We have audited the attached Balance Sheet of M/s. Kirloskar Multimedia
 Limited, Regd. Off: Kempapura, HAF Post, Bangalore - 560 024 as at 31st
 March 2012 and the Profit and Loss account for the year ended on that
 date together with the Schedules and Notes thereon annexed thereto.
 These financial statements are the responsibility of the Management of
 the Company. Our responsibility is to express an opinion on these
 financial statements based on our audit.
 
 We conducted our audit in accordance with generally accepted auditing
 standards in India. Those standards require that we plan and perform
 the audit to obtain reasonable assurance about whether the financial
 statements are prepared, in all material respects, in accordance with
 an identified financial reporting framework and are free of material
 mis-statements. 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 statements presentation. We believe that our audit provides
 a reasonable basis of our opinion, and report that:
 
 1.  As required by the Companies (Auditor''s Report) Order, 2003 (CARO -
 2003) as amended by the Companies (Auditor''s Report) Order (Amendment)
 2004, issued by the Central Government of India in terms of Sub-section
 (4A) of Section 227 of the Companies Act 1956, and on the basis of such
 checks and verification of books and records as we considered
 appropriate and as per the information and explanations given to us
 during the course of our audit, we report as follows on the matters
 specified in paragraphs 4 & 5 of the said Order:
 
 i a. The Company has maintained proper records showing all particulars,
 including quantitative details and situation of fixed assets.
 
 b.  According to the information and explanations given to us, the
 fixed assets have been physically verified by the management at
 reasonable intervals which, in our opinion, is reasonable, having
 regard to the size of the Company and nature of the assets. No material
 discrepancies were noticed on such verification.
 
 c.  In our opinion, the Company has not disposed off a substantial part
 of its Fixed Assets during the year and the going concern status of the
 Company is not affected.
 
 ii The Company is a Service Company, primarily rendering information
 technology services - multimedia. Further, as informed to us, the
 Company does not hold any physical inventories.  Thus paragraph 4(ii)
 of the Order is not applicable.
 
 iii We are informed that the Company has not taken / granted any loans,
 secured or unsecured, from/to 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 explanation
 given to us, there are adequate internal control procedures
 commensurate with the size of the Company and the nature of its
 business with regard to purchase of fixed assets and the sale of
 services. During the year, there were neither purchase of inventories
 and sale of services.
 
 v According to the information and explanations given to us, there are
 no transactions and arrangements, the particulars of which need to be
 entered into the Register maintained under Section 301 of the Companies
 Act, 1956.
 
 vi The Company has not accepted any deposits from the public within the
 meaning of Section 58A, 58AA or any other relevant provisions of the
 Companies Act, 1956 and the rules framed there under.
 
 vii The Company does not have an Internal Audit System commensurate
 with its size and nature of business.
 
 viii The Central Government has not prescribed maintenance of cost
 records under Section 209(1)(d) of the Companies Act, 1956, for the
 products of the Company.
 
 xi a. The Company is generally regular in depositing undisputed
 statutory dues including Provident
 
 Fund, Employees State Insurance, Income Tax, Sales Tax, Wealth Tax,
 Service Tax, Customs Duty, Excise Duty, Cess and any other Statutory
 dues with the appropriate authorities, except Rs. 82,987 being fines
 and penalty payable to ESIC which are outstanding as at 31.03.2012 for
 a period of more than six months from the date they became payable.
 
 b. According to the information and explanations given to us and on the
 basis of our examination of the accounts, there are no disputed amounts
 of Income Tax / Sales Tax / Service Tax / Customs Duty / Excise Duty /
 Cess as on 31 March 2012 except a claim against the Company by the
 Income Tax Department towards Income Tax and Interest amounting to Rs.
 3.93 Lakhs for which the Company has not made any provision in the
 Books of Accounts..
 
 x The Company is registered for a period not less than 5 years and
 accumulated losses at the end of the financial year are not less than
 50% of its net worth. However, the Company has incurred cash losses
 during the financial year and in the immediately preceding financial
 year.
 
 xi The Company has defaulted in the repayment of working capital
 facilities extended by Central Bank of India and in redemption of
 non-convertible debentures issued to KSFC. As on 31.03.2012, these
 amounts are outstanding, as disclosed in the financial statements, to
 the bank and financial institution and are overdue.
 
 xii As the Company has not granted loans and advances on the basis of
 security by way of pledge of shares, debentures and other securities,
 the question of reporting on Clause No. 4(xii) of the Order does not
 arise.
 
 xiii The provisions of any special statute applicable to Chit Fund,
 Nidhi, Mutual Benefit Fund or Societies are not applicable to the
 Company.
 
 xiv The Company is not dealing or trading in shares, securities,
 debentures and other investments.  Accordingly, Caluse 4(xiv) of the
 Order is not applicable.
 
 xv According to the information and explanations given to us, the
 Company has not given any guarantee for loans taken by others from
 banks and other financial institutions. Accordingly, Clause 4(xv) of
 the Order is not applicable.
 
 xvi The Company has not raised any Term Loans during the year.
 
 xvii According to the information and explanations given to us,and on
 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 of the Company.
 
 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 Companies Act, 1956, during the year.
 
 xix The Company has not issued any debentures during the year and hence
 the question of creating securities for the debentures issued does not
 arise.
 
 xx The Company has not made any public issue during the year and as
 such, reporting on Clause No 4(xx) of the Order does not arise.
 
 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
 fraud on or by the Company, noticed and reported during the year, nor
 have we been informed of such case by the Management.
 
 2.  Further to our report in paragraphs (1) above subject to:
 
 (i) Note number 4.4, regarding non provision of interest in respect of
 facilities from Central Bank of India till date and its consequential
 effects on the losses of the Company; and
 
 (ii) Note number 14, regarding not obtaining confirmation of balances
 in respect of secured loans, liabilities,
 
 deposits, margin money deposits with banks and other loans and advances
 and its consequential effect
 
 on the losses of the Company; and
 
 (iii) Note number 15, regarding non provision for the claim against the
 Company by Tata Finance Limited till date and its consequential effects
 on the loses of the Company; and
 
 (iv) Note number 16, regarding non provision for the claim against the
 Company by the Income Tax Department towards Income Tax and Interest
 amounting to Rs. 3.93 Lakhs and its consequential effects on the losses
 of the Company.
 
 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 the
 books;
 
 (c) the Balance Sheet and the Profit and Loss Account referred to in
 this report are in agreement with the books of account;
 
 (d) In our opinion and subject to various observations made in the
 above paragraphs, the Balance Sheet and Profit and Loss Account dealt
 with by this report have been prepared in compliance with the
 applicable Accounting Standards referred to in sub-section (3C) of the
 Companies Act, 1956;
 
 (e) On the basis of written representations received from the Directors
 of the Company as at 31st March 2012 and taken on record by the Board
 of Directors, none of the Directors is disqualified as on 31st March
 2012 from being appointed as Director of the Company under Clause (g),
 Sub-Section (i) 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 Balance Sheet and Profit and Loss
 Account read together with the Schedules and the Notes thereon give the
 information required by the Companies Act of 1956 in the manner so
 required and give a true and fair view:
 
 (i) in so far as it relates to the Balance Sheet, of the State of
 Affairs of the Company as at 31st March 2012 and
 
 (ii) in so far as it relates to the Profit and Loss Account, of the
 losses of the Company for the year ended on that date.
 
                                    for DIVAKARA & ASSOCIATES.,
 
                                     Chartered Accountants 
 
                                     Firm Regn No. 000763S
 
 PLACE : Bangalore                            (Sd/-)
  
                                      POLALI DIVAKAR RAO
 
 DATE : May 31, 2012
 
                                       (Proprietor)
 
                                      Membership No. 23377