Balaji Telefilms

1.  We have audited the attached Balance Sheet of Balaji Telefilms
 Limited as at 31st March, 2009, the Profit and Loss Account and also
 the Cash Flow statement for the year ended on that date, annexed
 thereto. These financial statements are the responsibility of the
 Companys management. Our responsibility is to express an opinion on
 these financial statements based on our audit.
 
 2.  We conducted our audit in accordance with the auditing standards
 generally accepted in India. Those Standards require that we plan and
 perform the audit to obtain reasonable assurance about whether the
 financial statements are free of material misstatement. An audit
 includes examining, on a test basis, evidence supporting the amounts
 and disclosures in the financial statements. An audit also includes
 assessing the accounting principles used and significant estimates made
 by management, as well as evaluating the overall financial statement
 presentation.  We believe that our audit provides a reasonable basis
 for our opinion.
 
 3.  As required by the Companies (Auditors Report) Order 2003 issued
 by the Central Government in terms of sub- section (4A) of section 227
 of the Companies Act, 1956, we enclose in the annexure a statement on
 the matters specified in paragraphs 4 and 5 of the said Order.
 
 4.  Further to our comments in the Annexure referred to above, we
 report that-
 
 i. we have obtained all the information and explanations which to the
 best of our knowledge and belief were necessary for the purposes of our
 audit;
 
 ii. in our opinion, proper books of account as required by law have
 been kept by the Company, so far as appears from our examination of the
 books;
 
 iii. the Balance Sheet, Profit and Loss Account and Cash Flow statement
 dealt with by this report are in agreement with the books of account;
 
 iv. in our opinion, the Balance Sheet, Profit and Loss Account and Cash
 Flow statement dealt with by this report comply with the accounting
 standards referred in sub-section (3C) of section 211 of the Companies
 Act, 1956;
 
 v. on the basis of written representations received from the directors,
 as on 31st March, 2009, and taken on record by the Board of Directors,
 we report that none of the directors is disqualified as on 31st March,
 2009 from being appointed as a director in terms of clause (g) of
 sub-section (1) of section 274 of the Companies Act 1956;
 
 vi. in our opinion, and to the best of our information and according to
 the explanations given to us, the said accounts, read 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:
 
 a) in case of the Balance Sheet, of the state of affairs ofthe Company
 as at31stMarch, 2009;
 
 b) in case of the Profit and Loss Account, of the profit
 fortheyearended on thatdate; and
 
 c) in case of the Cash Flow Statement, of the cash flows for the year
 ended on thatdate.
 
 Re: Balaji Telefilms Limited
 
 Referred to in Paragraph 3 of our report of even date
 
 (i) The requirements of clauses (xiii) and (xiv) of paragraph 4 of the
 Order are not applicable to the Company for the year.
 
 (ii) (a) The Company has maintained proper records, showing full
 particulars including quantitative details and situation of its fixed
 assets.
 
 (b) The fixed assets have been physically verified by the management
 during the year. In our opinion, the frequency of such verification is
 reasonable having regard to the size of the Company and nature of its
 assets. We are informed that no material discrepancies were noticed on
 such verification.
 
 (c) There has not been any significant disposal of fixed assets
 duringtheyear.
 
 (iii) (a) The inventory (tapes) has been physically verified during the
 year by the management. In our opinion, the frequency of verification
 is reasonable.
 
 (b) 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) The Company has maintained proper records of inventories. No
 material discrepancies were noticed on verification.
 
 (iv) (a) The Company has granted interest free loans to the two wholly
 owned subsidiaries covered in the Register maintained under section 301
 of the Companies Act, 1956. The maximum amount involved during the year
 is Rs. 2,810.04 lacs and the year end balance is Rs. 391.61 lacs.
 
 (b) In our opinion and according to the information and explanations
 given to us, other terms and conditions of the loans granted by the
 Company are not prima facie prejudicial to the interest of the Company.
 
 (c) Since there are no repayment schedules with regard to the loans
 granted, the question of commenting on payment of principal dues does
 not arise.
 
 (d) The Company has not taken loans from companies, firms or other
 parties covered in the Register maintained under section 301 of the
 Companies Act, 1956.  Consequently, requirements of clauses iii(e) to
 iii(g) of paragraph 4 of the Order are not applicable.
 
 (v) 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 with regard to purchase of inventory, fixed assets and
 for the sale of television serials.  During the course of our audit, we
 have not observed any continuing failure to correct major weaknesses in
 internal control system.
 
 (vi) (a) In our opinion and according to the information and
 explanations given to us, the particulars of contracts/arrangements
 that need to be entered into the Register maintained under section 301
 of the Companies Act, 1956 have been entered.
 
 (b) In our opinion and according to the information and explanations
 given to us, the transactions made in pursuance of
 contracts/arrangements entered in the Register maintained under section
 301 of the Companies Act, 1956 and exceeding the value of Rs 5 lacs in
 respect of each party during the year have been made at the prices
 which are reasonable having regard to prevailing market prices at the
 relevant time or the prices at which transactions for similar services
 have been made with other parties or as per information available with
 the Company.
 
 (vii) The Company has not accepted deposits from the public within the
 meaning of Sections 58A, 58AA or any other relevant provisions of the
 Companies Act, 1956, where applicable and the Rules framed there under.
 We are informed that no Order has been passed by the Company Law Board
 or the Reserve Bank of India or any Court or any other Tribunal.
 
 (viii) In our opinion, the Company has an internal audit system
 commensurate with its size and nature of its business.
 
 (ix) The maintenance of cost records has not been prescribed by the
 Central Government under Section 209 (1) (d) of the Companies Act,
 1956.
 
 (x) (a) According to the records of the Company, undisputed statutory
 dues including provident fund, investor education and protection fund,
 employees state insurance, income-tax, sales-tax, wealth tax, service
 tax, customs duty, excise duty, cess and other material statutory dues,
 where applicable, have generally been regularly deposited with
 appropriate authorities.  According to the information and explanations
 given to us, no undisputed amounts payable in respect of the aforesaid
 dues were outstanding as at 31st March, 2009 for a period of more than
 six months from the dates of them becoming payable.
 
 (b) According to the information and explanations given to us, there
 are no cases of non-deposit with appropriate authorities of disputed
 dues of sales tax, income tax, custom duty, wealth tax, service tax,
 excise duty and cess.
 
 (xi) The Company has no accumulated losses at the end of the financial
 year and it has not incurred cash losses in the financial year covered
 by our report and the immediately precedingfinancialyear.
 
 (xii) In our opinion and according to the information and explanations
 given to us, the Company has not defaulted in repayment of dues to
 banks. The Company does not have borrowings from financial institutions
 and has not issued debentures.
 
 (xiii) In our opinion and according to the information and explanations
 given to us, the Company has not granted loans and advances on the
 basis of security by way of pledge of shares, debentures and other
 securities.
 
 (xiv) According to the information and explanations given to us, the
 Company has not given any guarantee for loans taken by Others from
 banks or financial institutions.
 
 (xv) The Company has not obtained term loans during the year hence the
 question of commenting on application thereof does not arise.
 
 (xvi) According to the information and explanations given to us and on
 an overall examination of the balance sheet of the Company, we report
 that no funds raised on short-term basis have been used for long term
 investment.
 
 (xvii) The Company has not made any preferential allotment of shares to
 parties and companies covered in the Register maintained under Section
 301 of the Companies Act, 1956 during theyear.
 
 (xviii) No debentures have been issued by the Company and hence the
 question of creating security or charge in respect thereof does not
 arise.
 
 (xix) During the year, the Company has not raised money by public
 issue(s).
 
 (xx) To the best of our knowledge and belief and according to the
 information and explanations given to us, no fraud on or by the Company
 was noticed or reported during the year.
 
 
 For Deloitte Haskins & Sells                 For Snehal & Associates
 Chartered Accountants                        Chartered Accountants
 
 
 (A.Siddharth)                                (Snehal Shah)
 Partner                                       Proprietor
 Membership No.: 31467                         Membership No.: 40016
 
 Place: Mumbai                                 Place: Mumbai
 Dated: 13th May, 2009                         Date: 13th May, 2009