1.  We have audited the attached Balance Sheet of Balaji Telefilms
 Limited (the Company) as at March 31, 2011, the Profit and Loss
 Account and the Cash Flow Statement of the Company for the year ended
 on that date, both 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 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 in terms of section 227(4A) 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 of our knowledge and belief were necessary for the purposes of our
 audit;
 
 b) In our opinion, proper books of account as required by law have been
 kept by the Company so far as appears from our examination of those
 books;
 
 c) The Balance Sheet, Profit and Loss Account and Cash Flow Statement
 dealt with by this report are in agreement with the books of account;
 
 d) In our opinion, the Balance Sheet, Profit and Loss Account and Cash
 Flow Statement dealt with by this report comply with the accounting
 standards referred to in section 211 (3C) of the Companies Act, 1956;
 and
 
 e) In our opinion and to the best of our information, and according to
 the explanations given to us, the said accounts give the information
 required by the Companies Act, 1956, in the manner so required and give
 a true and fair view in conformity with the accounting principles
 generally accepted in India
 
 i) in the case of the Balance Sheet, of the state of affairs of the
 Company as at March 31, 2011;
 
 i) in the case of the Profit and 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 for the
 year ended on that date
 
 5.  On the basis of written representations received from the directors
 as on March 31, 2011 taken on record by the Board of Directors, we
 report that none of the Directors is disqualified as on March 31, 2011
 from being appointed as a director in terms of section 274(1)(g) of the
 Companies Act, 1956
 
 Annexure to the Auditors'' Report
 Re: Balaji Telefilms Limited
 (Referred to in Paragraph 3 of our report of even date)
 
 i) The nature of the Company''s activities are such that clauses (xiii)
 and (xiv) of paragraph 4 of the Companies (Auditor''s Report) Order,
 2003 are not applicable to the Company for the year.
 
 i) a) The Company has maintained proper records showing full
 particulars, including quantitative details and situation of the fixed
 assets
 
 b) The fixed assets were physically verified during the year by the
 Management in accordance with a regular program  of verification
 which, in our opinion, provides for physical verification of all the
 fixed assets at reasonable intervals. The Company is in the process of
 reconciling the data of physically verified fixed assets with the books
 of accounts and records. Accordingly, we are unable to comment on
 material discrepancies if any, which could result on completion of the
 physical verification exercise
 
 c) The fixed assets disposed off during the year, in our opinion, do
 not constitute a substantial part of the fixed assets of the Company
 and such disposal has, in our opinion, not affected the going concern
 status of the Company.
 
 iii) a) The inventories (tapes) have 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 inventories (tapes)
 followed by the management are reasonable and adequate in relation to
 the size of the Company and the nature of its business
 
 c) The Company is maintaining proper records of inventories (tapes).
 The discrepancies noticed on verification between the physical stocks
 and book records were not material
 
 iv) a) The Company has granted interest free unsecured loans
 aggregating Rs. 1,567.44 Lacs to its wholly owned subsidiary covered in
 the register maintained under section 301 of the Companies Act, 1956.
 At the year-end, the outstanding balances of such loans aggregated Rs.
 2,531.36 Lacs and the maximum amount involved during the year was Rs.
 4,149.47 Lacs
 
 b) In our opinion, the terms and conditions of the loan given are not,
 prima facie, prejudicial to the interests of the Company.
 
 c) According to information and explanations given to us, since there
 are no repayment schedules with regard to the loans given, clause (iii)
 (c) to (d) of paragraph 4 of Companies (Auditor''s Report) Order, 2003
 are not applicable to the Company
 
 d) 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 Companies Act, 1956. Hence, clause (iii) (e)
 to (g) of paragraph 4 of Companies (Auditor''s Report) Order, 2003 is
 not applicable to the Company
 
 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 purchases of inventory, fixed assets and with regard to the sale of
 goods and services. During the course of our audit, we have not
 observed any continuing failure to correct major weaknesses in such
 internal control system
 
 vi) In respect of contracts or arrangements entered in the Register
 maintained in pursuance of Section 301 of the Companies Act, 1956, to
 the best of our knowledge and belief and according to the information
 and explanations given to us
 
 a) The particulars of contracts or arrangements referred to Section 301
 that needed to be entered in the Register maintained under the said
 Section have been so entered
 
 b) Where each of such transaction is in excess of Rs. 5 Lacs in respect
 of any party, the transactions have been made at prices which are prima
 facie reasonable having regard to the prevailing market prices at the
 relevant time where such market prices are available with the Company.
 
 vii) The Company has not accepted any deposit from the public
 
 viii) In our opinion, the internal audit functions carried out during
 the year by firm of Chartered Accountants appointed by the management
 have been commensurate with the size of the Company and the 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) According to the information and explanations given to us in respect
 of statutory dues
 
 a) The Company has generally been regular in depositing undisputed
 dues, including Provident Fund, Investor Education and Protection Fund,
 Employees'' State Insurance, Income Tax, Sales Tax, Wealth Tax, Service
 Tax, Custom Duty, Excise Duty, Cess and other material statutory dues
 applicable to it with the appropriate authorities
 
 b) There were no undisputed amounts payable in respect of Income Tax,
 Value Added Tax, Wealth Tax, Custom Duty, Excise Duty, Cess and other
 material statutory dues in arrears as at March 31, 2011 for a period of
 more than six months from the date they became payable
 
 c) There were no dues of Income Tax, Value Added Tax, Wealth Tax,
 Service Tax, Custom Duty, Excise Duty and Cess which have not been
 deposited as on March 31, 2011 on account of disputes, except in case
 of service tax which is as detailed below
 
 Forum where 
 dispute is pending    Nature of dues   Amount 
                                       (Rs. in Lacs)   Financial Year to 
                                                     which amount 
                                                     relates
 
 Department of 
 Sales Tax             VAT                22,363     1.4.1999 to 
                                                    31.3.2005
 
 Office of the 
 Commissioner of 
 Service Tax           Service Tax         9,245     1.4.2006 to 
                                                    31.3.2010
 
 xi) The Company has no accumulated losses as at the end of the year and
 it has not incurred cash losses in the current year and in the
 immediately preceding financial year.
 
 xii) In our opinion and according to the information and explanations
 given to us, the Company does not have any borrowings from any banks,
 financial institutions and debenture holders
 
 xiii) In our opinion, 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) In our opinion and according to the information and explanations
 given to us, the Company has not taken term loans during the year.
 
 xvi) In our opinion and according to the information and explanations
 given to us and on an overall examination of the Balance Sheet, we
 report that funds raised on short-term basis have not been used during
 the year 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
 
 xviii) According to the information and explanations given to us the
 Company has not issued any debentures during the year.
 
 xix) The Company has not raised any money by way of public issues
 during the year.
 
 xx) To the best of our knowledge and according to the information and
 explanations given to us, no fraud on or by the Company has been
 noticed or reported during the year.
 
 For Deloitte Haskins & Sells                    For Snehal & Associates
 
 Chartered Accountants                             Chartered Accountants
 
 Reg. No117366W                                          Reg. No 110314W
 
 A.B.Jani                                                    Snehal Shah
 
 Partner                                                      Proprietor
 
 Membership Number: 46488                       Membership Number: 40016
 
 Mumbai                                                           Mumbai
 
 May 23, 2011                                               May 23, 2011