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Auditor Report of Paramount Communications Ltd.

Mar 31, 2017

Report on the Standalone Financial Statements

1. We have audited the accompanying Standalone financial statements of Paramount Communications Limited(“the Company”), which comprise the Balance Sheet as at 31st March, 2017, the Statement of Profit and Loss, the Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information.

Management’s Responsibility for the Standalone Financial Statements

2. The Company''s Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 (“the Act”) with respect to the preparation of these Standalone financial statements to give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies(Accounts) Rules, 2014. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

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

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

5. We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10)of the Act and other applicable authoritative pronouncements issued by the Institute of Chartered Accountants of India. Those Standards and pronouncements 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.

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

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

Basis for Qualified Opinion

8. We state that “From 1st July, 2016 company has not provided for interest and other dues of Rs.29,917,920/- on borrowings from a bank which have become NPA account as per bank classification and are outstanding at the year end and in respect of which interest has been reversed/not charged in statements provided by the Bank. Amount of interest not provided Rs.29,917,920/-as per the estimate by the management. We further report that loss for the year would have been Rs.33,050,752/ - as against reported figure Rs.3,132,832/- and short term borrowings would have been Rs.526,220,445./- as against reported figure Rs.496,302,525/- and debit balance in surplus would have been Rs.4,420,632,798/- as against reported figure Rs.4,390,714,878/-. (Refer Note 25.2)

Qualified Opinion

9. In our opinion and to the best of our information and according to the explanations given to us, except for the effects of the matter described in the basis for qualified opinion paragraph 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, 2017, and its loss and its cash flows for the year ended on that date.

Emphasis of Matter

10. We draw attention to

a. Note 36 to the financial statements. The accompanying financial statements have been prepared on a going concern basis despite negative net worth, overdue in repayment of loan installments, interest to banks, working capital facilities from banks, overdue in redemption of Foreign Currency Convertible Bonds (FCCBs). The appropriateness of the said basis is inter-alia dependent on Company''s ability to generate profit in future years and meet its financial obligations.

b. For Banks who have assigned and transferred the loan together with all underlying securities thereto and rights etc., to a Securitization and Asset Reconstruction Company (ARC), dues to those banks have been transferred and shown as due to ARC. (Refer Note 9.3)

c. Company has received and accepted Sanction letter / in principle approval with ARC for payment of Rs.373,800,000/towards full & final payment of the amount due & payable to ARC Subject to Company complying with ‘Schedule of Payments'' referred to in Sanction letter / in principle approval. As per schedule of payment Rs.167,500,000 /- is ought to be paid before 29th March, 2021 in half yearly installments and Rs.206,300,000/- is ought to be paid before 30th September, 2021 in half yearly installments. Company has paid all the installments due upto 31st March, 2017 and is confident of meeting all payment schedules specified in Sanction letter / in principle approval. In opinion of the management the settled amounts with ARC are new borrowing/ liability since the lender is different from earlier lenders and the new borrowings/ liability are on substantially different terms viz as amount of settlement, schedule of payment etc. Hence, this modification is treated as de-recognition of the original liability and the recognition of a new liability.

Accordingly, Company has written back Rs.714,204,200/- as exceptional item (settlement of dues) as difference between loans assigned to ARC by banks & Settlement amount between Company & ARC. (Refer Note 28)

d. In respect of dues to ARC which have been assigned by banks and in respect of which Settlement between company and ARC, no interest has been provided, since, the company is in the process of making settlement with the ARC. As per terms & conditions of Settlements with ARC during the year, no interest was charged by ARC.(Refer Note 25.1)

Our opinion is not modified in respect of these matters.

Report on Other Legal and Regulatory Requirements

11. As required by ‘the Companies (Auditor''s Report) Order, 2016'', issued by the Central Government of India in terms of subsection (11) of section 143 of the Act (hereinafter referred to as the “Order”), and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to us, we give in the Annexure B a statement on the matters specified in paragraphs 3 and 4 of the Order.

12. As required by Section 143 (3) of the Act, we report to the extent applicable that:

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

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

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

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

(e) On the basis of written representation received from the directors as on 31st March, 2017, taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2017 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 A.

(g) Non provision of interest on borrowings from a bank as described in paragraph 8 under the Basis of Qualified Opinion paragraph above and the going concern matter described in sub-paragraph 10 (a) under the Emphasis of Matter paragraph above, in our opinion, may have an adverse effect on the functioning of the Company.

(h) 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 knowledge and belief and according to the information and explanations given to us:

i. The Company has disclosed the impact of pending litigations as at 31st March, 2017 on its financial position in its financial statements - Refer Note No. 34.1 & 34.3

ii. The Company did not have any long-term contracts including derivative contracts as at 31st March, 2017

iii. There were no amounts, which were required to be transferred, to the Investor Education and Protection Fund by the Company during the year ended on 31st March, 2017.

iv. The company has provided requisite disclosures in its financial statements as to holdings as well as dealing in Specified Bank Notes during the period from 8th November, 2016 to 30th December, 2016 and these are in accordance with the books of accounts maintained by the company- Refer Note No.38

Referred to in paragraph 11 of the Independent Auditors'' Report of even date to the members of Paramount Communications Limited on the Standalone financial statements as of and for the year ended 31st March, 2017

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

(b) The fixed assets of the Company have been physically verified by the Management during the year. The discrepancies noticed on such verification were not material and have been properly dealt with in the books of account. In our opinion, the frequency of verification is reasonable.

(c) The title deeds of immovable properties, as disclosed in Note 11 on fixed assets to the financial statements, are held in the name of the Company, except for details as given below:

- In case of Land

Total number of cases:

01

Whether lease hold/ free hold:

Free Hold

Gross Block & Net Block (as at 31.03.2017):

Rs. 2,35,739/-

ii. The physical verification of inventory (excluding stocks with third parties) have been conducted at reasonable intervals by the Management during the year. In respect of inventory lying with third parties, these have substantially been confirmed by them. The discrepancies noticed on physical verification of inventory as compared to book records were not material.

iii. The Company has not granted any loans, secured or unsecured, to companies, firms, limited liability partnerships or other parties covered in the register maintained under Section 189 of the Act. There is one party covered in the register maintained under Section 189 of the Act, to which Company has given security deposits as per contractual obligations. (Refer Note 13.1)

(a) In respect of the aforesaid deposit, the terms and conditions under which such deposit was granted are not prejudicial to the Company''s interest.

(b) Since it is a security deposit no schedule for repayment of deposit is applicable and no interest was charged.

(c) In respect of the aforesaid deposit, there is no amount which is overdue for more than ninety days.

iv. 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 Companies Act, 2013 in respect of the loans and investments made, and guarantees and security provided by it.

v. The Company has not accepted any deposits from the public within the meaning of Sections 73, 74, 75 and 76 of the Act and the rules framed there under to the extent notified.

vi. Pursuant to the rules made by the Central Government of India, the Company is required to maintain cost records as specified under Section 148(1) of the Act in respect of its products. We have broadly reviewed the same, and are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the records with a view to determine whether they are accurate or complete.

vii. (a) According to the records of the Company and information and explanations given to us and the records of the Company examined by us, the Company has been generally regular in depositing the undisputed statutory dues including provident fund, employees state insurance, income tax, Investor education and protection fund, sales tax, service tax, customs duty, excise duty, cess and other material statutory dues applicable to it with the appropriate authorities.

(b) According to the information and explanations given to us and the records of the Company examined by us, the particulars of dues of Income Tax, Service Tax, Customs Duty and Excise Duty as at 31st March, 2017 which have not been deposited on account of a dispute are as follows:

Name of the Statute

Nature of the Due

Amount

Rs.

Period to which the amount relates

Forum where dispute is pending

Central Excise Act

Excise Duty

168,032,379/-

Various years for 2002-03 to 2014-15

CESTAT

40,624,358/-

Various years for 2007-08 to 2015-16

Commissioner

(Appeals)

Name of the Statute

Nature of the Due

Amount

Rs.

Period to which the amount relates

Forum where dispute is pending

Finance Act

Service Tax

31,399,088/-

Various years for 2005-06 to 2009-10

CESTAT

178,378/-

2005-06

Commissioner

(Appeals)

Customs Act

Customs Duty

5,247,875/-

2005-06, 2006-07, 2010-11 & 2011-12

CESTAT

viii. Based on our audit procedures and as per the information and explanations given by the management, the Company has defaulted in repayment of loans/ borrowings to banks and Foreign Currency Convertible Bond Holders (FCCBs) as per details given below. (Also refer Note 4.2, 7.2, 9.1& 9.3).

Name of the Leader

Nature of dues

Period of default

Amount of default Rs.

State Bank of India

Rupee Term Loans

From June 2013 to December 2016

297,201,283/-

Foreign Currency Term Loan

From September 2014 to December 2016

285,219,063/-

Rupee Working Capital Loans

From November 2014 to December 2016

539,432,964/-

State Bank of Patiala

Rupee Term Loans

From June 2016 to December 2016

15,822,244/-

Standard Chartered Bank

Rupee Term Loans

Since June 2013

92,361,568/-

Dena Bank

Rupee Term Loans

Since June 2016

62,702,601/-

Rupee Working Capital Loans

Since February 2017

340,171,363/-

Principal amount of Foreign Currency Convertible Bonds (FCCBs)

FCCBs

Since December, 2011

48,87,75,000/-

Premium on redemption of FCCB’s

FCCBs

Since December, 2011

22,26,28,876/-

The above information is in respect of defaults in repayment of principal amounts only.

ix. The Company has not raised any moneys by way of initial public offer, further public offer (including debt instruments) and term loans. Accordingly, the provisions of Clause 3(ix) of the Order are not applicable to the Company.

x. 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 material fraud by the Company or on the Company by its officers or employees, noticed or reported during the year, nor have we been informed of any such case by the Management.

xi. 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.

xii. As the Company is not a Nidhi Company and the Nidhi Rules, 2014 are not applicable to it, the provisions of Clause 3(xii) of the Order are not applicable to the Company.

xiii. The Company has entered into transactions with related parties in compliance with the provisions of Sections 177 and 188 of the Act. The details of such related party transactions have been disclosed in the financial statements as required under Accounting Standard (AS) 18, Related Party Disclosures specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

xiv. The Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review. Accordingly, the provisions of Clause 3(xiv) of the Order are not applicable to the Company.

xv. The Company has not entered into any non cash transactions with its directors or persons connected with him. Accordingly, the provisions of Clause 3(xv) of the Order are not applicable to the Company.

xvi. The Company is not required to be registered under Section 45-IA of the Reserve Bank of India Act, 1934. Accordingly, the provisions of Clause 3(xvi) of the Order are not applicable to the Company.

For JAGDISH CHAND & CO.

Firm Registration Number: 000129N

Chartered Accountants

(J.C. Gupta)

Place of signature : New Delhi Partner

Date : 29th May, 2017 Membership Number: 06107


Mar 31, 2016

INDEPENDENT AUDITOR’S REPORT

TO THE MEMBERS OF

PARAMOUNT COMMUNICATIONS LIMITED

Report on the Standalone Financial Statements

1. We have audited the accompanying Standalone financial statements of Paramount Communications Limited (“the Company”), which comprise the Balance Sheet as at 31st March, 2016, the Statement of Profit and Loss, the Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information.

Management’s Responsibility for the Standalone Financial Statements

2. The Company’s Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 (“the Act”) with respect to the preparation of these Standalone financial statements to give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

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

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

5. We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act and other applicable authoritative pronouncements issued by the Institute of Chartered Accountants of India. Those Standards and pronouncements 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.

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

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

Opinion

8. 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,

2016, and its loss and its cash flows for the year ended on that date.

Emphasis of Matter

9. We draw attention to

a. Note 36 to the financial statements. The accompanying financial statements have been prepared on a going concern basis despite negative net worth, overdue in repayment of loan installments, interest to banks, working capital facilities from banks, overdue in redemption of Foreign Currency Convertible Bonds (FCCBs). The appropriateness of the said basis is inter-alia dependent on Company’s ability to generate profit in future years and meet its financial obligations and also dependent on induction of financial investors in the company and/or joint venture with foreign companies.

b. Wherever, interest on borrowings has not been applied by banks, interest on those borrowings has been provided as per best estimates of the management. (Refer Note 25.1)

c. During the year a bank has assigned and transferred the loan together with all underlying securities thereto and rights etc., to a Securitization and Asset Reconstruction Company (Refer Note 9.3)

Our opinion is not modified in respect of these matters.

Report on Other Legal and Regulatory Requirements

10. As required by ‘the Companies (Auditor’s Report) Order, 2016’, issued by the Central Government of India in terms of subsection (11) of section 143 of the Act (hereinafter referred to as the “Order”), and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to us, we give in the Annexure B a statement on the matters specified in paragraphs 3 and 4 of the Order.

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

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

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

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

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

(e) On the basis of written representation received from the directors as on 31st March, 2016, taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 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 A.

(g) The going concern matter described in sub-paragraph 9 (a) under the Emphasis of Matter paragraph above, in our opinion, may have an adverse effect on the functioning of the Company.

(h) 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 knowledge and belief and according to the information and explanations given to us:

i. The Company has disclosed the impact of pending litigations as at 31st March, 2016 on its financial position in its financial statements - Refer Note No. 34.1 & 34.3

ii. The Company did not have any long-term contracts including derivative contracts as at 31st March, 2016

iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company during the year ended on 31st March, 2016

Referred to in paragraph 11 (f) of the Independent Auditors’ Report of even date to the members of Paramount Communications Limited on the standalone financial statements for the year ended 31st March, 2016

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Act

1. We have audited the internal financial controls over financial reporting of Paramount Communications Limited (“the Company”) as of 31st March, 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

2. The Company’s management 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 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 Act.

Auditors’ Responsibility

3. 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 deemed to be prescribed under section 143(10) of the Act 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 ICAI. 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 was established and maintained and if such controls operated effectively in all material respects.

4 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 auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.

5. 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

6. 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 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

7. 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

8. In our opinion, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at 31st March, 2016, 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.

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

(b) The fixed assets of the Company have been physically verified by the Management during the year. The discrepancies noticed on such verification were not material and have been properly dealt with in the books of account. In our opinion, the frequency of verification is reasonable.

(c) The title deeds of immovable properties, as disclosed in Note 11 on fixed assets to the financial statements, are held in the name of the Company, except for details as given below:

- In case of Land :-

Total number of cases:

01

Whether lease hold/ free hold:

Free Hold

Gross Block & Net Block (as at 31.03.2016):

'' 78,86,689/-

ii. The physical verification of inventory (excluding stocks with third parties) have been conducted at reasonable intervals by the Management during the year. In respect of inventory lying with third parties, these have substantially been confirmed by them. The discrepancies noticed on physical verification of inventory as compared to book records were not material.

iii. The Company has not granted any loans, secured or unsecured, to companies, firms, limited liability partnerships or other parties covered in the register maintained under Section 189 of the Act. There is one party covered in the register maintained under Section 189 of the Act, to which Company has given security deposits as per contractual obligations. (Refer Note 13.1)

(a) In respect of the aforesaid deposit, the terms and conditions under which such deposit was granted are not prejudicial to the Company’s interest.

(b) Since it is a security deposit no schedule for repayment of deposit is applicable and no interest was charged.

(c) In respect of the aforesaid deposit, there is no amount which is overdue for more than ninety days.

iv. 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 Companies Act, 2013 in respect of the loans and investments made, and guarantees and security provided by it.

v. The Company has not accepted any deposits from the public within the meaning of Sections 73, 74, 75 and 76 of the Act and the rules framed there under to the extent notified.

vi. Pursuant to the rules made by the Central Government of India, the Company is required to maintain cost records as specified under Section 148(1) of the Act in respect of its products.We have broadly reviewed the same, and are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the records with a view to determine whether they are accurate or complete.

vii. (a) According to the records of the Company and information and explanations given to us and the records of the Company examined by us, the Company has been generally regular in depositing the undisputed statutory dues including provident fund, employees state insurance, income tax, Investor education and protection fund, sales tax, service tax, customs duty, excise duty, cess and other material statutory dues applicable to it with the appropriate authorities.

(b) According to the information and explanations given to us and the records of the Company examined by us, the particulars of dues of Income Tax, Service Tax, Customs Duty and Excise Duty as at 31st March, 2016 which have not been deposited on account of a dispute are as follows:

Name of the Statute

Nature of the Due

Amount

Period to which the amount relates

Forum where dispute is pending

Central Excise Act

Excise Duty

20,37,57,113/-

Various years for 2002-03 to 2014-15

CESTAT

98,35,976/-

Various years for 2007-08 to 2014-15

Commissioner

(Appeals)

Name of the Statute

Nature of the Due

Amount

Period to which the amount relates

Forum where dispute is pending

Finance Act

Service Tax

3,13,99,088/-

Various years for 2005-06 to 2009-10

CESTAT

1,78,378/-

2005-06

Commissioner

(Appeals)

Customs Act

Customs Duty

52,47,875/-

2005-06, 2006-07, 2010-11 & 2011-12

CESTAT

Income Tax Act,1961

Income tax

4,42,98,650/-

2007-08 & 2008-09

Commissioner

(Appeals)

viii. Based on our audit procedures and as per the information and explanations given by the management, the Company has defaulted in repayment of loans/ borrowings to banks and Foreign Currency Convertible Bond Holders (FCCBs) as per details given below. (Also refer Note 4.2, 7.2, 9.1 & 9.3).

Name of the Leader

Nature of dues

Period of default

Amount of default ''

State Bank of India

Rupee Term Loans

Since June 2013

202,239,737/-

Foreign Currency Term Loan

Since September 2014

190,146,042/-

Rupee Working Capital Loans

Since November 2014

539,432,964/-

IDBI Bank Limited

Rupee Term Loans

From November 2014 to March 2016

155,650,327/-

Rupee Working Capital Loans

From November 2014 to March 2016

312,612,302/-

Standard Chartered Bank

Rupee Term Loans

Since June 2013

85,325,945/-

Principal amount of Foreign Currency Convertible Bonds (FCCBs)

FCCBs

Since December, 2011

499,575,000/-

Premium on redemption of FCCB’s

FCCBs

Since December, 2011

227,548,097/-

The above information is in respect of defaults in repayment of principal amounts only,

ix. The Company has not raised any moneys by way of initial public offer, further public offer (including debt instruments) and term loans. Accordingly, the provisions of Clause 3(ix) of the Order are not applicable to the Company.

x. 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 material fraud by the Company or on the Company by its officers or employees, noticed or reported during the year, nor have we been informed of any such case by the Management.

xi. 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.

xii. As the Company is not a Nidhi Company and the Nidhi Rules, 2014 are not applicable to it, the provisions of Clause 3(xii) of the Order are not applicable to the Company.

xiii. The Company has entered into transactions with related parties in compliance with the provisions of Sections 177 and 188 of the Act. The details of such related party transactions have been disclosed in the financial statements as required under Accounting Standard (AS) 18, Related Party Disclosures specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

xiv. The Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review. Accordingly, the provisions of Clause 3(xiv) of the Order are not applicable to the Company.

xv. The Company has not entered into any non cash transactions with its directors or persons connected with him. Accordingly, the provisions of Clause 3(xv) of the Order are not applicable to the Company.

xvi. The Company is not required to be registered under Section 45-IA of the Reserve Bank of India Act, 1934. Accordingly, the provisions of Clause 3(xvi) of the Order are not applicable to the Company.

For JAGDISH CHAND & CO.

Firm Registration

Number: 000129N

Chartered Accountants

(J.C. Gupta)

Place of signature : New Delhi Partner

Date : 27th May, 2016 Membership Number: 06107


Mar 31, 2015

1. We have audited the accompanying standalone financial statements of Paramount Communications Limited ("the Company"), which comprise the Balance Sheet as at 31st March, 2015, the Statement of Profit and Loss, the Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information.

Management's Responsibility for the Standalone Financial Statements

2. The Company's Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation of these standalone financial statements to give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor's Responsibility

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

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

5. We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act and other applicable authoritative pronouncements issued by the Institute of Chartered Accountants of India. Those Standards and pronouncements 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.

6. An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company's preparation of the financial statements that give a true and fair view, in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on whether the Company has in place an adequate internal financial controls system over financial reporting and the operating effectiveness of such controls. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company's Directors, as well as evaluating the overall presentation of the financial statements.

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

Opinion

8. 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 loss and its cash flows for the year ended on that date.

Emphasis of Matter

9. We draw attention to

a. Note 36 to the financial statements. The accompanying financial statements have been prepared on a going concern basis despite negative net worth, overdue in repayment of loan installments, interest to banks, working capital facilities from banks, overdue in redemption of Foreign Currency Convertible Bonds (FCCBs). The appropriateness of the said basis is inter-alia dependent on Company's ability to generate profit in future years and meet its financial obligations and also dependent on induction of financial investors in the company and/or joint venture with foreign companies.

b. Wherever, interest on borrowings has not been applied by banks, interest on those borrowings has been provided as per best estimates of the management. (Refer Note 25.1)

Our opinion is not qualified in respect of these matters.

Report on Other Legal and Regulatory Requirements

10. As required by 'the Companies (Auditor's Report) Order, 2015', issued by the Central Government of India in terms of sub- section (11) of section 143 of the Act (hereinafter referred to as the "Order"), and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to us, we give in the Annexure a statement on the matters specified in paragraphs 3 and 4 of the Order.

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

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

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

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

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

e. The going concern matter described in sub-paragraph (a) under the Emphasis of Matter paragraph above, in our opinion, may have an adverse effect on the functioning of the Company.

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

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 knowledge and belief and according to the information and explanations given to us:

i) The Company has disclosed the impact of pending litigations as at 31st March, 2015 on its financial position in its standalone financial statements. (Refer Note No. 34.1& 34.3)

ii) The Company did not have any long-term contracts including derivative contracts as at 31st March, 2015

iii) There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company during the year ended on 31st March, 2015

ANNEXURE TO INDEPENDENT AUDITORS' REPORT

Referred to in paragraph 10 of the Independent Auditors' Report of even date to the members of Paramount Communications Limited on the standalone financial statements as of and for the year ended 31st March, 2015

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

(b) The fixed assets of the Company have been physically verified by the Management during the year. The discrepancies noticed on such verification were not material and have been properly dealt with in the books of account. In our opinion, the frequency of verification is reasonable.

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

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

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

iii. (a) There is one party covered in the register maintained under Section 189 of the Act, to which Company has given deposit as per contractual obligations. Since it is a security deposit no principal amount was due and no interest was charged. (Refer Note 13.1)

(b) In respect of the aforesaid deposit, there is no overdue amount.

iv. In our opinion, and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business for the purchase of inventory and fixed assets and for the sale of goods. Further, on the basis of our examination of the books and records of the Company, and according to the information and explanations given to us, we have neither come across, nor have been informed of, any continuing failure to correct major weaknesses in the aforesaid internal control system.

v. The Company has not accepted any deposits from the public within the meaning of Sections 73, 74, 75 and 76 of the Act and the rules framed thereunder to the extent notified.

vi. We have broadly reviewed the books of account maintained by the Company pursuant to the Rules made by the Central Government for the maintenance of cost records under sub-section(1) of Section 148 of the Act, and are of the opinion that, prime facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the records with a view to determine whether they are accurate or complete.

vii. (a) According to the records of the Company and information and explanations given to us and the records of the Company examined by us, the Company has been generally regular in depositing the undisputed statutory dues including provident fund, employees state insurance, income tax, Investor education and protection fund, sales tax, wealth tax, service tax, customs duty, excise duty, cess and other material statutory dues applicable to it with the appropriate authorities, We are informed there are no undisputed statutory dues as of March 31, 2015 outstanding for a period of more than six months from the date they become payable.

(b) There are no dues in respect of income tax, sales tax, wealth tax, service tax, customs duty, excise duty and cess that have not been deposited with appropriate authorities on account of any dispute other than those mentioned below :-

Name of the Nature of Amount Statute the Due Rs

Central Excise Excise Duty 74,807,281 Act 10,261,496

Finance Act Service Tax 21,927,668

181,206

Customs Act Customs Duty 5,771,724

Income Tax Income tax 44,298,650 Act, 1961

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

Central Excise Various years for 2002-03 to CESTAT Act 2009-10

Various years for 2007-08 to Commissioner 2013-14 (Appeals)

Finance Act Various years for 2005-06 to CESTAT 2009-10 2005-06 & 2006-07 Commissioner (Appeals)

Customs Act 2005-06, 2006-07, 2010-11 & CESTAT 2011-12

Income Tax 2008-09 & 2009-10 Commissioner Act, 1961 (Appeals)

(c) The amounts required to be transferred to the Investor Education and Protection Fund have been transferred within the stipulated time in accordance with the provisions of the Act, and the rules made thereunder.

viii. The company's accumulated losses at the end of the financial year 31st March, 2015 were more than fifty percent of its net worth. The company has incurred cash losses during the financial year ended 31st March, 2015 and in the immediately preceding financial year.

ix. Based on our audit procedures and as per the information and explanations given by the management, the Company has defaulted in repayment of dues to banks and Foreign Currency Convertible Bond Holders (FCCBs) as per details given below. (Also refer Note 4.2, 7.2 & 9.1).

Nature of Payment FY 2014-2015 Period

Rupee Loans from banks 202,451,703 Since June, 2013

Working Capital Loans from banks 880,409,943 Since November, 2014

Foreign Currency Loans 89,577,884 Since September, 2014

Interest on Loans/Working Capital Loans from banks 552,544,289 Since October, 2013

Principal amount of Foreign Currency Convertible Bonds (FCCBs) 470,700,000 Since December, 2011

Premium on redemption of FCCB's 214,936,015 Since December, 2011

Interest on FCCBs due up to 31st December, 2014 21,284,901 Since January, 2012

x. The company has given guarantee for loans taken by two corporates from banks. According to the information and explanations given to us, we are of the opinion that the terms and conditions thereof are not prime facie prejudicial to the interest of the company. (Refer Note 34.2).

xi. The Company has not raised any term loans during the year. Accordingly, the provisions of Clause 3(xi) of the Order are not applicable to the Company.

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

For JAGDISH CHAND & CO. Firm Registration Number: 000129N Chartered Accountants

(J.C. Gupta) Place of signature : New Delhi Partner Date : 27th May, 2015 Membership Number: 06107


Mar 31, 2014

1. We have audited the accompanying financial statements of Paramount Communications Limited (the "Company"), which comprise the Balance Sheet as at 31st March, 2014, and the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information, which we have signed under reference to this report.

Management''s Responsibility for the Financial Statements

2. The Company''s Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards referred to in sub-section (3C) of section 211 of ''the Companies Act, 1956 of India (the "Act") read with the General Circular 15/2013 dated 13th September, 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013. This responsibility includes the design, implementation and maintenance of internal 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.

Auditors'' Responsibility

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

4. An audit involves performing procedures to obtain audit evidence, about the amounts and disclosures in the financial statements. 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. In making those risk assessments, the auditors consider internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity''s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by Management, as well as evaluating the overall presentation of the financial statements.

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

Opinion

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

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

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

Emphasis of Matter

7. We draw attention to :

a) Note 37 to the financial statements. The accompanying financial statements have been prepared on a going concern basis despite negative net worth, defaults in repayment of loan installments and interest to banks and other working capital facilities from banks, default in redemption of Foreign Currency Convertible Bonds (FCCBs) and filing of winding up petition filed against the Company under the Act on behalf of FCCB holders. The appropriation of the said basis is inter-alia dependent on reschedulement of repayments to banks and outcome of winding up petition.

b) Note 24.1 to the financial statements. Managerial Remuneration of Rs.9,032,489/- and Rs.853720 /- to Chairman & CEO and Managing Director for the year ended 31st March, 2014 and for March, 2013 respectively, is as approved by the shareholders by way of postal ballot. However, this is subject to final approval from the Central Government. Pending approval from the Central Government in this regard, the impact thereof on the financial statements to the extent of amount of remuneration that may be disallowed by the Central government, if any, is currently unascertainable

Our opinion is not qualified in respect of these matters.

Report on Other Legal and Regulatory Requirements

8. 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 (hereinafter referred to as the "Order"), and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to us, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

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

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

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

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

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

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

Referred to in paragraph ''8'' of the Independent Auditors'' Report to the Members of Paramount Communications Limited on the financial statements for the year ended 31st March, 2014

(i) (a) The Company is maintaining proper records to show full particulars, including quantitative details and situation of fixed assets.

(b) As explained to us, the Company has a programme of physically verifying all its fixed assets over a period of three years, which in our opinion is reasonable having regard to the size of the Company and the nature of its fixed assets. In accordance with this programme, a portion of the fixed assets were physically verified by the management during the year. The discrepancies noticed on such verification between the physical balances and the fixed assets records were not material and have been properly dealt with in the books of account.

(c) In our opinion and according to the information and explanations given to us, a substantial part of the fixed assets has not been disposed off by the Company during the year.

(ii) (a) During the year, the inventories have been physically verified by the management. In our opinion, the frequency of

verification is reasonable.

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

(c) On the basis of our examination of the record of inventories, we are of the opinion that, the Company is maintaining proper records of inventories. The discrepancies noticed on physical verification of inventories as compared to book records were not material and have been properly dealt with in the books of account.

(iii) (a) There is one party covered in the register maintained under Section 301 of the Companies Act, 1956 to which

Company has given deposit as per contractual obligations. The maximum amount involved during the year was Rs.18,000,000/- and the year end balance of deposit granted to such party was Rs.18,000,000/-. (Refer Note 13.1)

(b) In our opinion, terms and conditions on which deposit has been given to such party listed in the register maintained under Section 301 of the Companies Act, 1956 are not, prima facie, prejudicial to the interest of the Company. No interest was charged from the party, since this is deposit against premises taken on rent.

(c) No principal amount was due for repayment, no interest was charged from the party, since this was deposit against premises taken on rent.

(d) In respect of aforesaid deposit, there is no overdue amount more than Rupees one Lac.

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

(f) The company has not taken any loans, secured or unsecured, from companies, firms or other parties covered in the register maintained under section 301 of the Act. Therefore the provision of clause 4(iii) (f) & (g) of the said Order are not applicable to the company.

(iv) In our opinion and according to the information and explanations given to us, there are adequate internal control systems, commensurate with the size of the Company and the nature of its business with regard to the purchase of inventories, fixed assets and with regard to the sale of goods. There are no sale of services during the year. Further, on the basis of our examination and according to the information and explanations given to us, we have neither come across, nor have been informed of, any continuing failure to correct major weaknesses in aforesaid internal control system.

(v) (a) According to the information and explanations given to us, we are of the opinion that during the year, the particulars of contracts or arrangements referred to in section 301 of the Act have been entered in the register required to be maintained under that section.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements and exceeding the value of Rupees five lakhs in respect of any party have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

(vi) As, the Company has not accepted any deposits from the public within the meaning of sections 58A and 58AA of the Act and the rules framed there under, paragraph 4(vi) of the order is not applicable.

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

(viii) We have broadly reviewed the books of account maintained by the Company pursuant to the Rules made by the Central Government for the maintenance of cost records under Section 209 (1)(d) of the Companies Act, 1956 and are of the opinion that, prime facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the records with a view to determine whether they are accurate or complete.

(ix) a) According to the records of the Company and information and explanations given to us and the records of the Company examined by us, the Company has been generally regular in depositing the undispu -ted statutory dues including provident fund, employees state insura -nce, income tax, Investor education and protection fund, sales tax, wealth tax, service tax, customs duty, excise duty, cess and other material statutory dues applicable to it with the appropriate author -ities, We are informed there are no undisputed statutory dues as of March 31, 2014 outstanding for a period of more than six months from the date they become payable.

(b) There are no dues in respect of income tax, sales tax, wealth tax, service tax, customs duty, excise duty and cess that have not been deposited with appropriate authorities on account of any dispute other than those mentioned below :-

Name ofthe Statute Nature of Due Amount Period to which the amont relates

Central Excise Act Excise Duty 74,807,281 Various years for 2002-03 to 2009-10

2,566,120 2007-08 & 2008-09

Finance Act Service Tax 21,927,668 Various years for 2005-06 to 2009-10

178,378 2005-06 & 2006-07

Customs Act Custom Duty 5,771,724 2005-06, 2006-07, 2010-11 & 2011-12

Name of the Statute Forum where dispute is pending

Central Excise Act CESTAT

Finance Act Commissioner (Appeals) CESTAT

Customs Act Commissioner (Appeals) CESTAT

(x) The company''s accumulated losses at the end of the financial year 31st March, 2014 were more than fifty percent of its net worth. The company has incurred cash losses during the financial year ended 31st March, 2014 and in the immediately preceding financial year.

(xi) Based on our audit procedures and as per the information and explanations given by the management, the Company has defaulted in repayment of dues to banks and Foreign Currency Convertible Bond Holders (FCCBs) as per details given below. (Also refer Note 4.2, 7.2 & 9.1).

Natue of Due Default Rs Period of Default

Rupee Loans from banks 225,424,887 Since June, 2013

Working Capital Loans from banks 97,434,093 Since January,2014 (overdrawn)

Interest on Loans/working capital 123,531,305 Since October,2013 loans from banks

Principal amount of Foreign Currency 452,175,000 Since Decembe,2011 Convertible Bonds (FCCBs)

Premium on redemption of FCCBs 205,958,186 Since December2011

Interest on FCCBs due up to 31st 13,865,875 Since January,2012 December, 2013

(xii) As the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities, paragraph 4(xii) of the Order is not applicable.

(xiii) As the Company is not a chit fund / nidhi / mutual benefit funds / society to which the provisions of special statute relating to chit fund are applicable, paragraph 4(xiii) of the Order is not applicable.

(xiv) As the Company is not dealing or trading in shares, securities, debentures and other investments, paragraph 4(xiv) of the Order is not applicable.

(xv) The company has given guarantee for loans taken by two corporates from banks. According to the information and explanations given to us, we are of the opinion that the terms and conditions thereof are not prime facie prejudicial to the interest of the company. (Refer Note 34 (ii) & (iii)).

(xvi) The Company has not raised any term loans. Accordingly, the provisions of Clause 4(xvi) of the Order 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 during the year short term funds have not been used to finance long term investments.

(xviii) The Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Act during the year. Accordingly, the provisions of Clause 4 (xviii) of the Order are not applicable to the company.

(xix) The Company has not issued any debentures during the year and does not have any debentures outstanding as at the beginning of the year and at the year end on which it is required to create security or charge. Accordingly, the provisions of Clause 4(xix) of the Order are not applicable to the Company.

(xx) The Company has not raised any money by a public issue during the year. Accordingly, the provisions of Clause 4(xx) of the order are not applicable.

(xxi) 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 material fraud on or by the Company, noticed or reported during the year, nor have we been informed of any such case by the Management.

For JAGDISH CHAND & CO. Firm Registration Number: 000129N Chartered Accountants

(J.C. GUPTA) Place of signing: New Delhi Partner Date : 29th May, 2014 Membership Number 6107


Mar 31, 2012

1. We have audited the attached Balance Sheet of PARAMOUNT COMMUNICATIONS LIMITED as at 31st March, 2012 and also the Profit and Loss Account and the Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

4. We invite your attention to the following:

a) Note no 37 to the financial statements. The accompanying financial statements have been prepared on a going concern basis despite significant erosion of net worth, defaults in repayments to banks and redemption of Foreign Currency Convertible Bonds (FCCBs). The appropriation of the said basis is interalia dependent on successful implementation of Corporate Debt Restructuring (CDR) package.

b) No provision for diminution in the value of investment in shares of Paramount Wires & Cables Limited (Associate) and Paramount holdings Limited (Subsidiary) has been made. In the opinion of the management diminution in the value of these investments is temporary in nature( Refer note no12.1)

We have not qualified our opinion in respect of the matters referred in the paragraphs 4 (a) & 4(b) above.

5. a) We state that no provision has been made for premium on redemption of US $ 7.5 million1% Foreign Currency Convertible Bonds (FCCBs) due on 23rd November, 2011 amounting to Rs 195,636,955/- (gross of tax) for the year ended 31st March, 2012. In our opinion, this accounting treatment is not in accordance with current accounting standards i.e. AS-16. (Refer Note 36)

b) We further report that had observation made in Paragraph 5 (a) above been considered, other current liabilities would have been Rs 1,244,827,546/- as against reported figure of other current liabilities Rs 1,049,190,591/- and securities premium account would have been Rs 714,084,279/- as against reported figure of securities premium account Rs 909,721,234/- .

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

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

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

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

d) Except as stated in para 5(a) above, In our opinion, the Balance Sheet, Profit & 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 and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 31st March, 2012 from being appointed as a director of the Company 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 given to us, the said accounts read together with the significant accounting policies and notes thereon give the information required by the Companies Act, 1956, in the manner so required and subject to the effect of the matter stated in paragraphs 5(a) & 5(b) above give a true and fair view in conformity with the accounting principles generally accepted in India;

i. in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2012;

ii. in the case of the Profit & Loss Account, of the loss for the year ended on that date; and

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

(i) (a) The Company is maintaining proper records to show full particulars, including quantitative details and situation of fixed assets.

(b) As explained to us, the Company has a programme of physically verifying all its fixed assets over a period of three years, which in our opinion is reasonable having regard to the size of the Company and the nature of its fixed assets. In accordance with this programme, some of the fixed assets were physically verified by the management during the year. The discrepancies noticed on such verification between the physical balances and the fixed assets records were not material and have been properly dealt with in the books of account.

(c) In our opinion and according to the information and explanations given to us, a substantial part of the fixed assets has not been disposed off by the Company during the year.

(ii) (a) During the year, the inventories have been physically verified by the management. In our opinion, the frequency of verification is reasonable.

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

(c) On the basis of our examination of the record of inventories, we are of the opinion that, the Company is maintaining proper records of inventories. The discrepancies noticed on physical verification of inventories as compared to book records were not material and have been properly dealt with in the books of account.

(iii) (a) There is one party covered in the register maintained under Section 301 of the Companies Act, 1956 to which Company has given deposit as per contractual obligations. The maximum amount involved during the year was Rs 18,000,000/- and the year end balance of deposit granted to such party was Rs 18,000,000/- (Refer Note 13.1).

(b) In our opinion, terms and conditions on which deposit has been given to party listed in the register maintained under Section 301 of Companies Act, 1956 are not, prima facie, prejudicial to the interest of the Company. No interest was charged from this party, since this is deposit against premises taken on rent.

(c) As per stipulation no repayment was due from the party and no interest was charged from this party, since this was deposit against premises taken on rent. (Refer Note13.1).

(d) There is no overdue amount of deposit granted to the party listed in the register maintained under section 301 of the Companies Act, 1956.

(e) The company has taken deposit from one party covered in register maintained under section 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs 86,00,000/- and the year end balance of deposit taken from the party was Rs Nil .

(f) In our opinion, the rate of interest and other terms and conditions on which deposit has been taken from Companies, firms or other parties listed in the register maintained under Section 301 of Companies Act, 1956 are not, prima facie, prejudicial to the interest of the Company.

(g) The Company is regular in repaying the principal amounts as stipulated and also in the payment of interest where applicable in case of deposits taken from Companies, firms or other parties listed in the register maintained under section 301 of the Companies Act, 1956.

(iv) In our opinion and according to the information and explanations given to us, there are adequate internal control systems, commensurate with the size of the Company and the nature of its business with regard to the purchase of inventories, fixed assets and with regard to the sale of goods. There are no sales of services during the year. Further, on the basis of our examination and according to the information and explanations given to us, we have not come across nor have been informed of any continuing failure to correct major weaknesses in the internal control system.

(v) (a) According to the information and explanations given to us, we are of the opinion that during the year, the particulars of contracts or arrangements referred to in section 301 of the Act have been entered in the register required to be maintained under that section.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements and exceeding the value of Rupees five lakhs in respect of any party have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

(vi) As, the Company has not accepted any deposits from the public, paragraph 4(vi) of the order is not applicable.

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

(viii) We have broadly reviewed the books of account maintained by the Company pursuant to the Rules made by the Central Government for the maintenance of cost records under section 209 (1)(d) of the Companies Act, 1956 and are of the opinion that, prime facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the records with a view to determine whether they are accurate or complete.

(ix) (a) According to the records of the Company and information and explanations given to us and the records of the Company examined by us, the Company has been generally regular in depositing the undisputed statutory dues including provident fund, employees state insurance, income tax, Investor education and protection fund, sales tax, wealth tax, service tax, customs duty, excise duty, cess and other material statutory dues applicable to it with the appropriate authorities, We are informed there are no undisputed statutory dues as of March 31, 2012 outstanding for a period of more than six months from the date they become payable.

(b) There are no dues in respect of income tax, sales tax, wealth tax, service tax, customs duty, excise duty and cess that have not been deposited with appropriate authorities on account of any dispute other than those mentioned below :-

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

Income Tax Income Tax 774,327 2007-08 Commissioner Act (Appeals)

Central Excise Duty 74,336,296 Various years for CESTAT Excise Act 2002-03 to 2009-10

Excise Duty 69,150 2008-09 Commissioner (Appeals)

Finance Act Service Tax 24,348,909 Various years for CESTAT 2005-06 to 2010-11

Service Tax 411,686 Various years for Commissioner 2005-06 & 2010-11 (Appeals)

Customs Act Custom Duty 1,836,570 2005-06 & 2006-07 Commissioner (Appeals)

(x) The company's accumulated losses at the end of the financial year were more than fifty percent of its net worth .The company has incurred cash losses during the financial year and in the immediately preceding financial year.

(xi) Based on our audit procedures and as per the information and explanations given by the management, the Company has defaulted in repayment of principal amount of Rs 360,616,477/- of Term Loans from banks which were due for repayment on 31st March, 2012. Further the Company has defaulted in repayment of Rs 580,911,955./- (inclusive of premium on redemption of 195,636,955/-) upon redemption on 23rd November, 2011 of Foreign currency Convertible Bonds (FCCBs). Interest on FCCBs of Rs.675,042/- due as on 31st December, 2011 has also not been paid and is overdue. (Refer Note 4.2 & 9.2).

(xii) As the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities, paragraph 4(xii) of the order is not applicable.

(xiii) As the Company is not a chit fund / nidhi / mutual benefit funds / society to which the provisions of special statute relating to chit fund are applicable, paragraph 4(xiii) of the order is not applicable.

(xiv) As the Company is not dealing or trading in shares, securities, debentures and other investments, paragraph 4(xiv) of the order is not applicable.

(xv) The company has given guarantee for loans taken by two corporates from banks. According to the information and explanations given to us, we are of the opinion that the terms and conditions thereof are not prime facie prejudicial to the interest of the company (Refer Note 35 (ii), (iii) & (iv)).

(xvi) In our opinion and on the basis of information and explanations given to us, the Company has not obtained any term loans during the year.

(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 during the year short term funds have not been used to finance long term investments.

(xviii) During the year, the company has allotted equity shares on preferential basis to a company covered in the Register maintained under Section 301 of the Companies Act, 1956, consequent upon conversion of warrants. The price at which, these equity shares have been issued has been determined as per the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations 2009, which in our opinion , is not prejudicial to the interest of the company.

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

(xx) The Company has not raised any money by a public issue during the year. Accordingly, paragraph 4(xx) of the order is not applicable.

(xxi) Based upon the audit procedures performed and information and explanations given by the management, we report that, no fraud on or by the Company has been noticed or reported during the year ended March 31, 2012.

For JAGDISH CHAND & CO.

CHARTERED ACCOUNTANTS

(J.C. GUPTA)

Place : New Delhi PARTNER

Dated : 25th July, 2012 M. No. 6107

Firm Registration Number: 000129N


Mar 31, 2010

1. We have audited the attached Balance Sheet of PARAMOUNT COMMUNICATIONS LIMITED as at 31st March, 2010 and also the Profit and Loss Account and the Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

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

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

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

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

d) In our opinion, the Balance Sheet, Profit & 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 and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 31st March, 2010 from being appointed as a director of the Company 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 given to us, the said accounts read together with the significant accounting policies and notes thereon give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India;

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

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

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

Annexure referred to in paragraph 3 of the Auditors’ Report to the Members of Paramount Communications Limited on the accounts for the year ended March 31, 2010

(i) (a) The Company is maintaining proper records to show full particulars, including quantitative details and situation of fixed assets.

(b) As explained to us, the Company has a programme of physically verifying all its fixed assets over a period of three years, which in our opinion is reasonable having regard to the size of the Company and the nature of its fixed assets. In accordance with this programme, some of the fixed assets were physically verified by the management during the year. The discrepancies noticed on such verification between the physical balances and the fixed assets records were not material and have been properly dealt with in the books of account.

(c) In our opinion and according to the information and explanations given to us, a substantial part of the fixed assets has not been disposed off by the Company during the year.

(ii) (a) During the year, the inventories have been physically verified by the management. In our opinion, the frequency of verification is reasonable.

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

(c) On the basis of our examination of the record of inventories, we are of the opinion that, the Company is maintaining proper records of inventories. The discrepancies noticed on physical verification of inventories as compared to book records were not material and have been properly dealt with in the books of account.

(iii) (a) There is one party covered in the register maintained under Section 301 of the Companies Act, 1956 to which Company has given deposit as per contractual obligations. The maximum amount involved during the year was Rs1,80,00,000/- and the year end balance of deposit granted to such party was Rs.1,80,00,000/-. (Refer Note No 23 of Schedule "V")

(b) In our opinion, terms and conditions on which deposit has been given to party listed in the register maintained under Section 301 of Companies Act, 1956 are not, prima facie, prejudicial to the interest of the Company. No interest was charged from this party, since this is deposit against premises taken on rent.

(c) As per stipulation no repayment was due from the party and no interest was charged from this party, since this was deposit against premises taken on rent. (Refer Note No 23 of Schedule "V").

(d) There is no overdue amount of deposit granted to the party listed in the register maintained under section 301 of the Companies Act, 1956.

(e) The company has taken deposits from two Companies covered in register maintained under section 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs. 1,57,00,000/- and the year end balance of deposits taken from parties was Rs. 8,87,865/-.

(f) In our opinion, the rate of interest and other terms and conditions on which deposits have been taken from Companies, firms or other parties listed in the register maintained under Section 301 of Companies Act, 1956 are not, prima facie, prejudicial to the interest of the Company.

(g) The Company is regular in repaying the principal amounts as stipulated and also in the payment of interest where applicable in case of deposits taken from Companies, firms or other parties listed in the register maintained under section 301 of the Companies Act, 1956.

(iv) In our opinion and according to the information and explanations given to us, there are adequate internal control systems, commensurate with the size of the Company and the nature of its business with regard to the purchase of inventories, fixed assets and with regard to the sale of goods. There are no sale of services during the year. Further, on the basis of our examination and according to the information and explanations given to us, we have not come across nor have been informed of any continuing failure to correct major weaknesses in the internal control system.

(v) (a) According to the information and explanations given to us, we are of the opinion that during the year, the particulars of contracts or arrangements referred to in section 301 of the Act have been entered in the register required to be maintained under that section.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements and exceeding the value of Rupees five lakhs in respect of any party have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

(vi) As, the Company has not accepted any deposits from the public, paragraph 4(vi) of the order is not applicable.

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

(viii) We have broadly reviewed the books of account maintained by the Company pursuant to the Rules made by the Central Government for the maintenance of cost records under section 209 (1)(d) of the Companies Act, 1956 and are of the opinion that, prime facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the records with a view to determine whether they are accurate or complete.

(ix) (a) According to the records of the Company and information and explanations given to us and the records of the Company examined by us, the Company has been regularly depositing the undisputed statutory dues including provident fund, employees state insurance, income tax, Investor Education and Protection fund, sales tax, wealth tax, service tax, customs duty, excise duty, cess and other material statutory dues applicable to it with the appropriate authorities. We are informed there are no undisputed statutory dues as of March 31,2010 outstanding for a period of more than six months from the date they become payable.

(b) There are no dues in respect of income tax, sales tax, wealth tax, service tax, customs duty, excise duty and cess that have not been deposited with appropriate authorities on account of any dispute other than those mentioned below :-

Name of Nature of the Amount Period to which Forum where dispute the Statute Due Rs. the amount relates is pending

Income Tax Act Income Tax 2,64,47,220 2003-04 & Appeal pending before 2004-05 Commissioner of Income Tax (Appeals)

Income Tax 26,73,452 2005-06 & Appeal effects/ rectification to 2007-08 be done by Income Tax Authorities

Central Excise Act Excise Duty 5,52,52,571 2007-08 & 2008-09 CESTAT

Excise Duty 69,150 2007-08 Commissioner (appeals)

Finance Act Service Tax 8,11,930 2008-09 Commissioner (appeals)

Customs Act Custom Duty 18,36,570 2008-09 Commissioner (appeals)

(x) The Company does not have accumulated losses as at the year ended March 31, 2010. Further, the Company has not incurred cash losses during the year ended March 31, 2010, however the company incurred cash losses in the immediately preceding financial year ended March 31, 2009.

(xi) According to the records of the Company examined by us and on the information and explanations given to us, the Company has not defaulted in repayment of dues to banks or financial institution during the year. The Company has not issued debentures during the year.

(xii) As the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities, paragraph 4(xii) of the order is not applicable.

(xiii) As the Company is not a chit fund / nidhi / mutual benefit funds / society to which the provisions of special statute relating to chit fund are applicable, paragraph 4(xiii) of the order is not applicable.

(xiv) As the Company is not dealing or trading in shares, securities, debentures and other investments, paragraph 4(xiv) of the order is not applicable.

(xv) The company has given guarantee for loans taken by a corporate from banks. According to the information and explanations given to us, we are of the opinion that the term and conditions thereof are not prime facie prejudicial to the interest of the company (Refer Note No 2 (i) & (ii) of Schedule "V").

(xvi) We are informed that the Company has obtained term loans during the year and term loans were applied for the purposes for which the loans were obtained.

(xvii) According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we report that during the year short term funds have not been used to finance long term investments.

(xviii) According to the information and explanation given to us the Company has not made any preferential allotment of shares to parties or companies covered in the register maintained under section 301 of the Act.

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

(xx) The Company has not raised any money by a public issue during the year. Accordingly, paragraph 4(xx) of the order is not applicable.

(xxi) Based upon the audit procedures performed and information and explanations given by the management, we report that, no fraud on or by the Company has been noticed or reported during the year ended March 31, 2010.



For JAGDISH CHAND & CO. CHARTERED ACCOUNTANTS

(J.C. GUPTA) Place : New Delhi PARTNER

Dated : 28th May, 2010 M. No. 6107

Firm Registration Number: 000129N

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