Auditor Report of Zicom Electronic Security Systems Ltd.

Mar 31, 2016

Independent Auditor’s. Report

The Members,

Zicom Electronic Security Systems Limited

I. Report on the Financial Statements

We have audited the accompanying standalone financial statements of Zicom Electronic Security Systems Limited (hereinafter referred to as ''the Company''), comprising of the Balance Sheet as at March 31, 2016, the Statement of Profit and Loss and the Cash Flow Statement for the year then ended along with the Significant Accounting Policies and other explanatory information forming an integral part thereof.

II. Management''s Responsibility for the Financial Statements The Company''s Board of Directors is responsible for the matters 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 Standards referred to in Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014 and in accordance with the accounting principles generally accepted in India. This responsibility also includes the maintenance of adequate accounting records in accordance with the provision of the Act for safeguarding of the assets of the Company and for preventing and detecting the frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of internal financial control, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

III. Auditors'' Responsibility

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

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

We conducted our audit in accordance with the Standards on Auditing specified under section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company''s preparation of the financial statements that give true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by 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 reasonable basis for our audit opinion.

IV. Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India of the state of affairs of the Company as at March 31, 2016, and its profit and its cash flows for the year ended on that date.

V. Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2016 (''the Order'') issued by the Central Government of India in terms of sub-section (11) of Section 143 of the Act, we give in the Annexure A, a statement on the matters specified in the paragraph 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, the Statement of Profit and Loss and the Cash Flow Statement dealt with by this report are in agreement with the books of account;

d) In our opinion, the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement comply with the Accounting Standards specified under section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2013;

e) On the basis of written representations received from the directors as on March 31, 2016, and taken on record by the Board of Directors, none of the director is disqualified as on March 31, 2016, from being appointed as a director in terms of section 164(2) of the Act.;

f) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate report in ''Annexure B''; and

g) With respect to the other matters to be included in the Auditor''s Report in accordance with Rule 11 of the

Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations on its financial position in its financial statements

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

iii. The Company has transferred the required amount / unclaimed dividend amount to the Investor Education and Protection Fund (IEPF) within the requisite timeline as given under the Companies Act and the Rules made there under .

Annexure A referred to in the Independent Auditors'' Report

(Referred to in paragraph (V).1. of our report of even date)

In terms of the information and explanations given to us and the books and records examined by us and on the basis of such checks as we consider appropriate, we further report as under:

1) a) The Company has maintained proper records showing full

particulars, including quantitative details and situation of fixed assets.

b) As explained to us, the fixed assets have been physically verified by the management as per a phased programme of verification. In our opinion, the frequency of verification is reasonable having regard to the size of the Company and the nature of its fixed assets. The discrepancies noticed on such verification were not material and have been properly dealt with in the Company''s books of accounts.

c) According to the information and explanation given to us and on the basis of our examination of the records of the Company, the title deeds of immovable properties are held in the name of the Company.

2) As explained to us, the management has conducted physical verification of inventory at reasonable intervals during the year.

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.

In our opinion, the Company is maintaining proper records of inventory. The discrepancies noticed on such verification between physical inventories and the book records which were material in relation to the operations of the Company have been properly dealt with in the Company''s books of account.

3) According to the information and explanations provided to us and as per the records examined by us, during the year, the Company has granted unsecured loans to four bodies corporate representing the parties listed in the register maintained under Section 189 of the Act. The aggregate maximum and closing balances of these parties are Rs.10, 762.03 Lacs and Rs. 10,762.03 Lacs respectively.

a) In our opinion, the rate of interest wherever applicable and other terms and conditions of the aforesaid loans are not prima facie prejudicial to the interests of the Company.

b) Based on the information and explanations provided to us, in our opinion, the parties to whom the above loans were given are (i) regular in repayment of principal and interest, as applicable (ii) there was no overdue principal as at the close of the year and (iii) reasonable steps were taken by the Company to recover the loans.

4) In our opinion and according to the information and explanations given to us, the Company has complied with the provisions of Section 185 and 186 of the Act, with respect to the loans and investments made.

5) According to the information and explanations given to us, the Company has not accepted any deposits from the public.

6) The Central Government has not prescribed maintenance of cost records under section (1) of section 148 of the Act.

7) According to the information and explanations provided to us and on the basis of our examination of the books of account, the Company has been generally regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees'' State Insurance, Income-tax, Value Added Tax, Customs Duty, Service Tax, Cess and other statutory dues during the year with the appropriate authorities. As at the year end, there are no undisputed dues remaining payable for a period of more than six months from the date they became payable.

As per explanations provided to us and according to the records of the Company, the following are the particulars of disputed dues on account of Value Added Tax (Sales Tax) and Works Contract Tax that have not been deposited:

Name of the Statute	Nature of Dues	Amount (Rs.in Lacs)	Period to which the amount relates	Forum where the dispute is pending
CST Act	Diff Tax for C forms dues	1.37	2010 - 2011	DCTO . Salt Lake Circle. Kolkatta
CST Act	Diff Tax for C forms dues	0.73	2011 - 2012	DCTO . Salt Lake Circle. Kolkatta
MVAT Act	Dues due to set off disallowance and 25% interest under Amnesty scheme.	19.12	2011 - 2012	LTU E624- Mazgaon Mumbai
CST Act	Dues payable due to set off reduction on stock transfers and C forms liability	17.45	2012 - 2013	LTU E624- Mazgaon Mumbai
CST Act	Dues payable due to set off reduction on stock transfers and C forms liability	10.17	2013 -2014	LTU E624- Mazgaon Mumbai
CST Act	Dues towards disputed Vat and CST liability on account of disallowance of stock transfers	176.17	2013 - 2014	CTO. Indore . City Circle

8) Based on our audit procedures, books of account and as explained to us, we are of the opinion that, during the year, the Company has not defaulted in repayment of dues to any financial institution or bank. No debentures were issued or were outstanding during the year.

9) As per the records and based on the explanations provided to us, in our opinion, the money raised by way of initial public offer or further public offer (including debt instruments) and term loans were applied by the Company for the purpose for which they were obtained.

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

11) According to the information and explanations given to us and based on our examination of the records of the Company, the Company has paid / provided for managerial remuneration in accordance with the requisite approvals mandated by the provisions of Section 197 read with Schedule V to the Act.

12) In our opinion and according to the information and explanations given to us, the Company is not a nidhi company. Accordingly, paragraph 3(xii) of the Order is not applicable.

13) According to the information and explanations given to us and based on our examination of the records of the Company, transactions with the related parties are in compliance with Sections 177 and 188 of the Act. Details of such transactions have been disclosed in the financial statements as required by the applicable accounting standards.

14) According to the information and explanations given to us and based on our examination of the records of the Company, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year.

15) According to the information and explanations given to us and based on our examination of the records of the Company, the Company has not entered into non-cash transactions with directors or persons connected with him. Accordingly, paragraph 3(xv) of the Order is not applicable.

16) The Company is not required to be registered under Section 45-IA of the Reserve Bank of India Act 1934.

Annexure B referred to in the Independent Auditors'' Report

(Referred to in paragraph (V).2(f). of our report of even date) Report on the Internal Financial Controls under Clause (i) of subsection 3 of Section 143 of the Companies Act, 2013 (''the Act'')

We have audited the internal financial controls over financial reporting of Zicom Electronic Security Systems Limited (hereinafter referred to as ''the Company''), as of March 31, 2016 in conjunction with our audit of the standalone financial statements of the Company for the year ended on that date.

Management''s Responsibility for Internal Financial Controls The Company''s Board of Directors is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India (''ICAI''). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to the Company''s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.

Auditors'' Responsibility

Our responsibility is to express an opinion on the Company''s internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls over Financial Reporting (the ''Guidance Note'') and the Standards on Auditing, issued by ICAI and deemed to be prescribed under Section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls, both applicable to an audit of Internal Financial Controls and, both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting were established and maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditors'' judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company''s internal financial controls system over financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

A company''s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company''s internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of the Management and directors of the Company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company''s assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls over Financial Reporting

Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion, the Company has, in all material respects, an internal financial controls system in place over financial reporting and such internal financial controls over financial reporting were operating effectively as at 31 March 2016 however it needs to be further strengthened, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.

For Shyam Malpani & Associates

Chartered Accountants

Firm Registration No. 120438 W

Shyam Malpani

Proprietor

Membership No. F- 34171

Chicago, dated May 27, 2016

---

Mar 31, 2015

We have audited the attached financial statements of Zicom Electronic Security Systems Limited (hereinafter referred to as the Company), comprising of the Balance Sheet as at 31st March 2015, the Statement of Profit and Loss and the Cash Flow Statement for the year then ended along with the Significant Accounting Policies and other explanatory information forming an integral part thereof.

II. Management's Responsibility for the Financial Statements

The Company's Board of Directors is responsible for the matters 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 Standards referred to in Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014 and in accordance with the accounting principles generally accepted in India. This responsibility also includes the maintenance of adequate accounting records in accordance with the provision of the Act for safeguarding of the assets of the Company and for preventing and detecting the frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of internal financial control, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

III. Auditors' 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 there under.

We conducted our audit in accordance with the Standards on Auditing specified under section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company's preparation of the financial statements that give true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by 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 reasonable basis for our audit opinion.

IV. Emphasis of matter

We draw attention to Note No. 25.8 regarding Trade Receivables of Rs. 63.23 Lacs due from a customer against which no provision towards recovery has been considered necessary in the Company's books, since the management is confident of recovering the entire amount in near future, thus overstating the Trade Receivables and understating the Provisions and Profit for the year by the same extent.

Our opinion is not qualified in the above matter.

V. Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India of the state of affairs of the Company as at 31st March 2015 and its profit and its cash flows for the year ended on that date

VI. Report on Other Legal and Regulatory Requirements

1. 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, the Statement of Profit and Loss and the Cash Flow Statement dealt with by this report are in agreement with the books of account;

(d) In our opinion, the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement 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 March 31, 2015, and taken on record by the Board of Directors, none of the directors are disqualified as on March 31, 2015, from being appointed as a director in terms of section 164(2) of the Act.;

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

i. The Company has disclosed the impact of pending litigations on its financial position in its financial statements.

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

iii. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.

ANNEXURE REFERRED TO IN THE INDEPENDENT AUDITORS' REPORT

In terms of the information and explanations given to us and the books and records examined by us and on the basis of such checks as we consider appropriate, we further report as under:

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

As explained to us, the fixed assets have been physically verified by the management as per a phased programme of verification. In our opinion, the frequency of verification is reasonable having regard to the size of the Company and the nature of its fixed assets. The discrepancies noticed on such verification were not material and have been properly dealt within the Company's books of accounts.

2) As explained to us, the management has conducted physical verification of inventory at reasonable intervals during the year.

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.

In our opinion, the Company is maintaining proper records of inventory. The discrepancies noticed on such verification between physical inventories and the book records which were material in relation to the operations of the Company have been properly dealt with in the Company's books of account.

3) According to the information and explanations provided to us and as per the records examined by us, during the year, the Company has granted unsecured loans to three bodies corporate representing the parties listed in the register maintained under Section 189 of the Act. The aggregate maximum and closing balances of these parties are Rs. 6,504.16 Lacs and Rs.6,504.16 Lacs respectively.

In our opinion, the rate of interest wherever applicable and other terms and conditions of the aforesaid loans are not prima facie prejudicial to the interests of the Company.

Based on the information and explanations provided to us, in our opinion, the parties to whom the above loans were given are (i) regular in repayment of principal and interest, as applicable (ii) there was no overdue principal as at the close of the year and (iii) reasonable steps were taken by the Company to recover the loans.

4) In our opinion and according to the information and explanations provided to us, having regard to the explanations that some of the items of plant and equipments purchased are of special nature and suitable alternative sources do not exist for obtaining comparable quotations, the internal control procedures are commensurate with the size of the Company and the nature of its business, for the purchase of inventory, other fixed assets and for the sale of goods and provision of services. During the course of our audit, we have not come across any major weakness in the internal controls prevailing in the Company.

5) According to the information and explanations given to us, the Company has not accepted deposits as per the directives issued by Reserve Bank of India and the provisions of Sections 73 to 76 or any other relevant provisions of the Act and the rules framed there under.

6) The Central Government has prescribed maintenance of cost records under section (1) of section 148 of the Act. The Company during the year under review not used its manufacturing facility and hence the said clause was not applicable.

7) According to the information and explanations provided to us and on the basis of our examination of the books of account, the Company has been generally regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees' State Insurance, Income-tax, Value Added Tax, Customs Duty, Wealth Tax, Service Tax, Cess and other statutory dues during the year with the appropriate authorities. As at the year end, there are no undisputed dues remaining payable for a period of more than six months from the date they became payable.

As per explanations provided to us and according to the records of the Company, there are no disputed dues on account of provident Fund, Investor Education and Protection Fund, Employees' State Insurance, Income-tax, Value Added Tax, Customs Duty, Wealth Tax, Service Tax, Cess and other statutory dues that have not been deposited.

8) The Company does not have accumulated losses at the end of the current financial year nor has it incurred any cash losses in the current / immediately preceding financial year.

9) Based on our audit procedures, books of account and as explained to us, we are of the opinion that, during the year, the Company has not defaulted in repayment of dues to any financial institution or bank. No debentures were issued or were outstanding during the year.

10) According to the information and explanations provided to us and the records examined by us, the Company has given guarantee for loan taken by a subsidiary from bank to the extent of Rs. 48,001.99 Lacs. In our opinion, the terms and conditions of such guarantees are not prima facie prejudicial to the interests of the Company.

11) As per the records and based on the explanations provided to us, in our opinion, the term loans were applied by the Company for the purpose for which they were obtained.

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

For Shyam Malpani & Associates

Chartered Accountants

Firm Registration No. 120438 W



Shyam Malpani

Proprietor

Membership No. F- 34171

Mumbai, dated 27th May, 2015

---

Mar 31, 2014

We have audited the attached financial statements of Zicom Electronic Security Systems Limited (hereinafter referred to as the Company), comprising of the Balance Sheet as at March 31, 2014, the Statement of Profit and Loss and the Cash Flow Statement for the year then ended along with the Significant Accounting Policies and other explanatory information forming an integral part thereof.

II. Managements’ 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 Section 211(3C) of the Companies Act, 1956 (hereinafter referred to as the Act), read with General Circular 15/2013 dated 13th September 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013 and in accordance with the accounting principles generally accepted in India. This responsibility includes the design, implementation and maintenance of internal 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.

III. 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 of 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 assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing 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 the management, as well as evaluating the overall financial statement presentation.

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

1. As required by the Companies (Auditor's Report) Order, 2003 as amended by the Companies (Auditor's Report) (Amendment) Order, 2004 issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Act, we enclose in the Annexure a statement on the matters specified in paragraph 4 of the said Order, to the extent applicable to the Company during the year under review.

2. Further to our comments in the Annexure referred to in 1. above, as required by Section 227(3) of the Act, we report as follows:

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

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

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

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

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

V. Opinion

Matter of Emphasis

We draw attention to Note No. 25.8 regarding Trade Receivables of ' 63.24 Lacs due from a customer against which no provision towards recovery has been considered necessary in the Company's books, since the management is confident of recovering the entire amount in near future, thus overstating the Trade Receivables and understating the Provisions and Profit for the year by the same extent.

Our opinion is not qualified in the above matter

In our opinion and to the best of our information and according to the explanations given to us, 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 March 31,2014;

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

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

ANNEXURE REFERRED TO IN THE INDEPENDENT AUDITORS' REPORT (Referred to in paragraph (IV).1. our report of even date)

In terms of the information and explanations given to us and the books and records examined by us and on the basis of such checks as we consider appropriate, we further report as under:

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

As explained to us, the fixed assets have been physically verified by the management as per a phased programme of verification. In our opinion, the frequency of verification is reasonable having regard to the size of the Company and the nature of its fixed assets. The discrepancies noticed on such verification were not material and have been properly dealt with in the Company's books of accounts.

No portion of the fixed assets has been disposed off during the year by the Company.

2) As explained to us, the management has conducted physical verification of inventory at reasonable intervals during the year.

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.

In our opinion, the Company is maintaining proper records of inventory. The discrepancies noticed on such verification between physical inventories and the book records which were material in relation to the operations of the Company have been properly dealt with in the Company's books of account.

3) According to the information and explanations provided to us and as per the records examined by us, during the year, the Company has granted unsecured loans to three bodies corporate representing the parties listed in the register maintained under Section 301 of the Act. The aggregate maximum and closing balances of these parties are ' 2,868.28 Lacs and ' 2,275.46 Lacs respectively.

In our opinion, the rate of interest wherever applicable and other terms and conditions of the aforesaid loans are not prima facie prejudicial to the interests of the Company.

Based on the information and explanations provided to us, in our opinion, the parties to whom the above loans were given are (i) regular in repayment of principal and interest, as applicable (ii) there was no overdue principal as at the close of the year and (iii) reasonable steps were taken by the Company to recover the loans.

During the year, the Company has not taken any loan secured or unsecured from the parties covered in the register maintained under Section 301 of the Act.

4) In our opinion and according to the information and explanations provided to us, having regard to the explanations that some of the items of plant and equipments purchased are of special nature and suitable alternative sources do not exist for obtaining comparable quotations, the internal control procedures are commensurate with the size of the Company and the nature of its business, for the purchase of inventory, other fixed assets and for the sale of goods and provision of services. During the course of our audit, we have not come across any major weakness in the internal controls prevailing in the Company.

5) 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 all the particulars of contracts or arrangements that need to be entered into the register maintained under Section 301 of the Act have been so entered.

In our opinion, the transactions made in pursuance of such contracts or arrangements have been made at reasonable prices having regard to the prevailing market prices at the relevant time.

6) As per the records verified and based on explanations given to us, the Company has not accepted any deposits from the public within the meaning of Sections 58A, 58AA or any other relevant provisions of the Act and the rules framed there under.

7) In our opinion, the Company has a formal internal audit system. However, the same needs to be strengthened, both in respect of scope and coverage, in order to make it commensurate with the size of the Company and nature of its business.

8) The Central Government has prescribed maintenance of cost records under clause (d) of section (1) of section 209 of the Act. The Company during the year under review not used its manufacturing facility and hence the said clause was not applicable.

9) According to the information and explanations provided to us and on the basis of our examination of the books of account, the Company has been generally regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees' State Insurance, Income- tax, Value Added Tax, Customs Duty, Wealth Tax, Service Tax, Cess and other statutory dues during the year with the appropriate authorities. As at the year end, there are no undisputed dues remaining payable for a period of more than six months from the date they became payable.

As per explanations provided to us and according to the records of the Company, the following are the particulars of disputed dues on account of Value Added Tax (Sales Tax) and Works Contract Tax that have not been deposited:

Name of the Nature of Dues Amount Period to Forum where Statute (Rs in which the dispute Lacs) the amount relates is pending

Sales Tax Act VAT-Chandigarh 1.69 2011 - 2012 Deputy Commissioner Appeals

Sales Tax Act CST-Chandigarh 0.84 2011 - 2012 Deputy Commissioner Appeals

10) The Company does not have accumulated losses at the end of the current financial year nor has it incurred any cash losses in the current / immediately preceding financial year.

11) Based on our audit procedures, books of account and as explained to us, we are of the opinion that, during the year, the Company has not defaulted in repayment of dues to any financial institution or bank. No debentures were issued or were outstanding during the year.

12) As explained 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 during the year.

13) In our opinion the nature of activities of the Company does not attract any special statute applicable to Chit fund and Nidhi / Mutual Benefit Fund / Societies.

14) As per the records of the Company, the Company has not dealt with or traded in shares, securities, debentures and other investments. The investments of the Company are held in its own name.

15) According to the information and explanations provided to us and the records examined by us, the Company has given guarantee for loan taken by a subsidiary from banks to the extent of ' 41,508.75 Lacs. In our opinion, the terms and conditions of such guarantees are not prima facie prejudicial to the interests of the Company.

16) As per the records and based on the explanations provided to us, in our opinion, the term loans were applied by the Company for the purpose for which they were obtained.

17) On the basis of overall examination of the records and cash flows of the Company, in our opinion, the funds raised on short-term basis have not been used for long-term investment.

18) During the year, the Company has not made any preferential allotment of equity shares to the parties covered in the Register maintained under Section 301 of the Act.

19) As per the records verified, no debentures were issued or were outstanding during the year.

20) During the year, the Company has not raised any money through public issue.

21) Based upon the audit procedures performed and the information and explanations provided by the management, we report that no fraud on or by the Company has been noticed or reported during the course of our audit.

For Shyam Malpani & Associates Chartered Accountants Firm Registration No. 120438 W

Shyam Malpani Proprietor Membership No. F- 34171 Mumbai, dated May 27, 2014

---

Mar 31, 2013

I. Report on the Financial Statements

We have audited the attached financial statements of Zicom Electronic Security Systems Limited (hereinafter referred to as the Company), comprising of the Balance Sheet as at March 31, 2013, the Statement of Profit and Loss and the Cash Flow Statement for the year then ended along with the Significant Accounting Policies and other explanatory information forming an integral part thereof.

II. 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 Section 211(3C) of the Companies Act, 1956 (hereinafter referred to as the Act). 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.

III. 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 of 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 assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the management, as well as evaluating the overall financial statement presentation.

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

IV. Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2003 as amended by the Companies (Auditor''s Report) (Amendment) Order, 2004 issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Act, we enclose in the Annexure a statement on the matters specified in paragraph 4 & 5 of the said Order, to the extent applicable to the Company during the year under review.

2. Without qualifying our report we draw attention to

In respect of Sundry Debtors representing an opening amount of Rs. 105.56 Lacs due from the customer, the company has recovered its principle amount during the year under review an amount of Rs. 42.33 Lacs being the award from the Honourable Supreme Court of India in its favour.

The management is confident of recovering even the accrued interest on the same which has been disclosed under the head Other Current Asset amounting to Rs. 63.24 Lacs and hence no provision has been considered in this regard.

3. Further to our comments in the Annexure referred to in 1. above, as required by Section 227(3) of the Act, we report as follows:

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

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

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

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

(e) On the basis of written representations received from the respective directors as on March 31, 2013 and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2013 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Act.

V. Opinion

In our opinion and to the best of our information and according to the explanations given to us, 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 March 31, 2013;

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

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

Annexure referred to the Independent Auditors'' Report

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

In terms of the information and explanations given to us and the books and records examined by us and on the basis of such checks as we consider appropriate, we further report as under:

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

As explained to us, the fixed assets have been physically verified by the management as per a phased programme of verification. In our opinion, the frequency of verification is reasonable having regard to the size of the Company and the nature of its fixed assets. The discrepancies noticed on such verification were not material and have been properly dealt with in the Company''s books of accounts.

The Fixed assets disposed off during the year by the Company were not substantial and therefore do not affect the going concern assumption.

2) As explained to us, the management has conducted physical verification of inventory at reasonable intervals during the year.

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.

In our opinion, the Company is maintaining proper records of inventory. The discrepancies noticed on such verification between physical inventories and the book records which were material in relation to the operations of the Company have been properly dealt with in the Company''s books of account.

3) According to the information and explanations provided to us and as per the records examined by us, during the year, the Company has granted unsecured loans to bodies corporate and recovered in full unsecured loans given in earlier years from three other bodies corporate representing the parties listed in the register maintained under Section 301 of the Companies Act, 1956. The aggregate maximum and closing balances of these parties are Rs. 1,884.84 Lacs and Rs. 1,884.84 Lacs respectively.

In our opinion, the rate of interest wherever applicable and other terms and conditions of the aforesaid loans are not prima facie prejudicial to the interests of the Company.

Based on the information and explanations provided to us, in our opinion, the parties to whom the above loans were given are (i) regular in repayment of principal and interest, as applicable (ii) there was no overdue principal as at the close of the year and (iii) reasonable steps were taken by the Company to recover the loans.

During the year, the Company has not taken any loan secured or unsecured from the parties covered in the register maintained under Section 301 of the Companies Act, 1956.

4) In our opinion and according to the information and explanations provided to us, having regard to the explanations that some of the items of plant and equipments purchased are of special nature and suitable alternative sources do not exist for obtaining comparable quotations, the internal control procedures are commensurate with the size of the Company and the nature of its business, for the purchase of inventory, other fixed assets and for the sale of goods and provision of services. During the course of our audit, we have not come across any major weakness in the internal controls prevailing in the Company.

5) 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 all the particulars of contracts or arrangements that need to be entered into the register maintained under section 301 of the Companies Act, 1956 have been so entered.

In our opinion, the transactions made in pursuance of such contracts or arrangements have been made at reasonable prices having regard to the prevailing market prices at the relevant time.

6) As per the records verified and based on explanations given to us, the Company has not accepted any deposits from the public within the meaning of Sections 58A, 58AA or any other relevant provisions of the Companies Act, 1956 and the rules framed thereunder.

7) In our opinion, the Company has a formal internal audit system. However, the same needs to be strengthened, both in respect of scope and coverage, in order to make it commensurate with the size of the Company and nature of its business.

8) The Central Government has prescribed maintenance of cost records under clause (d) of section (1) of section 209 of the Companies Act, 1956. The Company during the year under review not used its manufacturing facility and hence the said clause was not applicable.

9) According to the information and explanations provided to us and on the basis of our examination of the books of account, the Company has been generally regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees'' State Insurance, Income- tax, Value Added Tax, Customs Duty, Wealth Tax, Service Tax, Cess and other statutory dues during the year with the appropriate authorities. As at the year end, there are no undisputed dues remaining payable for a period of more than six months from the date they became payable.

As per explanations provided to us and according to the records of the Company, the following are the particulars of disputed dues on account of Value Added Tax (Sales Tax) and Works Contract Tax that have not been deposited:

Name of the Statute Nature of Dues Amount (? in Lacs)

Sales Tax Act Classification Dispute 0.22

Sales Tax Act Non-submission 0.69 of Statutory Forms

Sales Tax Act Levy of Penalty 1.38

Works Contract Tax Disallowance of WCT 1.64

TDS certificates

Sales Tax Act VAT-Karnataka 1.42

Name Period to which Forum where the the amount relates dispute is pending

Sales Tax Act 2002-2003 Deputy Commissioner Appeals Sales Tax Act 2002-2003 Deputy Commissioner Appeals

Sales Tax Act 2002-2003 Assistant Commissioner Appeal

Sales Tax Act 2002-2003 Deputy Commissioner Appeals

Sales Tax Act 2007-2008 Joint Commissioner Enforcement- Karnataka

10) The Company does not have accumulated losses at the end of the current financial year nor has it incurred any cash losses in the current / immediately preceding financial year.

11) Based on our audit procedures, books of account and as explained to us, we are of the opinion that, during the year, the Company has not defaulted in repayment of dues to any financial institution or bank. No debentures were issued or were outstanding during the year.

12) As explained 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 during the year.

13) In our opinion the nature of activities of the Company does not attract any special statute applicable to chit fund and nidhi / mutual benefit fund / societies.

14) As per the records of the Company, the Company has not dealt with or traded in shares, securities, debentures and other investments. The investments of the Company are held in its name.

15) According to the information and explanations provided to us and the records examined by us, the Company has given guarantee for loan taken by a subsidiary from bank to the extent of Rs. 29,974.16 Lacs. In our opinion, the terms and conditions of such guarantees are not prima facie prejudicial to the interests of the Company.

16) As per the records and based on the explanations provided to us, in our opinion, the term loans were applied by the Company for the purpose for which they were obtained.

17) On the basis of overall examination of the records and cash flows of the Company, in our opinion, the funds raised on short-term basis have not been used for long-term investment.

18) During the year, the Company has made preferential allotment of equity shares to the parties covered in the Register maintained under Section 301 of the Companies Act, 1956.

19) As per the records verified, no debentures were issued or were outstanding during the year.

20) During the year, the Company has not raised any money through public issue.

21) Based upon the audit procedures performed and the information and explanations provided by the management, we report that no fraud on or by the Company has been noticed or reported during the course of our audit.

For Shyam Malpani & Associates

Chartered Accountants

Firm Registration No. 120438 W

Shyam Malpani

Proprietor Membership No. F-34171

Mumbai, dated May 16, 2013

---

Mar 31, 2012

1) We have audited the attached Balance Sheet of Zicom Electronic Security Systems Limited as at March 31, 2012, the statement of Profit and Loss and the Cash Flow statement for the year ended on that date annexed thereto. These financial statements are responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

2) We conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the 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 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 to the extent applicable to the company during the year.

4) Further to our comments in the Annexure referred to in Para 3 above, we report as follows:

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

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

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

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

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

f) In our opinion and to the best of our information and according to the explanations provided to us, they said financial statements, read with Significant Accounting Policies and Notes there on 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 March 31, 2012;

ii) in the case of the Statement of Profit and Loss, of the profit of the Company for the year ended on that date; and

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

In terms of the information and explanations given to us and the books and records examined by us and on the basis of such checks as we consider appropriate, we further report as under:

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

As explained to us, the fixed assets have been physically verified by the management as per a phased programme of verification. In our opinion, the frequency of verification is reasonable having regard to the size of the Company and the nature of its fixed assets. The discrepancies noticed on such verification were not material and have been properly dealt with in the Company's books of accounts.

The Fixed assets disposed off during the year by the Company were not substantial and therefore do not affect the going concern assumption.

2) As explained to us, the management has conducted physical verification of inventory at reasonable intervals during the year.

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.

In our opinion, the Company is maintaining proper records of inventory. The discrepancies noticed on such verification between physical inventories and the book records which were material in relation to the operations of the Company have been properly dealt with in the Company's books of account.

3) According to the information and explanations provided to us and as per the records examined by us, during the year, the Company has granted unsecured loan to a body corporate being a party covered under the register maintained under Section 301 of the Companies Act, 1956. The aggregate maximum and closing balances of these parties are Rs. 1,389.99 Lacs and Rs. 887.14 Lacs respectively.

In our opinion, the rate of interest wherever applicable and other terms and conditions of the aforesaid loans are not prima facie prejudicial to the interests of the Company.

Based on the information and explanations provided to us, in our opinion, the parties to whom the above loans were given are (i) regular in repayment of principal and interest, as applicable (ii) there was no overdue principal as at the close of the year and (iii) reasonable steps were taken by the Company to recover the loans.

During the year, the Company has not taken any loan, secured or unsecured, from the parties covered in the register maintained under Section 301 of the Companies Act, 1956.

4) In our opinion and according to the information and explanations provided to us, having regard to the explanations that some of the items of plant and equipments purchased are of special nature and suitable alternative sources do not exist for obtaining comparable quotations, the internal control procedures are commensurate with the size of the Company and the nature of its business, for the purchase of inventory, other fixed assets and for the sale of goods and provision of services. During the course of our audit, we have not come across any major weakness in the internal controls prevailing in the Company.

5) 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 all the particulars of contracts or arrangements that need to be entered into the register maintained under section 301 of the Companies Act, 1956 have been so entered.

In our opinion, the transactions made in pursuance of such contracts or arrangements have been made at reasonable prices having regard to the prevailing market prices at the relevant time.

6) As per the records verified and based on explanations given to us, the Company has not accepted any deposits from the public within the meaning of Sections 58A, 58AA or any other relevant provisions of the Companies Act, 1956 and the rules framed there under.

7) The Company has an internal audit system. However, In our opinion, the same needs to be strengthened, both in respect of scope and coverage, in order to make it commensurate with the size of the Company and nature of its business.

8) The Central Government has prescribed maintenance of cost records under clause (d) of section (1) of section 209 of the Companies Act, 1956. We have broadly reviewed the accounts and records of the Company in this connection and are of the opinion, that prima facie, the prescribed accounts and 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.

9) According to the information and explanations provided to us and on the basis of our examination of the books of account, the Company has been generally regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees' State Insurance, Income-tax, Value Added Tax,

Customs Duty, Wealth Tax, Service Tax, Cess and other statutory dues during the year with the appropriate authorities. As at the year end, there are no undisputed dues remaining payable for a period of more than six months from the date they became payable.

As per explanations provided to us and according to the records of the Company, the following are the particulars of disputed dues on account of Value Added Tax (Sales Tax) and Works Contract Tax that have not been deposited:

Name of the Statute Nature of Dues Amount Period to which the Forum where the dispute is (Rs. in Lacs) amount relates pending

Sales Tax Act Classification Dispute 0.22 2002 - 2003 Deputy Commissioner Appeals

Sales Tax Act Non-submission of Statutory Forms 0.69 2002 - 2003 Deputy Commissioner Appeals

Sales Tax Act Levy of Penalty 1.38 2002 - 2003 Assistant Commissioner Appeals

Works Contract Tax Disallowance of WCT TDS certi ficates 1.64 2002 - 2003 Deputy Commis sioner Appeals

Works Contract Tax Disallowance of WCT TDS certi ficates 2.18 2002 - 2003 Deputy Commis sioner Appeals

Sales Tax Act VAT-Karnataka 1.42 2007 - 2008 Joint Commissioner Enforcement- Karnataka

10) The Company does not have accumulated losses at the end of the current financial year nor has it not incurred any cash losses in the current / immediately preceding financial years.

11) Based on our audit procedures, books of account and as explained to us, we are of the opinion that, during the year, the Company has not defaulted in repayment of dues to any financial institution or bank. No debentures were issued or were outstanding during the year.

12) As explained 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 during the year.

13) In our opinion the nature of activities of the Company does not attract any special statute applicable to chit fund and nidhi / mutual benefit fund / societies.

14) As per the records of the Company, the Company has not dealt with or traded in shares, securities, debentures and other investments. The investments of the Company are held in its name.

15) According to the information and explanations provided to us and the records examined by us, the Company has given guarantee for loan taken by a subsidiary from bank to the extent of Rs. 16,776.70 Lacs. In our opinion, the terms and conditions of such guarantees are not prima facie prejudicial to the interests of the Company.

16) As per the records and based on the explanations provided to us, in our opinion, the term loans were applied by the Company for the purpose for which they were obtained.

17) On the basis of overall examination of the records and cash flows of the Company, in our opinion, the funds raised on short-term basis have not been used for long- term investment.

18) During the year, the Company has not made any preferential allotment of equity shares to the parties covered in the Register maintained under Section 301 of the Companies Act, 1956.

19) As per the records verified, no debentures were issued or were outstanding during the year.

20) During the year, the Company has not raised any money through public issue.

21) Based upon the audit procedures performed and the information and explanations provided by the management, we report that no fraud on or by the Company has been noticed or reported during the course of our audit.

For Malpani & Associates

Chartered Accountants

Firm Registration No. 120438 W

Shyam Malpani

Proprietor

Membership No. F-34171

Mumbai, dated May 17, 2012

---

Mar 31, 2010

1) We have audited the attached Balance Sheet of Zicom Electronic Security Systems Limited as at March 31, 2010, related Profit and Loss Account and the Cash Flow statement for the year ended on that date annexed thereto. These financial statements are 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 auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3) Without qualifying our report, we draw attention to Note no. 10 of Schedule 16 of the financial statement. As on March 31, 2010, the Company has Equity Investment of Rupees 4,101 Lacs in its wholly owned subsidiary Zicom Retail Products Private Limited and has advanced unsecured loan of Rupees 7,022 Lacs. The Said Subsidiary Company is incurring Losses and its accumulated losses as of March 31, 2010 is Rs. 1,915 Lacs. As explained by the management, that they are confident of generating greater business and improving profitability by the retail expansion and creation of Retail Electronic Security Brand. Accordingly management considers such diminution to be temporary in nature and hence no provision is required for diminution in the value of investments and in respect of Unsecured Loan.

4) As required by the Companies (Auditors Report) Order, 2003 ("the 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.

5) Further to our comments in the Annexure referred to 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 the 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 the Cash Flow statement dealt with by this report comply with the accounting standards referred to in sub- section (3C) of section 211 of the Companies Act, 1956;

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, we report that 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 Companies Act, 1956;

f) In our opinion, and to the best of our information and according to the explanations provided to us, the said financial statements read with the 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 Balance Sheet, of the state of affairs of the Company as at March 31, 2010;

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

iii) in case of the Cash Flow statement, of the cash flows for the year ended on that date.

Annexure referred to the Auditors Report (Referred to in paragraph 4 of our report of even date)

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

The fixed assets have been physically verified by the management as per a phased programme of verification, except fixed assets having net block value of Rupees 31,936,961, installed at customers place, which are not physically verified. In our opinion, the frequency of verification is reasonable having regard to the size of the Company and the nature of its fixed assets. The discrepancies noticed on such verification were not material and have been properly dealt with in the books of accounts.

Fixed assets disposed off during the year were not substantial and therefore do not affect the going concern assumption.

2) The management has conducted physical verification of inventory at reasonable intervals.

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.

The Company is maintaining proper records of inventory. The discrepancies noticed on such verification between physical inventories and the book records were not material in relation to the operations of the Company and the same have been properly dealt with in the books of account.

3) According to the information and explanations provided to us and as per the records examined by us, the Company has granted unsecured loans to four parties covered in the register maintained under Section 301 of the Companies Act, 1956 amounting to Rupees 781,080,801. The Maximum balance outstanding during the year was Rupees 825,361,558.

In our opinion rate of interest and other terms and conditions are not prima facie prejudicial to the interest of the Company.

In absence of repayment schedule of principal and interest, we are not able to comment on the regularity of the same.

The Company has not taken any loan secured or unsecured from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956.

4) In our opinion and according to the information and explanations provided to us, having regards to the explanations that some of

the items of Plant and Equipments purchased are of special nature and suitable alternative sources do not exist for obtaining comparable quotations, the internal control procedures are 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. During the course of our audit, no major weakness has been noticed in the internal controls.

5) 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 all the particulars of contracts or arrangements that need to be entered into the register maintained under section 301 of the Companies Act, 1956 have been so entered.

In our opinion and according to the information and explanations provided to us, the transactions made in pursuance of such contracts or arrangements have been made at reasonable prices having regard to the prevailing market prices at the relevant time.

6) In our opinion and according to the information and explanations provided to us, the Company has not accepted any deposits from the public within the meaning of Section 58A, 58AA or any other relevant provisions of the Companies Act, 1956 and the rules framed thereunder.

7) The Company has internal audit system commensurate with the size and nature of its business; however same needs to be strengthened.

8) According to the information and explanations given to us, the Central Government has not prescribed for the maintenance of the cost records under Section 209(1) (d) of the Companies Act, 1956, for any of the products of the Company.

9) According to the information and explanations provided to us and on the basis of our examination of the books of account, the Company has been generally regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees State Insurance, Income-tax, Sales Tax, Customs Duty, Wealth Tax, Service Tax, Cess and other statutory dues during the year with the appropriate authorities. As on March 31, 2010, there are no undisputed dues payable for a period of more than six months from the date they became payable.

As at March 31, 2010, according to the records of the Company and the information and explanation given to us, the following

are the particulars of disputed dues on account of Sales Tax that have not been deposited:

Name of the Statute Nature of Dues Amount in Rupees Period to which the Forum where the amount relates dispute is pending

Sales Tax Act Classification Dispute 21,561 2002 - 2003 Deputy Commissioner Appeals

Sales Tax Act Non-submission of 68,967 2002 - 2003 Deputy Commissioner Appeals statutory forms

Sales Tax Act Levy of Penalty 137,778 2002 - 2003 AssistantCommiss- ioner Appeal

Works Con- tract Tax Disallowance of 164,296 2002 - 2003 Deputy Commissioner (Appeals)

WCT cert-ificate

Works Cont- ract Tax Disallowance of 430,999 2002 - 2003 Deputy Commissioner Appeal

WCT certificate 2003 - 2004



10) The Company does not have accumulated losses at the end of the financial year and it has not incurred cash losses in the current and immediately preceding financial year.

11) Based on our audit procedures and as per the information and explanations provided by the management, we are of the opinion that, during the year the Company has not defaulted in repayment of dues to any financial institution or bank. No debentures were issued or were outstanding during the year.

12) Based on our audit procedures and according to the information and explanations provided to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

13) In our opinion and according to the information and explanations provided to us, the nature of activities of the Company does not attract any special statute applicable to chit fund and nidhi / mutual benefit fund / societies.

14) In our opinion and according to the information and explanations provided to us, the Company is not dealing or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4 (xiv) of the Companies (Auditors Report) Order, 2003 (as amended) are not applicable to the Company.

15) According to the information and explanations provided to us and the records examined by us, the Company has given guarantee for loan taken by two of its subsidiaries from bank. In our opinion, terms and conditions of guarantee are not prejudicial to the interest of the Company.

16) According to the information and explanations provided to us and the records examined by us, in our opinion, the term loans

were applied by the Company for the purpose for which they were obtained.

17) According to the information and explanations provided to us and on an overall examination of the records and cash flow statement of the Company, in our opinion, the funds raised on short-term basis have not been used for long-term investment.

18) 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.

19) According to the information and explanations provided to us and the records examined by us, no debentures were issued or were outstanding during the year.

20) During the year, the Company has not raised any money through public issue.

21) Based upon the audit procedures performed and the information and explanations provided by the management, we report that no fraud on or by the Company has been noticed or reported during the course of our audit.

Notes:

A. Term loan referred in (1) above is secured by the first charge on Plant & Machinery, Office Equipment and Equitable Mortgage of Land & Building at Bandra (West), Mumbai and Office at Bangalore and second charge by way of hypothecation of entire Stock, Book Debts and current assets.

B. Working capital loan referred in (2) above and banking facilities mentioned in clauses 2(a) and 2(b) of schedule 16 are secured by the first charge ranking pari passu on the entire Stock, Book Debts and current assets, and second charge on Plant & Machinery, Office Equipment and Equitable Mortgage of Land & Building at Bandra (West) Mumbai and Office at Bangalore. Further Secured by Term Deposit Receipt of Rs. 124 Lacs of the company.

FOR P.RAJ & CO.

Chartered Accountants

P. S. Shah

Proprietor

Membership No. 44611

Firm Registration No. 108310W

Mumbai, August 14, 2010