Deccan Chronicle Holdings

1 We have audited the attached balance sheet of Deccan Chronicle
 Holdings Limited (the Company) as at 31 March 2009, 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 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 (the
 Order), as amended, issued by the Central Government of India in terms
 of sub-section (4A) of section 227 of the Companies Act, 1956 (the
 Act), 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 sub-section (3C) of section 211 of the Act, to
 the extent applicable;
 
 (e) on the basis of written representations received from the
 directors, as on 31 March 2009, and taken on record by the Board of
 Directors, we report that none of the directors are disqualified as on
 31 March 2009 from being appointed as a director in terms of clause (g)
 of sub-section (1) of section 274 of the Act;
 
 (f) 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 31 March 2009;
 
 (ii) in the case of the profit and loss account, of the profit of the
 Company for the year ended on that date; and
 
 (iii) in the case of cash flow statement, of the cash flows of the
 Company for the year ended on that date.
 
 Annexure to the Auditors Report
 
 Annexure referred to in paragraph 3 of our report of even date to the
 members of Deccan Chronicle Holdings Limited. We report that:
 
 1.  The Company has maintained proper records showing full particulars,
 including quantitative details and situation of fixed assets.
 
 2.  The Company has a regular program of physical verification of its
 fixed assets by which all fixed assets are verified in a phased manner.
 Accordingly, certain assets were verified by Management during the
 year. No material discrepancies were noticed on such verification. In
 our opinion, this periodicity of physical verification is reasonable
 having regard to the size of the Company and the nature of its assets.
 
 3.  Fixed assets disposed of during the year were not substantial, and
 therefore, do not affect the going concern assumption.
 
 4.  Inventory, except for goods in transit, have been physically
 verified by the management as at the balance sheet date. In our
 opinion, the frequency of verification is reasonable.
 
 5.  The procedures for the 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.
 
 6.  The Company is maintaining proper records of inventory. The
 discrepancies noticed on verification between the physical stocks and
 the book records were not material.
 
 7.  The Company has neither granted nor taken any loans, secured or
 unsecured, to or from companies, firms or other parties covered in the
 register maintained under section 301 of the Companies Act, 1956.
 
 8.  In our opinion and according to the information and explanations
 given to us and having regard to the explanation that purchase of
 certain items of inventories and fixed assets are for the Companys
 specialized requirements and suitable alternative sources are not
 available to obtain comparable quotations, 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 inventories and
 fixed assets and with regard to the sale of advertisement space. The
 activities of the Company do not involve the sale of services. We have
 not observed any major weakness in the internal control system during
 the course of the audit.
 
 9.  In our opinion and according to the information and explanations
 given to us, the particulars of contracts or arrangements referred to
 in section 301 of the Companies Act, 1956 have been entered in the
 register required to be maintained under that section.
 
 10.  In our opinion and according to the information and explanations
 given to us, the transactions made in pursuance of contracts and
 arrangements entered in the register maintained under section 301 of
 the Companies Act, 1956 and exceeding the value of rupees five lakhs
 with any party during the year have been made at prices which are
 reasonable having regard to the prevailing market prices at the
 relevant time except for certain items of inventories and fixed assets,
 advertisement space sold, which are for the specialized requirements of
 buyer for which suitable alternative sources are not available to
 obtain comparable quotations. However, on the basis of information and
 explanations provided, the same appears reasonable.
 
 11.  The Company has not accepted any deposits from the public.
 
 12.  In our opinion, the Company has an internal audit system
 commensurate with the size and nature of its business.
 
 13.  The Central Government has not prescribed the maintenance of cost
 records under section 209(1 )(d) of the Companies Act, 1956 for any of
 the products manufactured/services rendered by the Company.
 
 14.  According to the information and explanations given to us and on
 the basis of our examination of the records of the Company, the Company
 has been generally regular in depositing with the appropriate
 authorities amounts deducted / accrued in the books of account in
 respect of undisputed statutory dues including Provident Fund,
 Employees State Insurance, Income-tax, Sales-tax, Wealth tax, Customs
 duty, Cess and other material statutory dues. As explained to us, the
 Company did not have any dues on account of Investor Education and
 Protection Fund, excise duty and service tax.
 
 Further, since the Central Government has till date not prescribed the
 amount of cess payable under Section 441A of the Act, we are not in a
 position to comment upon the regularity or otherwise of Company in
 depositing the same.
 
 According to the information and explanations given to us, no
 undisputed amounts payable in respect of Provident Fund, Employees
 State Insurance, Income tax, Sales tax, Wealth tax, Customs duty, Cess
 and other material statutory dues were in arrears as at 31 March 2009
 for a period of more than six months from the date they became payable.
 As explained to us, the Company did not have any dues on account of
 Investor Education and Protection Fund, excise duty and service tax.
 
 15.  According to the information and explanations given to us, there
 are no dues of Income tax, Sales tax, Wealth tax, Customs duty and Cess
 which have not been deposited with the appropriate authorities on
 account of any dispute. As explained to us, the Company did not have
 any dues on account of excise duty and service tax.
 
 16.  The Company does not have any accumulated losses at the end of the
 financial year and has not incurred cash losses in the financial year
 and in the immediately preceding financial year.
 
 17.  In our opinion and according to the information and explanations
 given to us, the Company has not defaulted in repayment of dues to its
 bankers or to any financial institutions or to debenture holders.
 
 18.  The Company has not granted any loans and advances on the basis of
 security by way of pledge of shares, debentures and other securities.
 
 19.  In our opinion, and according to the information and explanations
 given to us, the Company is not a chit fund or a nidhi/ mutual benefit
 fund/ society.
 
 20.  According to the information and explanations given to us, the
 Company is not dealing or trading in shares, securities, debentures and
 other investments.
 
 21.  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.
 
 22.  In our opinion and according to the information and explanations
 given to us, the term loans taken by the Company have been applied for
 the purpose for which they were raised.
 
 23.  According to the information and explanations given to us and on
 an overall examination of the balance sheet of the Company, we are of
 the opinion that the funds raised on short-term basis have not been
 used for long-term investment.
 
 24.  The Company has not made any preferential allotment of shares to
 companies/firms/parties covered in the register.maintained under
 Section 301 of the Companies Act, 1956.
 
 25.  According to the information and explanations given to us, the
 Company has created security or charge in respect of debentures issued
 during the year.
 
 26.  As informed to us, the Company has not raised any money during the
 year by public issues.
 
 27.  According to the information and explanations given to us, no
 fraud on or by the Company has been noticed or reported during the
 course of our audit.
 
 
 
 For B S R and Co                         For C B Mouli & Associates
 Chartered Accountants                         Chartered Accountants
 
        Zubin Shekary                                    Mani Oommen
              Partner                                        Partner
 
 Membership No: 48814                                     M.No.24046
 Secunderabad, June 26, 2009