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Auditor Report of Vision Cinemas Ltd.

Jun 30, 2011

We have audited the attached Balance Sheet of Vision Technology India Limited as at 30th June 2011, the Profit and Loss Account for the year ended on that date and the cash flow statement of the 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 our opinion on these financial statements based on our audit.

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

1. As required by the Companies (Auditor's Report) Order, 2003 as amended by the Companies (Auditors Report) Order, 2004 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.

2. We draw attention to:

- The amounts recoverable from Vasanth Color Laboratories Limited, which are doubtful. Further the company has not provided for the same, hence the Loss is understated by Rs.4,79,94,770/- with respect to Loans and Advances.

3. Further to our comments in the Annexure referred to in Para 1 and also Para 2 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 the 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, Profit and Loss Account and Cash Flow Statement dealt with by this report have been prepared in compliance 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 30th June 2011 and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 30th June 2011 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956;

f) In our opinion, and according to the best of our information and according to the explanations given to us, the said accounts read with the Accounting Policies and Notes thereon in Schedule 28, give the information required by the Companies Act, 1956 in the manner so required and gives a true and fair view in conformity with the accounting principles generally accepted in India:

a) In the case of Balance Sheet, of the state of affairs of the company as 3f 30 June 2011,

b) In the case of Profit and Loss Account, of the profit for the year ended on that date, and

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

ANNEXURE

Re: M/s. VISION TECHNOLOGY INDIA LIMITED, Bangalore

(Referred to in paragraph 3 of our report of even date)

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, fixed assets have not been physically verified by the management during the year.

c) The Company has not disposed off any fixed assets during the year and hence provisions of this clause are not applicable to the Company.

ii) The company has not held any inventory at any time during the year and hence in our opinion, the provisions of Clause 4(ii)(a), (b) and (c) of the said order are not applicable to the company.

iii) a) The company has not granted any loans secured/unsecured to companies, firms, or other parties covered in the register maintained under the Section 301 of the Companies Act 1956 during the year. Hence provisions of sub-clause (b) to (d) of clause (iii) of the order are not applicable.

e) The Company has taken interest free unsecured loans from Directors, who are covered in the register maintained under the Section 301 of the Companies Act, 1956. The maximum amount involved in such transactions is Rs.4.5 crores and the balance as at the end of the year is Rs.2.56 crores.

f) The terms and conditions on which unsecured loans taken from parties covered under section 301 of the Companies Act, 1956 are not prima facie prejudicial to the interest of the company.

g) The Company is regular in repaying the principal amount as stipulated.

iv) In our opinion and according to the information and explanations given to us, the internal control should be further strengthened in order to be commensurate with the size of the company and the nature of its business with regard to purchase of plant 8t machinery, equipment and with regard to the sale of goods and services. However, on the basis of our examination and information and according to the explanations given to us, we have neither come across, nor have we been informed of any instance of major weaknesses and continuing failure to correct major weaknesses in the aforesaid internal control procedures.

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

b) In respect of each of the transactions exceeding the value of five lakhs rupees in respect of any party in the financial year under review made in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956, they have been made at prices which are reasonable with regard to the prevailing market prices at the relevant time.

vi) The company has not accepted any deposit from the public and as such the provisions of paragraph 4(vi) of the said Order are not applicable.

vii) In our opinion the company has an internal audit system commensurate with the nature and size of business.

viii) The Central Government has not prescribed the maintenance of cost records as required under clause (d) of sub-section (1) of section 209 of the Companies Act, 1956.

ix) a) According to the information and explanations given to us and on the basis of our examination of books of accounts, the company has not been regular in depositing with appropriate authorities any undisputed statutory dues including, Provident Fund, Investor Education and Protection Fund, Employees' State Insurance, Income- Tax, Sales-Tax, Wealth-Tax, Customs duty, Excise Duty, Cess and other material statutory dues applicable to the company. Following are the Statutory Dues which are outstanding for a period of more than Six Months from the date they became payable:

a) Tax Deducted At Source Rs.2,32,294/-

b) Service Tax Rs.11,02,845/-

c) Profession Tax Rs.53,405/-

d) VAT Rs.82,229/-

b) According to the information and explanations given to us, there are no dues of Sales Tax, Income Tax, Customs Duty Wealth Tax, Excise Duty and Cess, which have not been deposited on account of any dispute.

x) In our opinion, the Company's accumulated losses at the end of the financial year are less than fifty percent of its net worth and it has not incurred any cash losses in the financial year and in the immediately preceding financial year.

xi) According to information and explanations given to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities and hence provisions of this clause is not applicable.

xii) According to information and explanations given to us, the company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities

xiii) In our opinion, the Company is not a chit fund or a nidhi/mutual benefit fund/society.

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

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

xvi)ln our opinion, the company has not raised any term loans during the year. Accordingly, the provisions of clause 4(xvi) of the Companies (Auditor's Report) Order, 2003 are not applicable to the Company.

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

xviii) During the year, the company has not made preferential allotment of shares to parties and Companies covered in the register maintained under section 301 of the Companies Act, 1956 except in the case of two parties to whom shares have been allotted on a preferential basis and in our opinion, the price at which the shares have been issued is not prejudicial to the interest of the Company.

xix) During the year, the company has not issued any debentures.

xx) The Company has not raised any money by public issues during the year and hence, the provisions of paragraph 4(xx) of the Companies (Auditors Report) Order, 2003 are not applicable to the Company.

xxi) During the course of our examination of the books of account carried out in accordance with the generally accepted accounting practices in India and according to the information and explanations given to us, 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.JANARDHAN a ASSOCIATES

CHARTERED ACCOUNTANTS

Registration No. 00531 OS



Sd/-

Place : Bangalore (VIJAY BHATIA)

Date : 16.11.2011 PARTNER

Membership No.201862


Jun 30, 2009

We have audited the attached Balance Sheet of Vision Technology India Limited as at 30th June 2009 and the Profit and Loss Account for the year ended on that date and also the cash flow statement of the 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 our opinion on these financial statements based on our audit.

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

1. As required by the Companies (Auditors Report) Order, 2003 as amended by the Companies (Auditors Report) Order, 2004 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.

2. We draw attention to:

- The amounts recoverable from Vasanth Color Laboratories Limited, which are doubtful. Further the company has not provided for the same, hence the Loss is understated by Rs. 22,634,789 with respect to Loans and Advances.

3. Further to our comments in the Annexure referred to in Para 1 and also Para 2 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 the 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 , Profit and Loss Account and Cash Flow Statement dealt with by this report have been prepared in compliance 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 30th June 2009 and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 30th June 2009 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956;

f) In our opinion, and according to the best of our information and according to the explanations given to us, the said accounts read with the Accounting Policies and Notes thereon in Schedule 28, give the information required by the Companies Act, 1956 in the manner so required and gives a true and fair view in conformity with the accounting principles generally accepted in India:

a) In the case of Balance Sheet, of the state of affairs of the company as at 30th June 2009,

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

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

ANNEXURE

Re: M/s. VISION TECHNOLOGY INDIA LIMITED, Bangalore

(Referred to in paragraph 3 of our report of even date)

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, fixed assets have not been physically verified by the management during the year.

c) The Company has not disposed off any fixed assets during the year and hence provisions of this clause are not applicable to the Company.

ii) The company has not held any inventory at any time during the year and hence in our opinion, the provisions of Clause 4 (ii) (a), (b) and (c) of the said order are not applicable to the company.

iii) a) The company has not granted/taken any loans secured/unsecured from/to the company, firms, other parties covered in the register maintained under the Section 301 of the Companies Act 1956.

iv) In our opinion and according to the information and explanations given to us, the internal control should be further strengthened in order to be commensurate with the size of the company and the nature of its business with regard to purchase of plant 6t machinery, equipment and other assets if any. However, on the basis of our examination and information and according to the explanations given to us, we have neither come across, nor have we been informed of any instance of major weaknesses and continuing failure to correct major weaknesses in the aforesaid internal control procedures.

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

b) In respect of each of the transactions exceeding the value of five lakhs rupees in respect of any party in the financial year under review made in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956, they have been made at prices which are reasonable with regard to the prevailing market prices at the relevant time.

vi) The company has not accepted any deposit from the public and as such the provisions of paragraph 4(vi) of the said Order are not applicable.

vii) The company does not have a system for internal audit, and in our opinion, the internal audit system should be implemented considering the Companys size and nature of its business.

viii)The Central Government has not prescribed the maintenance of cost records as required under clause (d) of sub-section (1) of section 209 of the Companies Act, 1956.

ix) a) According to the information and explanations given to us and on the basis of our examination of books of accounts, the company has not been regular in depositing with appropriate authorities any undisputed statutory dues including, Provident Fund, Investor Education and Protection Fund, Employees State Insurance, Income-Tax, Sales-Tax, Wealth-Tax, Customs duty, Excise Duty, Cess and other material statutory dues applicable to the company. Following are the Statutory Dues which are outstanding for a period of more than Six Months from the date they became payable:

a) Tax Deducted At Source Rs. 206,105/-

b) Service Tax Rs. 1,043,176/-

c) Profession Tax Rs. 53,405/-

d) VAT Rs. 82,229/-

b) According to the information and explanations given to us, there are no dues of Sales Tax, Income Tax, Customs Duty Wealth Tax, Excise Duty and Cess, which have not been deposited on account of any dispute.

x) In our opinion, the Companys accumulated losses at the end of the financial year are less than fifty percent of its net worth and it has not incurred any cash losses in the financial year and in the immediately preceding financial year.

xi) According to information and explanations given to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities and hence provisions of this clause is not applicable.

xii) According to information and explanations given to us, the company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities

xiii)ln our opinion, the Company is not a chit fund or a nidhi/mutual benefit fund/society.

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

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

xvi)ln our opinion, the company has not raised any term loans during the year. Accordingly, the provisions of clause 4(xvi) of the Companies (Auditors Report) Order, 2003 are not applicable to the Company.

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

xviii) During the year, the company has not made any preferential allotment of shares to parties and Companies covered in the register maintained under section 301 of the Companies Act, 1956.

xix) During the year, the company has not issued any debentures.

xx) The Company has not raised any money by public issues during the year and hence, the provisions of paragraph 4(xx) of the Companies (Auditors Report) Order, 2003 are not applicable to the Company.

xxi)During the course of our examination of the books of account carried out in accordance with the generally accepted accounting practices in India and according to the information and explanations given to us, 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.JANARDHAN a ASSOCIATES CHARTERED ACCOUNTANTS Sd/- Place: Bangalore (VIJAY BHATIA) Date: 25.11.2009 PARTNER Membership No. 201862

 
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