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Auditor Report of Videocon Industries Ltd.

Dec 31, 2014

We have audited the accompanying financial statements of VIDEOCON INDUSTRIES LIMITED ("the Company"), which comprise the Balance Sheet as at 31st December, 2014, the Statement of Profit and Loss and the Cash Flow Statement for the 18 months period ended on that date, and a summary of significant accounting policies and other explanatory information.

2. 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 notified under the Companies Act, 1956 ("the Act") (which are deemed to be applicable as per section 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014) and in accordance with the accounting principles generally accepted in India. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

3. Auditors'' Responsibility

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

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

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

4. Basis of Qualified Opinion

As mentioned in Note No.40, to the financiat statements, the Company has, directly and through its subsidiaries, made investments aggregating to Rs. 65,002.03 Million (As at 30th June, 2013 Rs. 49,337.50 Million) and also given advances ofRs. 340.4b Million (As at 30th June, 2013 Rs. 782.14 Million) to Videocon Telecommunications Limited (VTL), the subsidiary. The licenses awarded by the Department of Telecommunications (DoT) to VTL to provide Unified Access Services (UAS) in 21 circles in India w.e.f 25th January, 2008, were quashed by the Hon''ble Supreme Court of India, vide its order and judgment dated 2nd February, 2012. Subsequently, VTL participated in the auction conducted by DoT and has been awarded the Unified Licenses (Access Services) for 6 circles with effect from 16th February, 2013, which are valid for a period of 20 years. VTL has also been allotted spectrum in these 6 circles. VTL is continuing its commercial operations.

VTL has been continuously incurring losses and has huge accumulated losses as at 31st December, 2014. The ability of VTL to continue as a going concern is substantially dependent on its ability to fund its operating and capital expenditure requirements. The management is confident of mobilizing the necessary resources for continuing the operations of VTL as per the business plan.

However, in view of the huge accumulated losses of the VTL, we are unable to express an opinion on the extent of realisability of aforesaid investments in and advances to VTL The consequential effect of the above on assets and liabilities as at 31st December, 2014 and loss for the period ended on that date is not ascertainable.

5. Qualified Opinion

In our opinion and to the best of our information and according to the explanations given to us except for the possible effects of the matters described in the Basis of Qualified Opinion paragraph, the aforesaid financial statements read with the Notes thereon give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

a) In the case of the Balance Sheet, of the state of affairs of the Company as at 31 st December, 2014;

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

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

6. Other Matters

The Ministry of Corporate Affairs (MCA) had on 1st April, 2014, vide its General Circular No. 01/2014, Dissemination of Information with regards to the provision of the Companies Act, 2013 as notified titt date vis a vis corresponding provisions of the Companies Act, 1956, identifies such sections of the Companies Act, 1956, that would cease/ continue to have effect from 1st April, 2014.

Accordingly, in terms of the aforesaid Circular, our reporting in respect of section 227(3)(f) of the Companies Act, 1956, and clauses (iii), (v) (a) and (b), (vi), (viii), (xiv), (xviii) of the Companies (Auditor''s Report) Order, 2003 (dealing with sections 49, 58A, 58AA, 209(1 )(d) and 301 of the Companies Act, 1956) is only for the period beginning from 1st July, 2013 till 31st March, 2014 since as per the aforementioned MCA circular these sections have ceased to have effect from 1 st April, 2014.

7. Report on Other Legal and Regulator/ Requirements

A. As required by the Companies (Auditor''s Report) Order, 2003 ("the Order") issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order to the extent the same are applicable to the Company.

B. 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. Proper returns adequate for the purpose of our audit have been received from branches not visited by us. The branch Auditors Reports have been forwarded to us and have been appropriately dealt with;

c) the Balance Sheet, the Statement of Profit and Loss and the Cash Flow Statement dealt with by this report are in agreement with the books of account and with the audited returns from the foreign branches;

d) in our opinion, the Balance Sheet, Statement of Profit and Loss, and the Cash Flow Statement comply with the Accounting Standards notified under the Act (which are deemed to be applicable as per section 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014);

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 is 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 Act. The provisions of section 274(1 )(g) ceased to have effect from 1 st April, 2014 and hence, the reporting requirement under section 227(3)(f) of the Act is not applicable as of the balance sheet date.

Statement referred to in paragraph 7A read with paragraph 6 of the Independent Auditors'' Report of even date to the Members of VIDEOCON

INDUSTRIES LIMITED ("the Company") on the financial statements for the period ended 31st December, 2014.

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

(b) As per the information and explanations given to us, physical verification of fixed assets, other than those under joint venture, has been carried out at reasonable intervals in terms of the phased programme of verification adopted by the Company and no material discrepancies were noticed on such verification. In our opinion, the frequency of verification is reasonable, having regard to the size of the Company and the nature of its business.

(c) In our opinion, during the period the Company has not disposed off any substantial part of fixed assets.

(ii) (a) As per the information and explanation given to us, the inventories (excluding stock of crude oil lying at extraction site with the Operator) have been physically verified during the period by the management. In our opinion, having regard to the nature and location of stocks, the frequency of the physical verification is reasonable.

(b) In our opinion and according to the information and explanations given to us, 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) The Company is maintaining proper records of inventory. As per the information and explanations given to us, the discrepancies noticed on physical verification of stocks were not material in relation to the operations of the Company and the same have been properly dealt with in the books of account.

(iii) (a) As per the information and explanations given to us, the Company has not granted or taken any loans, secured or unsecured, to/from Companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. (b) As the Company has neither granted nor taken any loans, secured or unsecured to/from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956, sub-clauses (b), (c), (d), (f) and (g) of clause (iii) of paragraph 4 of the Order are not applicable, (iv) In our opinion and according to the information and explanations given to us, there are adequate internal control systems commensurate with the size of the Company and the nature of its business with regard to purchases of inventory and fixed assets and for the sales of goods and services. During the course of our audit, we have not observed any continuing failure to correct the major weakness in the internal control systems, (v) (a) Based on the audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that the particulars of contracts or arrangements referred to in section 301 of the Companies Act, 1956, have been entered in the register required to be maintained under that section, (b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956, and exceeding the value of Rupees Five Lakhs, in respect of any party during the period, have been made at prices which are reasonable having regard to prevailing market price at the relevant time, (vi) The Company has not accepted any deposits from the public within the meaning of the provisions of section 58A and 58AA or any other relevant provision of the Companies Act, 1956 and rules framed there under, (vii) In our opinion, the Company has an internal audit system commensurate with its size and nature of its business.

(viii) The Central Government has prescribed maintenance of the cost records under section 209(1 )(d) of the Companies Act, 1956, in respect of the Company''s products. As per the information and explanations provided to us, we are of the opinion that prima facie, the prescribed records have been made and maintained. We have however not made a detailed examination of the records with a view to determine whether they are accurate or complete, (ix) (a) According to the information and explanations given to us and the records examined by us, the Company is regular in depositing with appropriate authorities undisputed statutory dues including Provident Fund, Employees'' State Insurance, Investor Education and Protection Fund, Income tax, Sales tax, Wealth tax, Service tax, Custom duty, Excise duty, Cess and other statutory dues wherever applicable. According to the information and explanations given to us, no undisputed arrears of statutory dues were outstanding as at 31st December, 2014 for a period of more than six months from the date they became payable, (b) According to the records of the Company examined by us and information and explanations given to us, the particulars of dues of Sales tax, Income tax, Wealth tax, Service tax, Custom duty, Excise duty, Cess which have not been deposited on account of any disputes, are given below:

Name of Statute Nature of Dues rs in Forum where Million dispute is pending

1. Customs Act, Custom Duty and Penalties 7.71 Supreme Court

1.50 High Court

0.04 Superintendent

163.25 CESTAT

0.93 Commissioner (Appeals)

_67.56 Commissioner_

15.49 Joint Commissioner

17.63 Deputy Commissioner

8.59 Asst. Commissioner

2. Central Excise Excise Duty and Penalties 4.01 High Court Act 1944 490.86 CESTAT

3.61 Tribunal

1.23 Commissioner (Appeals)

637.32 Commissioner

32.97 Additional Commissioner

0.85 Deputy Commissioner

0.71 Assistant Commissioner



Name of Statute Nature of Dues rs in Forum where Million dispute is pending

3. Finance Act, Service Tax and Penalties 24.16 CESTAT 1944 service Tax Provisions) 2.25 Additional Commissioner

0.15 Deputy Commissioner

1.03 Assistant Commissioner

0.11 Superintendent

4. Central Sales Sales Tax 29.46 High Court TAx Act 1956 and State Sales Tax 16.49 Tribunal Acts of various States 10.30 Commissioner

1.05 Sr. Joint Commissioner

18.20 Joint Commiss ioner (Appeals)

516.50 Joint Commiss ioner

409.44 Additional Commissioner

0.19 Deputy Commissioner (Appeals)

31.54 Deputy Commiss ioner

18.21 Assistant Commis sioner

12.66 Commercial Tax Officer

0.27 Assistant Commercial Tax Officer

5. Income Tax Income Tax 155.23 High Court Act 1961 62.40 Appellate Tribunal

6. Navi Mumbai Cess 1,012.64 High Court Municipal Corporation

(x) There are no accumulated losses as at 31st December, 2014. The Company has not incurred any cash losses during the period covered by our audit and the immediately preceding financial year.

(xi) Based on our audit procedures and the information and explanations given to us, it is observed that, the Company has defaulted in repayment of loans and payment of interest to banks and financial institutions which are summarized below:

Particulars Principal Amount Interest Amount Delay in Days - Range (Rs. in Million) (Rs. in Million)

Amount paid before the period end 3,795.23 14,408.74 1 to 88 days

Amount outstanding as at 31st December, 2014 - - -

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

(xiii) In our opinion, the Company is not a chit fund company or nidhi/mutual benefit fund/society Therefore the clause (xiii) of paragraph 4 of the Order is not applicable to the Company.

(xiv) The Company has maintained proper records of transactions and contracts in respect of dealing and trading in shares, securities, debentures and other investments and timely entries have generally been made therein. All shares, debentures and other securities have been held by the Company in its own name except to the extent of the exemption granted under section 49 of the Companies Act, 1956.

(xv) According to the information and explanations given to us, the terms and conditions of guarantees given by the Company for loans taken by others from banks or financial institutions are prima facie not prejudicial to the interest of the Company.

(xvi) According to the information and explanations given to us, the term loans raised during the period were applied, on an overall basis, for the purposes for which the loans were obtained.

(xvii) According to the information and explanations given to us and on our overall examination of the Balance Sheet of the Company, we report that the Company has not used funds raised on short term basis for long term investments.

(xviii) The Company has not made any preferential allotment of shares during the period to parties and companies covered in the register maintained under section 301 of the Companies Act, 1956.

(xix) The Company has not issued any secured debentures during the period.

(xx) During the period, the Company has not raised any money by way of public issue. The Company has during the period raised Rs. 2,851.27 Million (including securities premium ofRs. 2,694.27 Million) by way of issue of Global Depository Receipts.

(xxi) According to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the period.

For KHANDELWAL JAIN & CO. For KADAM & CO. Chartered Accountants Chartered Accountants (Firm Registration No. 105049W) (Firm Registration No. 104524W)

BHUPENDRA Y. KARKHANIS U. S. KADAM Partner Partner Membership No.: 108336 Membership No.: 31055

Place : Mumbai Date: 15th May, 2015


Jun 30, 2013

1. We have audited the attached Balance Sheet of VIDEOCON INDUSTRIES LIMITED (the Company), as at 30th June, 2013, Statement of Profit and Loss and also the Cash Flow Statement of the Company for the 18 months period 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 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, issued by the Central Government of India in terms of Section 227(4A) of the Companies Act, 1956, on the basis of such checks as considered appropriate and according to the information and explanations given to us during the course of the audit, we give in the Annexure hereto 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 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. Proper returns adequate for the purpose of our audit have been received from branches not visited by us. The branch Auditors Reports have been forwarded to us and have been appropriately dealt with;

c) The Balance Sheet, Statement of Profit and Loss and the Cash Flow Statement dealt with by this report are in agreement with the books of account and with the audited returns from the foreign branches;

d) In our opinion, the Balance Sheet, Statement of Profit and Loss and the Cash Flow Statement dealt with by this report comply with the Accounting Standards referred to in Section 211(3C) of the Companies Act, 1956 (which continue to be applicable in respect of Section 133 of the Companies Act, 2013, in terms of General Circular 15/2013 dated 13th September, 2013, of the Ministry of Corporate Affairs);

e) On the basis of written representations received from the directors as on 30th June, 2013 and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 30th June, 2013, from being appointed as a director in terms of Section 274(1 )(g) of the Companies Act, 1956;

f) As mentioned in Note No. 37, to the financial statements, the Company has, directly and through its subsidiaries, made investments ofX 49,337.50 Million and advanced loans ofRs. 782.74 Million to Videocon Telecommunications Limited (VTL), the subsidiary. VTL had been awarded licenses by the Department of Telecommunications (DoT) to provide Unified Access Service (UAS) in 27 circles in India w.e.f. 25th January, 2008, which were valid for 20 years. VTL had also been allotted spectrum in 20 circles and had launched its commercial operations in 17 circles.

The Hon ''ble Supreme Court of India, vide its order and judgment dated 2nd February, 2012 ("Judgment") in two separate writ petitions, quashed the UAS licenses granted on or after 10th January, 2008 pursuant to two press releases issued on 10th January, 2008 and the subsequent allocation of spectrum to licensees which included the 21 UAS licenses issued and allocation of spectrum to VTL.

The Hon''ble Supreme Court of India vide its Judgment had also directed the Central Government to grant fresh UAS licenses and spectrum allocation by auction. The DoT, had issued a Notice inviting applications for auction of spectrum, VTL participated in the said auction and has been awarded the Unified Licenses (Access Services) for 6 circles w.e.f. 16th February, 2013, which are valid for a period of 20 years. VTL has also been allotted spectrum in these 6 circles. VTL is continuing its commercial operations.

VTL has been continuously incurring losses and has huge accumulated losses as at 30th June, 2013. The ability of VTL to continue as a going concern is substantially dependent on its ability to fund its operating and capital funding requirements. VTL is confident of mobilizing the necessary resources for continuing its operations as per the business plan.

However, in view of the accumulated losses of VTL, we are unable to express an opinion on the extent of realisability of aforesaid investments in and advances to VTL. The consequential effect of the above on assets and liabilities as at 30th June, 2013 and the loss for the period ended on that date is not ascertainable.

g) Without qualifying our report we draw attention to Note No. 38(A), to the financial statements, regarding incorporation of the Company''s share, in the operations of the joint ventures based on the statements received from the respective Operator. The Company has received the audited financial statements for the period upto 31st March, 2013 and un-audited financial statements for the period 1st April, 2013 to 30th June, 2013, in respect of Ravva Oil & Gas Field Joint Venture on which we have placed reliance.

h) In our opinion and to the best of our information and according to explanations given to us, the said financial statements subject to our comment in paragraph (f) above, the impact of which on the financial statements of the Company, if any, is unascertainable and read together with the Significant Accounting Policies and notes thereon, give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

(i) In the case of the Balance Sheet, of the state of affairs of the Company as at 30th June, 2013;

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

(iii) In the case of the Cash Flow Statement, of the cash flows for the period ended on that date.

ANNEXURE TO THE AUDITORS'' REPORT

Statement referred to in paragraph 3 of the Auditors'' Report of even date to the Members of VIDEOCON INDUSTRIES LIMITED (the Company) on the financial statements for the period ended 30th June, 2013.

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

(b) As per the information and explanations given to us, physical verification of fixed assets, other than those under joint venture, has been carried out at reasonable intervals in terms of the phased programme of verification adopted by the Company and no material discrepancies were noticed on such verification. In our opinion, the frequency of verification is reasonable, having regard to the size of the Company and the nature of its business.

(c) In our opinion, during the period the Company has not disposed off substantial part of fixed assets.

(ii) (a) As per the information and explanations given to us, the inventories (excluding stock of crude oil lying at extraction site with the Operator) have been physically verified during the period by the management. In our opinion, having regard to the nature and location of stocks, the frequency of the physical verification is reasonable.

(b) In our opinion and according to the information and explanations given to us, 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) The Company is maintaining proper records of inventory. As per the information and explanations given to us, the discrepancies noticed on physical verification of stocks were not material in relation to the operations of the Company and the same have been properly dealt with in the books of account.

(iii) (a) As per the information and explanations given to us, the Company has not granted or taken any loans, secured or unsecured, to/from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956.

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

(iv) In our opinion and according to the information and explanations given to us, there are adequate internal control systems commensurate with the size of the Company and the nature of its business with regard to purchases of inventory and fixed assets and for the sales of goods and services. During the course of our audit, we have not observed any continuing failure to correct the major weakness in the internal control systems.

(v) (a) Based on the audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that the particulars of contracts or arrangements referred to in Section 301 of the Companies Act, 1956, have been entered in the register required to be maintained under that Section.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements entered in the register maintained under Section 301 of the Companies Act, 1956, and exceeding the value of Rupees Five Lakhs, in respect of any party during the period, have been made at prices which are reasonable having regard to prevailing market price at the relevant time.

(vi) The Company has not accepted any deposits from the public within the meaning of the provisions of Section 58A and 58AA or any other relevant provision of the Companies Act, 1956 and rules framed there under.

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

(viii) The Central Government has prescribed maintenance of the cost records under Section 209(1 )(d) of the Companies Act, 1956, in respect of the Company''s products. As per the information and explanations provided to us, we are of the opinion that prima facie, the prescribed records have been made and maintained. We have however not made a detailed examination of the records with a view to determine whether they are accurate or complete.

(ix) According to the information and explanations given to us and the records examined by us, the Company is regular in depositing with appropriate authorities undisputed statutory dues including Provident Fund, Employees'' State Insurance, Investor Education and Protection Fund, Income tax, Sales tax, Wealth tax, Service tax. Custom duty, Excise duty, Cess and other statutory dues wherever applicable. According to the information and explanations given to us, no undisputed arrears of statutory dues were outstanding as at 30th June, 2013, for a period of more than six months from the date they became payable.

(x) There are no accumulated losses as at 30th June, 2013. The Company has not incurred any cash losses during the period covered by our audit and the immediately preceding financial year.

(xi) Based on our audit procedures and the information and explanations given to us, we observed that, the Company has defaulted in repayment of loans and payment of interest to banks and financial institutions is summarized below:

Particulars X in Million Delay in Days

Principal Repayment 20,731.85 1 to 89 Days

Interest 19,515.97 1 to 89 Days

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

(xiii) In our opinion, the Company is not a chit fund company or nidhi/mutual benefit fund/society. Therefore the Clause (xiii) of paragraph 4 of the Order is not applicable to the Company.

(xiv) The Company has maintained proper records of transactions and contracts in respect of dealing and trading in shares, securities, debentures and other investments and timely entries have generally been made therein. All shares, debentures and other securities have been held by the Company in its own name except to the extent of the exemption granted under Section 49 of the Companies Act, 1956.

(xv) According to the information and explanations given to us, the terms and conditions of guarantees given by the Company for loans taken by others from banks or financial institutions are prima facie not prejudicial to the interest of the Company.

(xvi) According to the information and explanations given to us, the term loans raised during the period were applied, on an overall basis, for the purposes for which the loans were obtained.

(xvii) According to the information and explanations given to us and on our overall examination of the Balance Sheet of the Company, we report that the Company has not used funds raised on short term basis for long term investments.

(xviii) The Company has not made any preferential allotment of shares during the period to parties and companies covered in the register maintained under Section 301 of the Companies Act, 1956.

(xix) The Company has not issued any secured debentures during the period.

(xx) During the period, the Company has not raised any money by way of public issue.

(xxi) According to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the period.

For KHANDELWAL JAIN & CO. For KADAM & CO.

Chartered Accountants Chartered Accountants

(Firm Registration No. 105049W) (Firm Registration No. 104524W)

SHIVRATAN AGARWAL U. S. KADAM

Partner Partner

Membership No.: 104180 Membership No.:31055

Place : Mumbai

Date : 29th November, 2013


Dec 31, 2011

1. We have audited the attached Balance Sheet of VIDEOCON INDUSTRIES LIMITED, as at 31st December, 2011, Profit and Loss Account and also the Cash Flow Statement of the Company 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 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, issued by the Central Government of India in terms of Section 227(4A) of the Companies Act, 1956, on the basis of such checks as considered appropriate and according to the information and explanations given to us during the course of the audit, we give in the Annexure hereto 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 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. Proper returns adequate for the purpose of our audit have been received from branches not visited by us. The branch Auditors Reports have been forwarded to us and have been appropriately dealt with;

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

d) In our opinion, the Balance Sheet, Profit and Loss Account, and the Cash Flow Statement dealt with by this report comply with the Accounting Standards referred to in Section 211(3C) of the Companies Act, 1956;

e) On the basis of written representations received from the directors as on 31st December, 2011 and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 31st December, 2011 from being appointed as a director in terms of Section 274(1)(g) of the Companies Act, 1956;

f) As mentioned in Note No. B-9 of Schedule No. 15 to the financial statements, the Company has, directly and through its subsidiaries, made investments of Rs 15,000.00 Million, given share application money ofRs 5,000.00 Million and advanced loans ofRs 19,620.84 Million to Videocon Telecommunications Limited (VTL), the subsidiary. VTL was granted Unified Access Services (UAS) Licenses in 21 circles on 10th January, 2008 and had also been allotted spectrum in 20 circles out of which it has launched its services in 16 circles.

The Hon'ble Supreme Court of India, vide its judgement dated 2nd February, 2012 in two separate writ petitions filed by Centre for Public Interest Litigation and by another, has quashed all the UAS licenses granted on or after 10th January, 2008 and the subsequent allocation of spectrum to these licencees. This includes the 21 licenses issued to VTL and the spectrum allotted to it in 20 circles.

The Hon'ble Supreme Court of India had directed that its aforesaid order shall be operative after four months from 2nd February, 2012. On 24th April, 2012, the Hon'ble Supreme Court of India modified its order and postponed the operation of its order of quashing the Telecom Licenses and related allocation of spectrum to 7th September, 2012. The Hon'ble Supreme Court of India has, vide order dated 2nd February, 2012, also directed TRAI to make fresh recommendations for grant of licenses and allocation of spectrum and the Central Government to grant fresh licenses and allocation of spectrum by auction thereafter. The Central Government has announced that it will complete the auction of licenses and related spectrum on or before 31st August, 2012.

Pending the fresh auction as mentioned above, VTL is continuing its business. It proposes to participate in the fresh auction and is hopeful of continuing the business thereafter. Accordingly, in the opinion of the management, no provision is required for diminution in the value of aforesaid investments, share application money and advances. We are unable to comment upon the extent of realisability of the said investments, share application money and advances;

g) In our opinion and to the best of our information and according to explanations given to us, the said financial statements subject to paragraph (f) above, the impact of which on the financial statements of the Company, if any, is unascertainable and read together with the Significant Accounting Policies and notes thereon, give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

(i) In the case of the Balance Sheet, of the state of affairs of the Company as at 31st December, 2011;

(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 REFERRED TO IN THE AUDITORS' REPORT

Statement referred to in paragraph 3 of the Auditors' Report of even date to the Members of VIDEOCON INDUSTRIES LIMITED on the financial statements for the year ended 31st December, 2011.

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

(b) As per the information and explanations given to us, physical verification of fixed assets, other than those under joint venture, has been carried out at reasonable intervals in terms of the phased programme of verification adopted by the Company and no material discrepancies were noticed on such verification. In our opinion, the frequency of verification is reasonable, having regard to the size of the Company and the nature of its business.

(c) In our opinion, during the year the Company has not disposed off a substantial part of fixed assets.

(ii) (a) As per the information and explanations given to us, the inventories (excluding stock of crude oil lying at extraction site with the Operator) have been physically verified during the year by the management. In our opinion, having regard to the nature and location of stocks, the frequency of the physical verification is reasonable.

(b) In our opinion and according to the information and explanations given to us, 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) The Company is maintaining proper records of inventory. As per the information and explanations given to us the discrepancies noticed on physical verification of stocks were not material in relation to the operations of the Company and the same have been properly dealt with in the books of account.

(iii) (a) As per the information and explanations given to us, the Company has not granted or taken any loans, secured or unsecured, to/from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956.

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

(iv) In our opinion and according to the information and explanations given to us, there are adequate internal control systems commensurate with the size of the Company and the nature of its business with regard to purchases of inventory and fixed assets and for the sales of goods and services. During the course of our audit, we have not observed any continuing failure to correct the major weakness in the internal control systems.

(v) (a) Based on the audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that the particulars of contracts or arrangements referred to in Section 301 of the Companies Act, 1956, have been entered in the register required to be maintained under that Section.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements entered in the register maintained under Section 301 of the Companies Act, 1956, and exceeding the value of Rupees Five Lakhs, in respect of any party during the year, have been made at prices which are reasonable having regard to prevailing market price at the relevant time.

(vi) The Company has not accepted any deposits from the public within the meaning of the provisions of Section 58A and 58AA or any other relevant provision of the Companies Act, 1956 and rules made there under.

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

(viii) The Central Government has prescribed maintenance of the cost records under Section 209(1)(d) of the Companies Act, 1956, in respect of the Company's products. As per the information and explanations provided to us, we are of the opinion that prima facie, the prescribed records have been made and maintained. We have however not made a detailed examination of the records with a view to determine whether they are accurate or complete.

(ix) (a) According to the information and explanations given to us and the records examined by us, the Company is regular in depositing with appropriate authorities 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 statutory dues wherever applicable. According to the information and explanations given to us, no undisputed arrears of statutory dues were outstanding as on 31st December, 2011 for a period of more than six months from the date they became payable.

(b) According to the records of the Company examined by us and information and explanations given to us, the particulars of dues of Sales tax, Income tax, Wealth tax, Service tax, Customs duty, Excise duty, Cess which have not been deposited on account of disputes, are given below:

Nature of Statute Nature of Dues Rs in Million Forum where dispute is Pending

1. Customs Act, 1962 Custom Duty 131.09 CESTAT

1.14 Asst. Commissioner

0.93 Commissioner (Appeals)

200.86 Supreme Court

17.44 Deputy Commissioner

89.49 Commissioner

Custom Penalty 6.00 CESTAT

2. Central Excise Act, 1944 / Finance Act, 1994 Excise Duty 1.46 Asst. Commissioner (Service Tax Provisions) 2.65 Addl. Commissioner

4.61 Joint Commissioner

87.28 Commissioner

0.70 Commissioner (Appeals)

71.02 CESTAT

3.61 Tribunal

33.02 High Court

Excise Penalty 3.16 Commissioner (Appeals)

0.01 High Court

118.11 CESTAT

Service Tax 7.16 Asst. Commissioner

14.95 Deputy Commissioner

2.99 Joint Commissioner

7.54 Addl. Commissioner

1.21 Commissioner (Appeals)

1.91 CESTAT

222.23 Commissioner

Service Tax Penalty 20.89 Commissioner

0.28 Commissioner (Appeals)

1.88 CESTAT

3. Central Sales Tax Act, 1956 and State Sales Tax Sales Tax 13.88 Sales Tax Officer/ Commercial Taxation Officer Acts of various States 0.55 Asst. Commissioner (A)

0.18 Asst. Commissioner of Commercial Tax

0.27 Asst. Commercial Taxation Officer

10.75 Deputy Commissioner (A)

116.94 Joint Commissioner (A)

18.58 Joint Commissioner - Commercial Tax

364.08 Addl. Commissioner

5.53 Addl. Deputy Commissioner

27.46 Tribunal

0.23 Addl. E&T Commissioner

0.85 High Court

0.46 Supreme Court

4. Income Tax Act, 1961 Income Tax 494.74 Appellate Tribunal

5. Navi Mumbai Municipal Corporation Cess 1,012.64 High Court

(x) There are no accumulated losses as at 31st December, 2011. The Company has not incurred any cash losses during the year covered by our audit and the immediately preceding financial year.

(xi) Based on our audit procedures and the information and explanations given by the management, we are of the opinion that the Company has not defaulted in repayment of dues to financial institutions, banks or to debenture holders during the year.

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

(xiii) In our opinion, the Company is not a Chit fund Company or nidhi/ mutual benefit fund/ society. Therefore the Clause (xiii) of paragraph 4 of the Order is not applicable to the Company.

(xiv) The Company has maintained proper records of transactions and contracts in respect of dealing and trading in shares, securities, debentures and other investments and timely entries have generally been made therein. All shares, debentures and other securities have been held by the Company in its own name except to the extent of the exemption granted under Section 49 of the Companies Act, 1956.

(xv) According to the information and explanations given to us, the terms and conditions of guarantees given by the Company for loans taken by others from banks or financial institutions are prima facie not prejudicial to the interest of the Company.

(xvi) According to the information and explanations given to us, the term loans raised during the year were applied, on an overall basis, for the purposes for which the loans were obtained.

(xvii) According to the information and explanations given to us and on our overall examination of the Balance Sheet of the Company, we report that the Company has not used funds raised on short term basis for long term investments.

(xviii)The Company has not made any preferential allotment of shares during the year to parties and companies covered in the register maintained under Section 301 of the Companies Act, 1956.

(xix) The Company has not issued any secured debentures during the year. The Company has created security in respect of debentures issued in earlier years.

(xx) During the year, the Company has not raised any money by way of public issue.

(xxi) According to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the year.

For KHANDELWAL JAIN & CO. For KADAM & CO.

Chartered Accountants Chartered Accountants

(Firm Registration No. 105049W) (Firm Registration No. 104524W)

AKASH SHINGHAL U. S. KADAM

Partner Partner

Membership No. 103490 Membership No. 31055

Place : Mumbai

Date : 26th May, 2012


Sep 30, 2009

1. We have audited the attached Balance Sheet of VIDEOCON INDUSTRIES LIMITED, as at 30th September, 2009, Profit and Loss Account and also the Cash Flow Statement of the Company 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 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) Oder, 2003, issued by the Central Government in terms of Section 227(4A) of the Companies Act, 1956, on the basis of such checks as considered appropriate and according to the information and explanations given to us during the course of the audit, we give in the Annexure hereto a statement on the matters specified in Paragraphs 4 and 5 of the said Order.

4. Attention is invited to Note No. B-9 of Schedule 15 regarding Incorporation of the Companys share in the operations of the joint ventures based on the statements received from the respective Operators. The Company has received the audited financial statements for the period upto 31st March, 2009 and un-audited financial statements for the period 1 st April, 2009 to 30th September, 2009, in respect of the Joint Venture Rawa Oil & Gas Field and un-audited statements upto 30th September, 2009 in respect of other joint ventures on which we have placed reliance. We have also placed reliance on technical / commercial evaluation by the management In respect of allocation of development cost to producing properties depletion of producing properties, on the basis of provsd.remaining reserves and liability for abandonment costs.

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 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. Proper returns adequate for the purpose of our audit have been receive?) from branches not visited by us. The branch Auditors Reports have been forwarded to us and have been appropriately dealt with;

c) The Balance Sheet, Profit and Loss Account and the Cash Flow Statement dealt with by the report are in agreement with the books of account and with the audited returns from the foreign branches;

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 Section 211 (3C) of the Companies Act, 1956;

e) According to the information and explanations given to us and on the basis of written representations received from the directors and taken on record by the Board of Directors, we report that none of the directors is disqualified from being appointed as a director in terms of Section 274(1 )(g) of the Companies Act, 1956;

f) In our opinion and to the best of our information and according to explanations given to us, the said financial statements, read together with the significant accounting policies, notes thereon and paragraph 4 above, give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

(i) in the case of the Balance Sheet, of the state of affairs of the Company as at 30th September, 2009;

(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 REFERRED TO THE AUDITORS REPORT

Statement referred to in paragraph 3 of the Auditors Report of even date to the Members of VIDEOCON INDUSTRIES LIMITED on the financial statements for the year ended 30th September, 2009.

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

(b) As per the information and explanations given to us, physical verification of fixed assets, other than those under joint venture, has been carried out at reasonable intervals in terms of the phased programme of verification adopted by the Company and no material discrepancies were noticed on such verification. In our opinion, the frequency of verification is reasonable, having regard to the size of the Company and nature of its business.

(c) In our opinion, during the year the Company has not disposed off a substantial part of fixed assets.

(ii) (a) As per the information and explanations given to us, the inventories (excluding stock of crude oil lying at extraction site with the Operator) have been physically verified during the year by the management. In our opinion, having regard to thenature and location of stocks, the frequency of the physical verification is reasonable.

(b) In our opinion and according to the information and explanations given to us, 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) The Company is maintaining proper records of inventory. As per the information and explanations given to us the discrepancies noticed on physical verification of stocks were not material in relation to the operations of the Company and the same have been properly dealt with in the books of account.

(iii) (a) As per the information and explanations given to us, the Company has not granted or taken any loans, secured or unsecured, to/from Companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1 956. (b) As the Company has neither granted nor taken any loans, secured or unsecured to/from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956, sub-clauses (b), (c), (d), (f) and (g) of Clause (iii) of paragraph 4 of the Order are not applicable. (iv) In our opinion and according to the information and explanations given to us, there are adequate internal control systems commensurate with the size of the Company and the nature of its business with regard to purchases of inventory and fixed assets and for the sales of goods and services. During the course of our audit, we have not observed any continuing failure to correct the major weakness in the internal controls systems. (v) (a) Based on the audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that the particulars - of contracts or arrangements referred to in Section 301 of the Companies Act, 1956 have been entered in the register required to be maintained under that section. (b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements entered in the register maintained under Section 301 of the Companies Act, 1956 and exceeding the value of Rupees Five Lakh, in respect of any party during the year, have been made at prices which are reasonable having regard to prevailing market price at the relevant time.

(vi) The Company has not accepted any deposits from the public within the meaning of the provisions of Section 58A and 58AA or any other relevant provision of the Companies Act, 1956 and rules made there under.

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

(viii) The Central Government has prescribed maintenance of the cost records under Section 209(1 )(d) of the Companies Act, 1956 in respect of the Companys products. As per the information and explanations provided to us, we are of the opinion that prima facie, the prescribed records have been made and maintained. We have however not made a detailed examination of the records with a view to determine whether they are accurate or complete.

(ix) (a) According to the information and explanations given to us and the records examined by us, the Company is regular in depositing with appropriate authorities 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 statutory dues wherever applicable. According to the information and explanations given to us, no undisputed arrears of statutory dues were outstanding as on 30th September, 2009 for a period of more than six months from the date they became payable.

(b) According to the records of the Company examined by us and information and explanations given to us the particulars of dues of Sale-tax, Income-tax, Wealth-tax, Service-tax, Customs-duty, Excise-duty, Cess which have not been deposited on account of disputes, are given below:

Nature of Statute Nature of Dues Amount Forum where dispute is pending (Rs. in Million)

1. Customs Act, 1962 Customs Duty 123.32 CESTAT

18.31 Asst. Commissioner

0.94 Commissioner (Appeal)

0.57 Addl. Commissioner

12.13 Supreme Court

Customs Penalty 23.96 Commissioner

2. Central Excise Act, 1944 Excise Penalty 9.34 Commissioner (Appeals)

8.20 CESTAT

Service Tax and Education Cess 0.60 Asst. Commissioner

15.99 Addl. Commissioner

0.28 Deputy Commissioner

3.33 CESTAT

2.25 Joint Commissioner

Excise Duty 0.86 Addl. Commissioner

9.71 Asst. Commissioner 77.48 CESTAT 44.54 Commissioner 8.56 Commissioner (Appeal) 0.20 Dy. Commissioner 3.82 High Court

3. Central Sales Tax Act, 1956 and Sales Tax 1.31 Joint Commissioner (Appeal) Sales Tax Acts of various States 75.58 Dy. Commissioner (Appeals)

1.50 High Court 17.56 Tribunal 2.52 Sr. Asst. Commissioner

4.Income Tax Act, 1961 Income Tax 161.59 Dy. Commissioner

82.00 Joint Commissioner 90.59 Asst. Commissioner 15.20 Appellate Tribunal

(x) There are no accumulated losses as at 30th September, 2009. The Company has not incurred any cash losses during the year covered by our audit and the immediately preceding financial year.

(xi) Based on our audit procedures and the information and explanations given by the management, we are of the opinion that the Company has not defaulted in repayment of dues to a financial institution, bank or to debenture holders during the year.

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

(xiii) In our opinion, the Company is not a Chit fund Company or nidhi/ mutual benefit fund/ society. Therefore the Clause (xiii) of paragraph 4 of the Order is not applicable to the Company.

(xiv) The Company has maintained proper records of transactions and contracts in respect of dealing and trading in shares, securities, debentures and other investments and timely entries have generally been made therein. All shares, debentures and other securities have been held by the Company in its own name except to the extent of the exemption granted under Section 49 of the Companies Act, 1956.

(xv) According to the information and explanations given to us, the terms and conditions of guarantees given by the Company for loans taken by others from banks or financial institutions are prima facie not prejudicial to the interest of the Company.

(xvi) According to the information and explanations given to us, the term loans raised during the year were applied, on an overall basis, for the purposes for which the loans were obtained.

(xvii) According to the information and explanations given to us and on our overall examination of the balance sheet Of the Company, we report that the Company has not used funds raised on short term basis for long term investments.

(xviii)The Company has not made any preferential allotment of shares during the year to parties and companies covered in the register maintained under Section 301 of the Companies Act, 1956.

(xix) The Company has not issued any secured debentures during the year. The Company has created security in respect of debentures issued in earlier years.

(xx) During the year the Company has not raised any money by way of public issue.

(xxi) According to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the year.

For KHANDELWAL JAIN & CO. For KADAM & CO. Chartered Accountants Chartered Accountants

SHIVRATAN AGARWAL U. S. KADAM

Partner Partner

Membership No. 104180 Membership No. 31055

Firm Registration No. 105049W Firm Registration No. 104524W

Place : Mumbai Date : 15th February, 2010

 
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