other terms and conditions of loans given by the Company, was not prima facie prejudicial to the interest of the Company.

(c) This loan was repayable on demand, However the receipt of the interest on this loan was irregular.

(d) As informed to us, there are no overdue amounts except interest thereon.

(e) The Company has taken unsecured loans fromjhreejiarties (including director), covered in the register maintained under Section 301 of the Act maximum amount outstanding at any time during the year and the year-end balance from them is Rs.314.78 lacs and 310.78 lacs respectiv -ely excluding interest thereon {which includes maximum outstanding and year-end balance of 70.30 lacs and 66.30 lacs respectively from a director).

(f) In our opinion, the rate of interest and other terms and conditions of such loans are not prima facie prejudicial to the interest of the Company.

(g) In respect of the aforesaid loans, the Company is irregular in repayment of principal and interest amount

4) In our opinion and according to the information and explanations given to us, having regard to the explanation that certain items purchased are of special nature for which suitable alternative sources does not exist for obtaining comparative quotations, there is an adequate internal control system commensurate with the size of the Company and the nature of its business for the purchase of inventory, fixed assets and for the sale of goods. Further, on the basis of our examination of the books and records of the Company and according to the information and explanations given to us, we have neither come across nor have been informed of any continuing failure to correct major weaknesses in the aforesaid internal control system.

5) (a) According to the information and explanations given to us, we are of the opinion that the particulars of all contracts or arrangements that need to be entered into the register maintained under section 301 of the Companies Act,1956 have been so entered.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956 and exceeding the value of rupees five lacs or more in respect of each party, during the year, have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

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

7) In our opinion, the Company should strengthen interna! audit system commensurate with its - size and nature of its business.

8) Pursuant to the rules made by the Central Government of India, the maintenance of cost records has been prescribed under clause (d) of sub-section (1) of Section 209 of the Act, We are of the opinion that the prescribed accounts and records have not been maintained. Therefore we are unable to comment on the accuracy and completeness of these records.

9) (a) According to the information and explanations given to us and the records of the Company examined by us, in our opinion, the Company had been irregular 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, as applicable, with the appropriate authorities.

(b) According to information and explanations given to us, no undisputed amounts payable in respect of Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty and Cess

were in arrears at the year-end for a period of more than six months from the date they became payable except Rs.122.48 lacs of TDS, Rs.0.40 lacs of TCS, Rs.258.74 lacs of Provident Fund, Rs.100.09 lacs, Rs.7140.50 lacs of Vat & CST, Rs.259.93 lacs of Excise, Rs.10,50 lacs of WCTand Rs.331.74 lacs as in terest on non payment/ delayed payment of various statutory dues.

(c) According to the information and explanations given to us and the records of the Company examined by us, the particulars of dues of income-tax, sales-tax, wealth tax, service tax, customs duty, excise duty and cess as at 31s March, 2014 which have not been deposited on account of a dispute, are as follows-

(in lacs)

Name of the Nature of Related Period Forum where the Amount Statute Dues dispute is pending

Central Trade Tax F.Y. 1995-96 to Hon''bleSupreme Court 431,60 Sales 1998-99 Tax Act, Trade Tax F.Y.1995-96 Tribunal, Ghaziabad 1.95

Trade Tax F.Y. 1996-97 Tribunal, Noida 2.10 Trade Tax F.Y. 1996-97 Tribunal, Noida 1.30

Trade Tax F.Y.1996-97 Hon''ble High Court, 6.00 Allahabad

Trade Tax F.Y, 1997-98 Hon''ble High Court, 201.56 Allahabad

Trade Tax F.Y 1997-98 and Hon''ble High Court 120.27 1998-1999

Trade Tax F.Y.1999-00 Hon''ble High Court, 47.28 Allahabad

Entry Tax F.Y. 2000-01 Hon''ble High Court, 55.92 Allahabad

Entry Tax F.Y. 2002-03 Hon''ble High Court, 21.59 Allahabad

Entry Tax F.Y. 2003-04 Hon''ble High Court, 0.82 Allahabad_

Trade Tax F.Y. 2004-05 Hon''ble Tribunal, 1.50 Ghaziabad

Entry Tax F.Y. 2008-09 Addl. Commissioner 1.75 Appeals Salestax F.Y. 2008-09 Commercial Taxa 10.45 officer, Kota

Sales Tax F.Y. 2009-10 Commercial Tax 58.75 officer, Kota

Sales Tax F.Y. 2010-11 Commercial Tax 1810.4 officer, Kota

Sales Tax F.Y. 2009-10 Commercial Tax 6.93 officer, Kota

Central Customs F.Y. 2003-04 Commissioner Customs 7.49 Duty

Customs Act, Customs F.Y. 2005-06 to Customs, Excise 758.80 1962 Duty & Service F.Y, 2007-08 Tax Appellate Tribunal

U.P. VAT Act Sales Tax F.Y. 2007-08 Hon''ble High Court, 343.33 Allahabad

Sales Tax F.Y. 2009-10 Joint commissioner 383.14 of Commercial Taxes, Noida

Central Excise F.Y. 1994-99 Hon''ble Supreme 109.00 Excise Act, Duty Court 1.99 Excise F.Y. 1996-97 Customs, Excise Duty & Service Tax Appellate Tribunal

Name of the Nature of Related Period Forum where the Amount Statute Dues dispute is pending

1944 Excise Duty F. Y. 1996-97 Hon''ble High Court, 86.50 Allahabad

Excise Duty F. Y. 1997-98 Hon''ble High Court, 66.38 Allahabad

Excise Duty F. Y. 1998-99 Customs, Excise 0.73 & Service Tax Appellate Tribunal

Excise Duty F. Y. 2000-01 Hon''ble High Court, 64.25 Allahabad

Excise Duty F. Y. 2001-02 Customs, Excise 1419.97 & Service Tax Appellate Tribunal

Excise Duty F. Y. 2002-03 Hon''ble High Court, 3.03 Allahabad

Service Tax F. Y. 2002-07 Customs, Excise 9.19 & Service Tax Appellate Tribunal

Excise Duty F. Y. 2003-04 Hon''ble High Court, 8.64 Allahabad

Excise Duty F. Y 2004-05 to Commissioner-Excise 6.40 2007-08

Service Tax F. Y, 2004-08 Commissioner-Excise 400.65

Excise Duty F. Y. 2004-05 Customs, Excise 10.00 & Service Tax Appellate Tribunal

Excise Duty F. Y. 2004-05 Dy. Commissioner 1.68 Excise

Excise Duty F. Y. 2005-06 Customs, Excise 314.32 & Service Tax Appellate Tribunal

Excise Duty F. Y. 2005-06 Customs, Excise 81.04 & Service Tax Appellate Tribunal

Excise Duty F. Y 2005-06 CESTAT 7,20

Excise Duty F. Y. 2006-07 Jt. Secretary, 27.66 Ministry of Financ

Excise Duty F. Y. 2006-07 Commissioner 9.0 of Central Excise

Excise Duty F. Y. 2008-09 Joint Commiss 47.94 ioner of Appeal

Excise Duty F. Y. 2008-09 Commissioner 6.11 (Appeal) Central Excise

Service Tax F. Y. 2009-10 Commissioner 31.26 -Excise

R VAT Act, Sales tax F. Y. 2008-09 Commercial Tax 4.95 2003 Officer, Kota

M VAT Act, Sales Tax F. Y. 2009-10 Deputy Commiss 339.02 2002 ioner of Sales Tax-Aurangabad

Name of the Nature of Related Period Forum where the Amount Statute Dues dispute is pending

IncomeTax Income Tax A.Y. 2005-06 Commissioner 245.03 Act, of Income Tax 1961 (Appeal)

Income Tax F.Y. 2006-07 Commissioner 0.49 (TPS) of Income Tax (Appeal)

Income Tax A.Y. 2008-09 Commissioner 46.23 of Income Tax (Appeal)

Income Tax F.Y. 2008-09 Rectification 134.01 (TP5) appiication for amendment of assessment

Income Tax F.Y. 2009-10 order is being 12.69 (TPS) filed before the Assessing Officer.

Income Tax F.Y. 2009-10 Commissioner 6.68 (TPS) of Income Tax (Appeal)

10) The Company has accumulated losses as at 31s1 March, 2014 of f 72,721.75 lacs. The accumulated losses at the end of the financial year are not less than fifty percent of its net- worth. The net-worth of the Company has eroded completely at the end of the financial year. The Company has incurred cash losses during the current financial year and immediately preceding financial year.

11) According to the records of the Company examined by us and the information and explanation given to us, the Company has defaulted in repayment of dues to financial institutions and banks as per details below:-

Amount Delay Days as on Paid(in Nature Of Dues Amount Due Due Date Payment Lacs) 31st Mar 30th May in Lacs) Date 2014 2014

93.48 31-Mar-11 1096 1156

2726.58 30-Jun-11 1005 1065

22.34 15-Aug-11 959 1019

2427.28 30-Sep-11 913 973

31.55 31-0ct-11 882 942

17.5 15-Nov-11 867 927

766.39 31-Dec-11 821 881

Principal 17.5 15-feb-12 Not Yet Not 775 835 Paid Appli Cable 860.81 31-Mar-12 730 790

17.5 15-May-12 685 745

829.26 30-Jun-12 636 699

17.5 l5-Aug-12 593 653

829.26 30-Sep-12 547 607

17.5 15-NOV-12 501 561

829.27 31-Dec-12 455 515

17.5 15-feb-13 409 469

829.27 31-Mar-13 365 425

17.5 31-May-13 304 364

552.42 30-Jun-13 274 334

17.5 31-Aug-13 212 272 552.42 30-sep-13 182 242

17.5 30-NOV-13 90 150

552.42 31-Dec-13 31 91

17.5 28-Feb-14 0 60 554.07 31-Mar-14

l5-Apr-11 15

15-Apr-11 15

15-Apr-11 15

132 31-Mar-11 04-May-11 5

04-Jun-11 6

04-Jul-11 7

0.56 31-May-11 1035 1095

1.17 30-Jun-11 1005 1065

107.21 31-Jul-11 974 1034

107.21 31-Aug-11 943 1003

134.18 30-Sep-11 913 973

144.18 31-0ct-11 882 942

144.18 30-Nov-11 852 912

144.18 31-Dec-11 821 881

154.21 31-Jan-12 790 850

lnterest 154.21 28-Feb-12 762 822

154.21 31-Mar-12 700 729

203.61 30-Apr-12 Not Yet Not 730 790 Paid Appli cable

203.61 31-May-12 669 729 203.61 30-Jun-12 639 699

203.61 31-Jul-12 608 668

203.61 31-Aug-12 577 637

203.61 30-Sep-12 547 607

203.61 31-Oct-12 516 576

203.61 30-NOV-12 486 546

203.61 31-Dec-12 455 515

203.61 31-Jan-13 424 484

203.61 28-Feb-13 396 456

232.22 31-Mar-13 365 425

614.71 30-Jun-13 274 334

629.28 30-Sep-13 182 242

9.09 31-Dec-13 90 150

7.65 31-Mar-14 0 60

Penal Interest Upto 31" on Default of 57334 March 2013 Not yet Not More than Principal paid Appli 730 days cable

April 2013 365 to 127,27 Mar 2014

12) In our. opinion and according to the information and explanation given to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debenture and other securities.

13) . 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 Order are not applicable to the Company.

14) As per the information and explanations given to us, the Company is not dealing or trading in shares, securities, debentures and other investments. Accordingly, the provision of clause 4 (xiv) of the Order is not applicable to the Company.

15) In our opinion, and according to the information and explanations given to us, the terms and conditions of a guarantee of ft,651.53 lacs given by the Company, for a loan taken by Samtel Electron Devices, GmbH from a bank, are prima facie not prejudicial to the interest of the Company.

16) In our opinion and according to the information and explanations given to us, no fresh term loan has been obtained by the Company during the year under audit. Accordingly, the provision of clause 4 (xvi) of the Order is not applicable to the Company.

17) On the basis of an overall examination of the balance sheet of the Company, we report that short term funds of f41,933.35 lacs generated from reduction in net current assets have been utilized for long term applications.

18) According to the information and explanation given to us, the Company has not made preferential allotment of shares to any of the parties covered in the register maintained under Section 301 of the Act.

19) The Company has not issued any debentures during the year.

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

21) 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, we have neither come across any instance of fraud on or by the Company noticed or reported during the year, nor have been informed of such case by the management.

For S. S. Kothari Mehta & Co. Chartered Accountants Firm Registration Number: 000756N

(K.K. Tuishan) Partner Membership Number: 085033

Place: New Delhi Date: 30,h May, 2014


Mar 31, 2013

We have audited the accompanying financial statements of Samtel Color Limited (''the Company''), which comprise the Balance Sheet as at 31st March 2013, and the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and Notes to Financial Statements comprising of a summary of significant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 (''the Act''). This responsibility includes the design, implementation and maintenance of internal 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.

Auditor''s Responsibility

Our responsibility is to express an opinion on thesefinancial 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 the materia! misstatement of the financial statements, whether due to error or fraud. In making those risk assessments, the auditor considers internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

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

Basis for Qualified Opinion

The financial statements have been prepared by the Company on the going concern basis as fully elaborated in Note 38 of the financial statements as the proceedings are going on before the Board of Industrial and Financial Reconstruction under the Sick Industrial Companies(Specia! Provisions) Act 1985.

We had reported in our audit report for the year ended 31st March 2012 as under:- (i) The entire net worth of the Company has eroded completely; (ii)the Company has initiated the bidding process for the disposal of production lines 1 and 4(non -core assets) out of 4 production lines at plant situated at Gautam Budh Magar(Uttor Pradesh} after obtaining approval of CDR lenders and consequently impaired those production lines by Rs. 3,366.91 Lacs and related stores & spares by Rs, 512.28 Lacs;(iii} the manufacturing operations at other production tines at plants situated at Ghaziobad (Uttar Pradesh) & Parwanoo (Himachai Pradesh) could not be resumed in the financial year due to non-participation of labour in production process due to their over-dues; (iv) the Company has defaulted in repayment of loans as per CDR scheme and borrowings of other lenders; (v)there is diminution in the value of long term investments; (vi)reconciliation and confirmations of balances of certain major creditors and acceptances are pending; (vii) non- redemption of 969,163, 0% redeemable preference shares of RslOO each amounting to Rs. 969.16 lacs already due for redemption; and (viii) non payment of preference dividend for the period from 32sr March 2008 to 31st March 2012 aggregating to Rs. 773.61 Lacs on 2110116 8% Non Convertible Cumulative Redeemable Preference Shares.

We further report that during the year, in addition to the continuation of our above observations, as under :-

(i) in view of the continued failure of the Company to disburse the legitimate dues of the workmen, Hon''ble High Court of Himachai Pradesh (Shimla) has settled the dispute by passing an order for the closure of Deflection Yoke unit at Parwanoo (H.P) and thereby, pay off the corresponding outstanding dues by selling the industrial undertaking/Company assets etc., (ii)the operations have been suspended in all locations by the mid of November 12, & have not been resumed till date and consequently, management has impaired the production tines 3 & 5, located at Gautam Buddh Nagar (UP) & Deflection Yoke unit located at Parwanoo (HP) by Rs. 27,977.06 lacs and related stores & spares by Rs. 410.35 lacs etc.; (Hi) the impairment of assets of production line 2, located at Gautam Buddh Nagar (U.P.), and gun division at Meerut has not been considered by the management on the rationale of its revival plan of running the operations by restructuring them even though in our opinion considering the liquidity crunch, the probability of running these lines seems remote; (iv) the balances outstanding as on 31st March, 2013 of receivables & inventory are subject to confirmation & physical verification respectively due to temporary suspension of operations & non access to inventories, (v) raw material & finished goods inventory amounting to Rs. 311.90 lacs and Rs. 55 lacs respectively have been seized by the excise authorities due to non- payment of excise dues; (vi) there is non-submission of various statutory returns acknowledged by the respective authorities, non provision/deposition of various overdue statutory liabilities like PF/Service Tax/TDS/Excise/Vat & CST/WCT/TCS/ESI/Gratuity/Bonus/ Preference dividend & related over dues (interest and penalty), non deduction of TD5 on provisional expenses; and as explained by management exact amount of which could not be ascertained in present scenario; (viii) there is increase in diminution of investments in current year of Rs. 841.48 lacs, (ix) Assets lying with the Provident Fund trust have been transferred to Regional Provident Fund Commissioner and those related to Gratuity Trust have been settled by adjustment of employees dues. However, as per the management, related liability has been accounted for completely and there will be no demand over and above the sum;, (x) Company has accounted for its gratuity and leave encashment liability on actual basis rather than on actuarial valuation method which has been prescribed in Accounting StandardAS-15, "Employee Benefits".

These factors raise substantial doubts as to the Company''s ability to continue as going concern and therefore, the Company may not be able to realise its assets and discharge its liabilities in the norma! course of business. The financial statements do not include any adjustment relating to the recoverability and classification of recorded assets ampunps

Based on the above facts we are of the opinion that going concern assumption has been affected and the financials should have been stated at net realisable value.

Qualified Opinion

In our opinion and to the best of our information and according to the explanations given to us, except for the effects of the matter described in the Basis for Qualified Opinion paragraph regarding erosion of net-worth coupled with other events and inability in realisatiqn of assets and discharge of liabilities based on going concern assumptions and clauses (1), {21(31,(7), (9), (10), (11) & (17) of annexure to Auditor''s Report referred in clause 1 of paragraph of ''Report on other Legal and Regulatory requirements'' below; being non-provision of physical verification due to restricted access of fixed assets & inventories, irregular in payment or principal and interest to certain parties, internal audit system, non payment of outstanding statutory dues, cash loss in the current financial year, default in payment of dues to financial institutions and banks and utilization of short -term funds for long term purposes, the financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

a) In the case of the Balance Sheet, of the state of affairs of the Company as at 31i{ March 2013;

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

c) In the case of the Cash Flow Statement, of the cash flows for the year ended on that date. 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 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

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

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

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

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

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

e) On the basis of written representations received from the directors as on 315: March 2013, and taken on record by the Board of Directors, none of the directors are disqualified 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;

Re: Samtel Color Limited

Referred to in clause 1 of paragraph on ''Report on Other Legal and Regulatory Requirements'' of our report of even date,

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

(b) During the year, due to suspension of the operations and non-access of the fixed assets at all plant locations, the physical status of the assets as at the reporting date and til! the date of signing of this report could not be confirmed by the management. Consequently, we are unable to comment on the accounting of any material discrepancy noticed on physical verification, if any,

(c) In our opinion and according to the information and explanations given to us, substantial part of fixed assets has not been disposed of by the Company. However, during the year, plant & machinery related to line no 3 & 5, located at Gautam Buddh Nagar plant, and Deflection Yoke unit, located at Parwanoo (HP),-have been impaired and the book value have been reduced by f 27,977,06 lacs, [refer note no 38 (b)].

2) (a) The inventory could not be physically verified by the management during the year, as the factories at all locations were closed due to temporary suspension and access to Inventories were not available as at 31st March 2013. Thus the inventories have been taken on the basis of management certification.

(b) We are unable to comment on the procedures of physical verification of inventory followed by the management for the reason 2(a) above.

c) Due to the reasons mentioned in 2(a) above, we are unable to comment on the inventory records and discrepancies thereto.

3) (a) The Company has granted unsecured loans to two companies covered in the register maintained under Section 301 of the Act. The maximum amount outstanding at anytime during the year and the year-end balance from them is Rs.277.00 lacs and T 100.00 lacs, respectively.

(b) The rate-of interest and other terms and conditions of loans given by the Company, are not prima facie prejudicial to the interest of the Company.

(c) These loans are repayable on demand. However the recsipt of the interest is irregular.

(d) As informed to us, there are no overdue amounts except interest thereon.

(e) The Company has taken unsecured loans from three parties (including director}, covered in the register maintained under Section 301 of the Act. The maximum amount outstanding at any time during the year and the year end balance from them is f 314.78 lacs, excluding interest thereon (which includes maximum outstanding and year end balance of f 70.30 lacs from a director).

(f) in our opinion, the rate of interest and other terms and conditions of such loans are not prima facte prejudicial to the interest of the Company.

(g) In respect of the aforesaid loans, the Company is irregular in repayment of principal and interest amount.

4} In our opinion and according to the information and explanations given to us, having regard to the explanation that certain items purchased are of special nature for which suitable alternative sources does not exist for obtaining comparative quotations, there is an adequate internal control system commensurate with the size of the Company and the nature of its business for the purchase of inventory, fixed assets and for the sale of goods. Further, on the basis of our examination of the books and records of the Company and according to the information and explanations given to us, we have neither corne across nor have been informed of any continuing failure to correct major weaknesses in the aforesaid internal control system.

5) (a) According to the information and explanations given to us, we are of the opinion that the particulars of all contracts or arrangements that need to be entered into the register maintained under section 301 of the Companies Act,1956 have been so entered.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956 and exceeding the value of rupees five lacs or more in respect of each party, during the year, have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

6) The Company has not accepted any deposits from the public within the meaning of Sections 58A and 5SAA of the Act and the rules framed there under.

7) in oar opinion, the Company should strengthen internal audit system commensurate with its size and nature of its business,

8] We have broadly reviewed the books of account maintained by the Company in respect of products where, pursuant to the rules made by the Central Government of India, the maintenance of cost records has been prescribed under clause (d) of sub-section (1} of Section 209 of the Act and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the records with a view to determine whether they are accurate or complete.

9) (a) According to the information and explanations given to us and the records of the Company examined by us, in our opinion, the Company had been irregular 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, as applicable, with the appropriate authorities,

(b) According to information and explanations given to us, no undisputed amounts payable in respect of Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty and Cess were in arrears at the year-end for a period of more than six months from the date they became payable except Rs. 110A3:iiaijsi.ps, fO.38 lacs of TC5, f 273.74 lacs of Provident Fund, f 140.62 lacs of Vat&CST, f''244.50 of Excise, Rs.0.27 lacs of WCT and f 5.13 lacs of Service Tax. (c) According to the information and explanations given to us and the records of the Company examined by us, the particulars of dues of income-tax, sales-tax, wealth tax, service tax, customs duty, excise duty and cess as at 31" March, 2013 which have not been deposited on account of a dispute, are as follows-

{Rs. in lacs)

Name of the Nature of Related Period Forum where the dispute Amount Statute Dues is pending

Central Sales Trade Tax F. Y. 1995-96 to Hon''ble Supreme Court 431.60 Tax Act, 1998-99

1956 Trade Tax F. Y.1995-96 Tribunal, Ghaziabad 1.95

Trade Tax F. Y. 1996-97 Tribunal, Noida 2.10

Trade Tax F. Y. 1996-97 Tribunal, Noida 1.30

Trade Tax F. Y.1996-97 Hon''ble High Court, 6.00 Allahabad

Trade Tax F. Y. 1997-98 Hon''ble High Court, 201.56 Allahabad

Trade Tax F.Y 1997-98 Hon''ble High Court 120.27 and 1998-1999

Trade Tax F. Y.1999-00 Hon''ble High Court, 47.28 Allahabad

Entry Tax F. Y. 2000-01 Hon''ble High Court, 55.92 Allahabad

Entry Tax F.Y. 2002-03 Hon''ble High Court, 21.59 Allahabad

Entry Tax F. Y. 2OO3-04 Hon''ble High Court, 0,82 Allahabad

Trade Tax F.Y. 2004-05 Hon''ble Tribunal, 1.50 Ghaziabad

Entry Tax F. Y.2008-09 AddL Commissioner 1.75 Appeals

Central Customs Duty F.Y.2003-04 Commissioner Customs 7,49 Customs Customs Duty F.Y, 2005-06 to Customs, Excise & Service 758.80 Act, 1962 F.Y. 2007-08 Tax Appellate Tribunal

U.P.VAT Act Sales Tax F.Y. 2007-08 Hon''ble High Court, 343.33 Allahabad

Central Excise Duty F. Y. 1994-99 Hon''ble Supreme Court 109.00

Excise Act, Excise Duty F. Y. 1996-97 Customs, Excise & Service 1.99 1944 Tax Appellate Tribunal

Excise Duty F. Y. 1996-97 Hon''ble High Court 86.50 Allahabad

Excise Duty F. Y. 1997-98 Hon''ble High Court, 66.38 Allahabad

Excise Duty F. Y.1998-99 Customs, Excise & Service 0.73 Tax Appellate Tribunal

Excise Duty F. Y. 2000-01 Hon''ble High Court, 64.25 Allahabad

Excise Duty F. Y. 2001-02 Customs, Excise & Service 1419.97 Tax appellate Tribunal

Excise Duty F. Y. 2002-03 Hon''ble High Court, 3.03 Allahabad

Service Tax F.Y. 2002-07 Customs, Excise & Service 9.19 Tax Appellate Tribunal

Excise Duty F.Y. 2003-04 Hon''ble High Court, 8.64 Allahabad

Excise Duty F.Y 2004-05 to Commissioner- Excise 6.40 2007-08

Service Tax F.Y. 2004-08 Commissioner - Excise 400.65

Excise Duty F.Y. 2004-05 Customs, Excise & Service 10.00 Tax Appellate Tribunal

Excise Duty F. Y. 2004-05 Dy. Commissioner Excise 1.68

Excise Duty F. Y. 2005-06 Customs, Excise & Service 314.32 Tax Appellate Tribunal

Excise Duty F. Y. 2005-06 Customs, Excise & Service 81.04 Tax Appellate Tribunal

Excise Duty F.Y 2005-05 CESTAT 7.20

Excise Duty F. Y. 2006-07 Jt. Secretary, Ministry of 27.66 Finance

Excise Duty F.Y. 2006-07 Commissioner of Central 9,0 Excise

Excise Duty F.Y. 2008-09 Joint Commissioner of 47.94 Appeal

Excise Duty F.Y. 2008-09 Commissioner (Appeal) 6.11 Central Excise

Service Tax F.Y, 2009-10 Commissioner-Excise 31.26

Income Tax Income Tax A.Y. 2005-06 Commissionerof Income 245,03 Act, 1961 Tax (Appeal)

Income Tax F.Y. 2006-07 Commissioner of Income 0.49 (TDS) Tax (Appeal)

Income Tax A.Y. 2008-09 Commissioner of Income 46.23 Tax (Appeal)

Income Tax F.Y. 2008-09 Rectification application 134.01 (TDS) for amendment o

Income Tax F.Y. 2009-10 assessment order is being 12.69 (TDS) filed before the Assessing Officer.

Income Tax F.Y. 2009-10 Commissioner of Income 6.68 (TDS) Tax (Appeal)



10) The Company has accumulated losses as at 31* March, 2013 of f 72,647.91 lacs. The accumulated losses at the end of the financial year are not less than fifty percent of its net- vjorth. The net-worth of the Company has eroded completely at the end of the financial year. The Company has incurred cash /ojses - during the current financial year and immediately preceding financial year.

11) According to the records of the Company examined by us and the information and explanation given to us, the Company has defaulted in repayment of dues to financial institutions and banks a$ per details below:-

12) fn our opinion and according to the information and explanation given to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debenture and other securities.

13) 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 Order are not applicable to the Company.

14) As per the information and explanations given to us, the Company is not dealing or trading in shares, securities, debentures and other investments. Accordingly, the provision of clause 4 (xiv)of the Order is not applicable to the,C&nnpa;ny.:,.

15) In our opinion, and according to the information and explanations given to us, the terms and conditions of a guarantee of fl,390.3S lacs given by the Company, for a loan taken by Samtei Electron Devices, GmbH from a bank, are prima facie not prejudicial to the interest of the Company.

16) In our opinion and according to the information and explanations given to us, no fresh term loan has been obtained by the Company during the year under audit. Accordingly, the provision of clause 4 (xvi) of the Order is not applicable to the Company.

17} On the basis of an overall examination of the balance sheet of the Company, we report that short term funds of Rs.37,027,81 lacs generated from reduction in net current assets have been utilized for long term applications.

18) According to the information and explanation given to us, the Company has not made preferential allotment of shares to any of the parties covered in the register maintained under Section 301 of the Act.

19) The Company has not issued any debentures during the year.

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

21) 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, we have neither come across any instance of fraud on or by the Company noticed or reported during the year, nor have been informed of such case by the management.



For S. S. Kothari Mehta & Co.

Chartered Accountants

Firm Registration No.: 0007S6N



K.K.Tulshan

Partner

Membership No: 085033



Place: New Delhi

Date: 31st May, 2013


Mar 31, 2011

1. We have audited the attached Balance Sheet of Samtel Color Limited, as at March 31,2011, and the related Profit and Loss Account and 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.

2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by 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 (Auditors Report) (Amendment) Order, 2004} {hereinafter referred to as 'Order'} issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

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

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

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

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

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

(e) On the basis of written representations received from the directors, as on March31, 2011 and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2011 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Act;

(f) Since the Central Government has not issued any notification as to the rate at which the cess is to be paid under section 441A of the Companies Act, 1956 nor has it issued any rules under the said section, prescribing the manner in which such cess is to be paid, no cess is due and payable by the Company.

(g) Without qualifying our opinion we draw attention to Note no 1K of schedule Q, wherein the approval for managerial remuneration amounting to Rs57.65 lacs for the year 31st March 2010 from Central Government is pending.

(h) In our opinion and to the best of our information and according to the explanations given to us, the said financial statements together with Significant Accounting Policies & Notes thereon , give in the prescribed manner the information required by the Companies Act, 1956 and give a true and fair view in conformity with the accounting principles generally accepted in India:

(i) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2011; (ii) in the case of the Profit and Loss Account, of the Loss for the year ended on that date; and (Hi) in the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

ANNEXURE TO AUDITORS' REPORT

[Referred to in paragraph 3 of the Auditors' Report of even date to the members of Samtel Color Limited on the financial statements for the year ended March 31, 2011]

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

of fixed assets.

(b) The fixed assets are physically verified by the management according to a phased programme designed to cover all the items 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. Pursuant to the programme, all the fixed assets of the Company have been physically verified by the management. 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 fixed assets has not been disposed of by the Company during the year. However, during the year (a) plant and machinery of the Company has been revalued by an independent professional valuer leading to a decline of Rs. 1013.91 lacs in its net book value (refer note 11 of Schedule Q); (b)certain research and development plant and machinery relating to "Plasma Display Panel Project" has been impaired by Rs. 1,457.62 lacs (refer note 12 of Schedule Q);

2. (a) The inventory has been physically verified during the year by the management. In our opinion, the frequency of verification is reasonable.

(b) In our opinion, the procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) On the basis of our examination of the inventory records, in our opinion, the Company is maintaining proper records of inventory. The discrepancies noticed on physical verification of inventory as compared to book records were not material.

3. (a) The Company has granted unsecured loans to two companies covered in the register maintained under Section 301 of the Act. The maximum amount outstanding at any time during the year and the year end balance from them is Rs. 277.00 lacs.

(b) The rate of interest and other terms and conditions of loans given by the company, are not prima facie prejudicial to the interest of the company.

(c) These loans are repayable on demand and the receipt of the interest is regular.

(d) As informed to us, there are no overdue amounts;

(e) The Company has taken unsecured loans from 3 parties covered in the register maintained under Section 301 of the Act. The maximum amount outstanding at any time during the year and the year end balance from them is Rs. 286.77 lacs, excluding interest thereon.

(f) In our opinion, the rate of interest and other terms and conditions of such loans are not prima facie prejudicial to the interest of the Company.

(g) In respect of the aforesaid loans, the Company is regular in repayment of principal amounts. The interest amount is however not paid by the Company as there is a delay in repayment of principal amount of loan installments to CDR lenders .

4. In our opinion and according to the information and explanations given to us, having regard to the explanation that certain items purchased are of special nature for which suitable alternative sources do not exist for obtaining comparative quotations, there is an adequate internal control system commensurate with the size of the Company and the nature of its business for the purchase of inventory, fixed assets and for the sale of goods and services. Further, on the basis of our examination of the books and records of the Company and according to the information and explanations given to us, we have neither come across nor have been informed of any continuing failure to correct major weaknesses in the aforesaid internal control system.

5. (a) According to the information and explanations given to us, we are of the opinion that the particulars of all contracts or arrangements that need to be entered into the register maintained under section 301 of the Companies Act, 1956 have been so entered.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956 and exceeding the value of rupees five lacs or more in respect of each party, during the year, have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

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

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

8. We have broadly reviewed the books of account maintained by the Company in respect of products where, pursuant to the rules made by the Central Government of India, the maintenance of cost records has been prescribed under clause (d) of sub-section (1) of Section 209 of the Act and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the records with a view to determine whether they are accurate or complete.

9. (a) According to the information and explanations given to us and the records of the Company examined by us, in our opinion, the Company is generally 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, as applicable, with the appropriate authorities.

(b) According to information and explanations given to us, no undisputed amounts payable in respect of Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty and Cess were in arrears at the year- end for a period of more than six months from the date they became payable.

(c) According to the information and explanations given to us and the records of the Company examined by us, the particulars of dues of income-tax, sales-tax, wealth tax, service tax, customs duty, excise duty and cess as at March 31, 2011 which have not been deposited on account of a dispute, are as follows-

Name of the Statute Nature of Dues Period to which the amount relates

Central Sales Tax Trade Tax F. Y. 1995-96 Act, 1956 Trade Tax F. Y. 1999-00

Trade Tax F. Y. 1996-97

Trade Tax F. Y. 1997-98

Trade Tax F. Y. 1995-96

Trade Tax F. Y. 1996-97

The U.P. Tax on Entry Entry Tax F. Y. 2003-04 of Goods Act, 2000 Entry Tax F. Y. 2000-01

Entry Tax F. Y. 2002-03

Entry Tax F. Y. 2008-09

U.P. VAT Act Sales Tax F. Y. 2007-08

Central Customs Customs Duty F. Y. 2006-08 Act, 1962 Customs Duty F. Y. 2003-04

Central Excise Act, Excise Duty F. Y. 1994-99 1944 Excise Duty F. Y. 1992-93

Excise Duty F. Y. 1997-98

Excise Duty F. Y. 2000-01

Excise Duty F. Y. 2003-04

Excise Duty F. Y. 2004-05

Excise Duty F. Y. 2005-06

Excise Duty F. Y. 2001-02

Excise Duty F. Y. 2005-06

Excise Duty F. Y. 1998-99

Excise Duty F. Y. 1996-97

Service Tax F. Y. 2002-07

Excise Duty F. Y. 2006-07

Excise Duty F. Y. 2004-05

Excise Duty F. Y. 2004-05

Income Tax Act, 1961 Income Tax F. Y. 2008-09

Income TaxfFDS) F. Y. 2008-09

Income Tax(TDS) F. Y. 2009-10

Central Sales Tax Trade Tax F. Y. 1995-96 Act, 1956 Trade Tax F. Y. 1999-00

Trade Tax F. Y. 1996-97

Trade Tax F. Y. 1997-98

Trade Tax F. Y. 1995-96

Trade Tax F. Y. 1996-97

The U.P. Tax on Entry Entry Tax F. Y. 2003-04 of Goods Act, 2000 Entry Tax F. Y. 2000-01

Entry Tax F. Y. 2002-03

Entry Tax F. Y. 2008-09

U.P. VAT Act Sales Tax F. Y. 2007-08

Central Customs Customs Duty F. Y. 2006-08 Act, 1962 Customs Duty F. Y. 2003-04

Central Excise Act, Excise Duty F. Y. 1994-99 1944 Excise Duty F. Y. 1992-93

Excise Duty F. Y. 1997-98

Excise Duty F. Y. 2000-01

Excise Duty F. Y. 2003-04

Excise Duty F. Y. 2004-05

Excise Duty F. Y. 2005-06

Excise Duty F. Y. 2001-02

Excise Duty F. Y. 2005-06

Excise Duty F. Y. 1998-99

Excise Duty F. Y. 1996-97

Service Tax F. Y. 2002-07

Excise Duty F. Y. 2006-07

Excise Duty F. Y. 2004-05

Excise Duty F. Y. 2004-05

Income Tax Act, 1961 Income Tax F. Y. 2008-09

Income Tax(TDS) F. Y. 2008-09

Income Tax(TDS) F. Y. 2009-10

Name of the Nature of Forum where the Amount Statue Dues dispute is pending (Rs. in lacks)

Central Trade Tax Supreme Court 431.60 Sales Tax Act, 1956 Trade Tax High Court, Allahabad 47.28

Trade Tax High Court, Allahabad 6.00

Trade Tax High Court, Allahabad 201.56

Trade Tax Tribunal, Ghaziabad 1.95

Trade Tax Tribunal, Ghaziabad 2.10

The U.P. Entry Tax High Court, Allahabad 0.82 Tax on Entry of Goods Act, 2000 Entry Tax High Court, Allahabad 55.92

Entry Tax High Court, Allahabad 21.59

Entry Tax Addl. Commissioner Appeals 1.75

U.P. VAT Act Sales Tax High Court, Allahabad 343.33

Central Customs Customs, Excise & Service Customs Duty Tax Appellate Tribunal 758.80 Act, 1962 Customs Commissioner Customs 7.49 Duty

Central Excise Duty Supreme Court 109.00 Excise Act, 1944 Excise Duty High Court, Allahabad 86.50

Excise Duty High Court, Allahabad 66.38

Excise Duty High Court, Allahabad 64.25

Excise Duty High Court, Allahabad 8.64

Excise Duty High Court, Allahabad 3.03

Excise Duty Customs, Excise & Service Tax Appellate Tribunal 314.32

Excise Duty Customs, Excise & Service Tax Appellate Tribunal 1469.97

Excise Duty Customs, Excise & Service Tax Appellate Tribunal 81.04

Excise Duty Customs, Excise & Service Tax Appellate Tribunal 0.73

Excise Duty Customs, Excise & Service Tax Appellate Tribunal 1.99

Service Tax Customs, Excise & Service Tax Appellate Tribunal 32.57

Excise Duty Jt. Secretary, Ministry of Finance 27.66

Excise Duty Commissioner Appeals 10.00

Excise Duty Dy. Commissioner Excise 1.68

Income Tax Income Tax Commissioner of Income Tax Act, 1961 (Appeal) 46.23

Income Tax Rectification application for 180.24 (TDS) amendment of assessment order is being filed before the Assessing Officer. Income Tax (TDS) 12.69

10. The Company has accumulated losses as at 31st March, 2011 of Rs. 2,840.82 lacs (after adjusting General Reserve of Rs 5361.92 lacs) The Company has not incurred cash losses during the financial year as well as in the immediately preceding financial year.

11. According to the records of the Company examined by us and the information and explanation given to us, the Company has defaulted in repayment of dues to financial institutions and banks as per details below:-

Amount in Rs. lacs

Nature of Amount Due date Amount paid/ Date paid Period of dues Due (unpaid) (Rs. in default (Rs.) (Rs.) lacs) till the date of payment/ as at 28.04.2011 Principal* 834.90 31.12.2010 110.81 12.02.2011 43 days

397.00 23.03.2011 82 days

267.67 25.03.2011 84 days

59.42 28.03.2011 87 days

Principal 18.75 31.03.2011 (18.75) - 28 days

Principal 834.90 31.03.2011 (834.90) - 28 days

* Interest 1.30 12.02.2011 (1.30) - 76 days thereon 10.70 23.03.2011 (10.70) - 37 days date of 7.39 25.03.2011 (7.39) - 35 days repayment 1.71 28.03.2011 (1.71) - 31 days

Interest 154.27 31.03.2011 8.43 06.04.2011 6 days on various loans 90.28 07.04.2011 7 days

33.60 15.04.2011 15 days

(21.96) - 18 days

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

13. 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 Order are not applicable to the company.

14. As per the information and explanations given to us, the Company is not dealing or trading in shares, securities, debentures and other investments. Accordingly, the provision of clause 4 (xiv) of the Order is not applicable to the Company.

15. In our opinion, and according to the information and explanations given to us, the terms and conditions of a guarantee of Rs. 1,264.80 lacs given by the Company, for a loan taken by Samtel Electron Devices, GmbH from a bank, are prima facie not prejudicial to the interest of the Company.

16. In our opinion, and according to the information and explanations given to us, no fresh term loan has been obtained by the company during the year under audit. Accordingly, the provision of clause 4 (xvi) of the Order is not applicable to the Company.

17. On the basis of an overall examination of the balance sheet of the Company, we report that short term funds of Rs 5926.89 lacs generated from reduction in net current assets have been utilized in repayment of long term loans.

18. According to the information and explanation given to us, the Company has not made preferential allotment of shares to any of the parties covered in the register maintained under Section 301 of the Act.

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

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

21. 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, we have neither come across any instance of fraud on or by the Company noticed or reported during the year, nor have we been informed of such case by the management.

For S.S.Kothari Mehta & Co. Chartered Accountants Firm Reg.No.:000756N

Sd/- K.K. Tulshan Partner Membership No.: 85033

New Delhi April 28, 2011


Mar 31, 2010

1. We have audited the attached Balance Sheet of Samtel Color Limited, as at March 31, 2010, and the related Profit and Loss Account and 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.

2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by 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 (Auditors Report) Order, 2003 {as amended by the Companies (Auditors Report) (Amendment) Order, 2004} {hereinafter referred to as Order} issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4. As indicated in Note 1K on Schedule Q, managerial remuneration aggregating Rs. 104.18 lacs is subject to approval by the Central Government, (including Rs.46.53 lacs relating to the year ended March 31st, 2009).

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

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

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

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

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

(e) On the basis of written representations received from the directors, as on March 31, 2010 and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2010 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Act;

6. In our opinion and to the best of our information and according to the explanations given to us, the said financial statements together with the notes thereon and attached thereto give in the prescribed manner the information required by the Act and subject to paragraph 4 above, give a true and fair view in conformity with the accounting principles generally accepted in India:

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

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

(iii) in the case of the Cash Flow Statement, of the cash flows for the year ended on that date. Annexure to Auditors Report [Referred to in paragraph 3 of the Auditors Report of even date to the members of Samtel Color Limited on the financial statements for the year ended March 31, 2010]

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

(b) The fixed assets are physically verified by the management according to a phased programme designed to cover all the items 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. Pursuant to the programme, all the fixed assets of the Company have been physically verified by the management. 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 fixed assets has not been disposed of by the Company during the year.

2. (a) The inventory has been physically verified during the year by the management. In our opinion, the frequency of verification is reasonable.

(b) In our opinion, the procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) On the basis of our examination of the inventory records, in our opinion, the Company is maintaining proper records of inventory. The discrepancies noticed on physical verification of inventory as compared to book records were not material.

3. (a) The Company has not granted any loans, secured or unsecured, to companies, firms or other parties covered in the register maintained under Section 301 of the Act.

Accordingly, paragraphs (iiib), (iiic) and (iiid) of the Order are not applicable.

(b) The Company has taken unsecured loan in earlier years from 3 parties covered in the register maintained under Section 301 of the Act. The maximum amount involved during the year as well as the balance at year end of such loans amounted to Rs. 286.77 lacs, excluding interest thereon.

(c) In our opinion, the rate of interest and other terms and conditions of such loans are not prima facie prejudicial to the interest of the Company.

(d) In respect of the aforesaid loans, the Company is regular in repayment of principal amounts and is also regular in payment of interest, as stipulated.

4. In our opinion and according to the information and explanations given to us, having regard to the explanation that certain items purchased are of special nature for which suitable alternative sources do not exist for obtaining comparative quotations, there is an adequate internal control system commensurate with the size of the Company and the nature of its business for the purchase of inventory, fixed assets and for the sale of goods and services. Further, on the basis of our examination of the books and records of the Company and according to the information and explanations given to us, we have neither come across nor have been informed of any continuing failure to correct major weaknesses in the aforesaid internal control system.

5. (a) According to the information and explanations given to us, we are of the opinion that the particulars of all contracts or arrangements that need to be entered into the register maintained under section 301 of the Companies Act, 1956 have been so entered.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements entered in the register maintained under section 301 of the Companies Act,1956 and exceeding the value of rupees five lacs or more in respect of each party, during the year, have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

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

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

8. We have broadly reviewed the books of account maintained by the Company in respect of products where, pursuant to the Rules made by the Central Government of India, the maintenance of cost records has been prescribed under clause (d) of sub-section (1) of Section 209 of the Act and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the records with a view to determine whether they are accurate or complete.

9. (a) According to the information and explanations given to us and the records of the Company examined by us, in our opinion, the Company is generally 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, as applicable, with the appropriate authorities.

(b) According to information and explanations given to us, no undisputed amounts payable in respect of Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty and Cess were in arrears at the year-end for a period of more than six months from the date they became payable.

(c) According to the information and explanations given to us and the records of the Company examined by us, the particulars of dues of income-tax, sales-tax, wealth tax, service tax, customs duty, excise duty and cess as at March 31, 2010 which have not been deposited on account of a dispute, are as follows-



Name of the Statute Nature of Dues Period to which

the amount relates

Central Sales Tax Trade Tax F. Y. 1995-96 Act, 1956

Trade Tax F. Y. 1999-00

Trade Tax F. Y. 1996-97

Trade Tax F. Y. 1997-98

Trade Tax F. Y. 1995-96

Trade Tax F. Y. 1996-97

The UP. Tax on Entry Entry Tax F. Y. 2003-04 of Goods Act, 2000

Entry Tax F. Y. 2000-01

Entry Tax F. Y. 2002-03

Entry Tax F. Y.2008-09

U.P. VAT Act Sales Tax F.Y. 2007-08

Central Customs Customs Duty F.Y. 2006-08

Act, 1962

Customs Duty F.Y. 2003-04

Central Excise Excise Duty F. Y. 1994-99

Act, 1944

Excise Duty F. Y. 1992-93

Excise Duty F. Y. 1997-98

Name of the Statute Forum where the Amount dispute is pending (Rs. in lacs)

Central Sales Tax Supreme Court 431.60 Act, 1956

High Court, Allahabad 47.28

High Court, Allahabad 6.00

High Court, Allahabad 201.56

Tribunal, Ghaziabad 1.95

Tribunal, Noida 2.10

The U.P. Tax on Entry High Court, Allahabad 0.82 of Goods Act, 2000

High Court, Allahabad 55.92

High Court, Allahabad 21.59

Addl. Commissioner Appeals 1.75

U.P. VAT Act High Court, Allahabad 343.33

Central Customs Customs, Excise & Service Tax Appellate Tribunal 1316.12

Commissioner Customs *7.49

Central Excise Supreme Court 109.00 Act, 1944

High Court, Allahabad 86.50

High Court, Allahabad 66.38



Name of the Statute Nature of Dues Period to which

the amount relates

Excise Duty F. Y. 2000-01

Excise Duty F. Y. 2003-04

Excise Duty F. Y. 2004-05

Excise Duty F. Y. 2005-06

Excise Duty F. Y. 2001-02

Excise Duty F. Y. 2005-06

Central Excise Excise Duty F. Y. 1998-99

Act, 1944

Excise Duty F. Y. 1996-97

Service Tax F. Y. 2002-07

Excise Duty F. Y. 2006-07

Excise Duty F. Y. 2004-05

Excise Duty F. Y. 2004-05

Name of the Statute Forum where the Amount dispute is pending (Rs. in lacs)

High Court, Allahabad 64.25

High Court, Allahabad 8.64

High Court, Allahabad 3.03

Customs, Excise & Service Tax 574.37 Appellate Tribunal

Customs, Excise & Service Tax 1469.97 Appellate Tribunal

Customs, Excise & Service Tax

Appellate Tribunal 81.04

Central Excise Customs, Excise & Service Tax Act,1944 Appellate Tribunal 0.73

Customs, Excise & Service Tax

Appellate Tribunal 1.99

Customs, Excise & Service Tax

Appellate Tribunal 32.57

Jt. Secretary, Ministry of Finance 27.66

Commissioner Appeals 10.00

Dy. Commissioner Excise 1.68



10. The Company does not have any accumulated losses as at 31 st March, 2010. The Company has not incurred cash losses during the financial year covered by the audit but incurred cash losses in the immediately preceding financial year.

11. According to the records of the Company examined by us and the information and explanation given to us, the Company has not defaulted in repayment of dues to financial institutions and banks.

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

13. 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 Order are not applicable to the company.

14. As per the information and explanations given to us, the Company is not dealing or trading in shares, securities, debentures and other investments. Accordingly, the provision of clause 4 (xiv) of the Order is not applicable to the Company.

15. In our opinion, and according to the information and explanations given to us, the terms and conditions of a guarantee of Rs. 1211.20 lacs given by the Company, for a loan taken by Samtel Electron Devices, GmbH from a bank, are prima facie not prejudicial to the interest of the Company.

16. In our opinion, and according to the information and explanations given to us, and on an overall basis, no fresh term loan has been obtained by the company during the year under audit. Accordingly, the provision of clause 4 (xvi) of the Order is not applicable to the Company.

17. On the basis of an overall examination of the balance sheet of the Company, in our opinion and according to the information and explanations given to us, no funds raised on a short-term basis have been used for long-term investment.

18. According to the information and explanation given to us, The Company has made preferential allotment of shares to company covered in the register maintained under Section 301 of the Act. In our opinion, the price at which shares have been issued is not prejudicial to the interest of the company.

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

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

21. We have been informed that an employee of the company has misappropriated funds. The entire amount has since been recovered and the employee has been terminated.

For S.S.Kothari Mehta & Co. Chartered Accountants Firm Reg.No.:000756N

Sd/-

Yogesh K. Gupta

Partner

Membership No.: 93214

New Delhi, April 24, 2010



 
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