Mirc Electronics

We have audited the attached Balance Sheet of MIRC Electronics Limited,
 as at March 31, 2009 and also the related 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.
 
 We conducted our audit in accordance with standards on auditing
 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 mis-statement. 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.
 
 As required by the Companies (Auditor’s Report) Order, 2003, as amended
 by the Companies (Auditor’s Report) Order, 2004 (hereinafter to be
 referred to as “the Order”) 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, to the extent applicable.
 
 Further to our comments in the Annexure referred to in paragraph 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 to 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 March 31, 2009 and taken on record by the Board of Directors, we
 report that none of the directors is disqualified as on March 31, 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) We draw the attention to note no.10 of Schedule 21 to the
 financial statements relating to excess managerial remuneration charged
 to the profit and loss account of the current year, which is subject to
 the approval of the Central Government and the Shareholders.
 
 (vii) In our opinion and to the best of our information and according
 to the explanations given to us, the said financial statements together
 with the notes thereon give the information required by the Companies
 Act, 1956, 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 March 31, 2009;
 
 (b) in the case of the Profit and Loss Account, of the Profit 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.
 
 Referred to in paragraph 3 of the Auditors report of even date of MIRC
 Electronics Limited for the year ended March 31, 2009.
 
 (i) (a) The Company has maintained proper records showing full
 particulars, including quantitative details and the situation of its
 fixed assets;
 
 (b) According to the information and explanations given to us, the
 company has a regular programme of physical verification by which a
 substantial portion of the fixed assets has been physically verified by
 the management during the year. In our opinion, the frequency of
 verification of the fixed assets by the management is reasonable having
 regard to the size of the Company and the nature of its assets. To the
 best of our knowledge, no material discrepancies were noticed on
 verification conducted during the year as compared with the book
 records and the same have been appropriately dealt with in the books of
 accounts.
 
 (c) The assets disposed off during the year are not significant and
 therefore do not affect the going concern assumption;
 
 (ii) (a) Inventories have been physically verified by the Management,
 during the year. 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 for physical verification of the
 inventories followed by the management were generally reasonable and
 adequate in relation to the size of the company and the nature of its
 business.
 
 (c) In our opinion the Company is maintaining proper records of
 inventory. The discrepancies noticed between the physical stocks and
 the book stocks were not material and have been properly dealt with in
 the books of account.
 
 (iii) (a) The Company has granted unsecured loan to a subsidiary
 company covered in the register maintained under Section 301 of the
 Companies Act, 1956. The aggregate maximum amount during the year and
 outstanding amount as at the balance sheet date of such loan are both
 Rs. 68.25 lacs.
 
 (b) In our opinion and according to the information and explanations
 given to us, the rate of interest and other terms and conditions on
 which said loans have been granted are not, prima facie, prejudicial to
 the interest of the Company.
 
 (c) There are no overdue amounts of principal and interest in respect
 of loans granted.
 
 (d) The Company had taken unsecured loan from a company covered in the
 register maintained under section 301 of the companies Act, 1956. The
 maximum amount outstanding during the year is Rs.1019.10 lacs. There is
 no outstanding amount as at the balance sheet date of such loan as the
 company from whom such loan was taken has been amalgamated with the
 Company.
 
 (e) In our opinion and according to the information and explanations
 given to us, the rate of interest and other terms and conditions on
 which said loans have been taken are not, prima facie, prejudicial to
 the interest of the Company.
 
 (f) The company had repaid the principal amounts as stipulated and was
 regular in the payment of interest thereon.
 
 (iv) In our opinion and according to the information and explanations
 given to us, generally there are adequate internal control procedures
 commensurate with the size of the Company and the nature of its
 business with regard to purchase of inventory, fixed assets and for
 sale of goods and services. During the course of our audit, no major
 weakness has been noticed in the internal control system.
 
 (v) (a) To the best of our knowledge and belief and according to the
 information and explanations given to us, we are of the opinion that
 the particulars of contracts and arrangements that need to be entered
 into the register maintained under section 301 of the Companies Act,
 1956 have been properly entered in the said register.
 
 (b) During the year, there are transactions of purchase of materials
 and services from two parties covered under section 301 of the
 Companies Act, 1956 and exceeding Rupees five lacs. As per the
 information and explanation provided to us, the said purchases are made
 at prevailing market prices except for purchases of special nature
 wherein comparative prices of similar goods are not available. Also,
 there are transactions of sale of spares and sale of services to two
 parties covered under section 301 of the Companies Act, 1956 exceeding
 Rupees five lacs.  These are entered at prices which are reasonable
 having regard to the prevailing market prices at the time of sale.
 
 (vi) The Company has not accepted any deposits from the public, hence
 the provision of Section 58A, 58AA or any other relevant provisions of
 the Companies Act 1956 and the rules framed there under are not
 applicable.
 
 (vii) In our opinion, the Company has a system of internal audit, which
 is commensurate with its size and nature of its business.
 
 (viii) We have broadly reviewed the books of accounts maintained by the
 Company pursuant to the rules made by the Central Government under
 Section 209(1) (d) of the Companies Act, 1956 for maintenance of cost
 records in respect of products manufactured and are of the opinion
 that, prima facie, the prescribed accounts and records have been
 maintained by the company.  We have, however, not made a detailed
 examination of the records with a view to determine whether they are
 accurate or complete.
 
 (ix) (a) According to the information and explanation provided to us,
 during the year the Company is generally regular in depositing with
 appropriate authorities undisputed statutory dues including amount of
 provident fund, investor education and protection fund, employees’
 state insurance, income-tax, sales-tax, wealth-tax, custom duty,
 excise-duty, service tax, cess and other material statutory dues,
 applicable to it.
 
 (b) The following are the details of disputed Income Tax, Excise Duty,
 and Sales tax that have not been paid to the concerned authorities.
 
 Name                Relevant
 of                  Financial
 Statute               Year
 
 Income Tax          1993-94,
                     1994-95,
                     1995-96,
                     1996-97,
                     1998-99,
                     1999-00,
                     2000-01
 Income Tax          1997-98
 Income Tax          2002-03,
                     2003-04,
                     2004-05
 Central             1998-99
 Excise
 Central Excise      1997-98,
                     1999-00,
                     2005-06,
                     2008-09
 Central Excise      1999-00,
                     2001 to 2005,
                     2005-06
 Customs             1998-99
 Customs             2001-02
 Sales Tax           1991-92,
                     2000-01,
                     2004-05,
                     2005-06
 Sales Tax           1997-98
 Sales Tax           1992-93,
                     1993-94,
                     1996-97,
                     1998-99,
                     1999-00,
                     2000-01,
                     2001-02,
                     2002-03,
                     2003-04,
                     2004-05,
                     2006-07,
                     2007-08
 Sales Tax           2001-02,
                     2007-08
 Sales Tax           2002-03,
                     2003-04
 Sales Tax           1998-99,
                     2000-01
 Sales Tax           1987-88,
                     2001-02
 
 Forum where          Unpaid
 Dispute is           Amount
 Pending             (Rs. in Lacs)
 
 High Court              634.88
 ITAT                      0.02
 CIT (A)                 269.15
 High Court               62.44
 Commissioner            416.97
 CESTAT                  225.58
 CESTAT                   35.77
 Commissioner              1.93
 High Court             1060.69
 Board of                  6.93
 Madhya
 Pradesh
 Commercial
 Taxes, Bhopal
 Commissioner            194.74
 Deputy                    9.47
 Commissioner
 Tribunal                217.19
 ACCT                      1.13
 Appellate
 Joint                     2.55
 Commissioner
 
 (x) The company does not have accumulated losses and has not incurred
 cash losses during the financial year and immediately preceding
 financial year.
 
 (xi) According to the information and explanations given to us, the
 Company has not defaulted in repayment of dues to financial
 institutions, banks or debenture holders.
 
 (xii) 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.
 
 (xiii) The Company is not a chit fund or a nidhi / mutual fund benefit
 fund / society. Therefore, the provisions of clause 4(xiii) of the
 Companies (Auditors Report) Order, 2003 are not applicable to the
 company.
 
 (xiv) According to the information and explanations given to us, the
 Company is not dealing or trading in shares, securities and debentures.
 However, it has dealings in Mutual Fund Units during the year. For the
 transactions in Mutual fund units the Company has maintained proper
 records and has made timely entries therein. All the shares, securities
 and other investments are held by the company in its own name.
 
 (xv) In our opinion and according to the information and explanations
 given to us, the terms and conditions on which the Company has given
 guarantees for loans taken by its subsidiaries from bank is not, prima
 facie, prejudicial to the interest of the Company.
 
 (xvi) In our opinion and on the basis of the information and
 explanation given to us, the term loans have been applied for the
 purpose for which they were raised other than amounts temporarily
 invested pending utilisation of the funds for the stated use.
 
 (xvii) On the basis of our examination of the books of accounts and the
 information and explanation given to us, we report that, the funds
 raised on short-term basis have not been used for long-term investment.
 
 (xviii) During the year, 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.
 
 (xix) According to the information and explanations given to us the
 Company has not issued any secured debentures, which are outstanding
 during the year.
 
 (xx) During the period covered by our audit report, the Company has not
 raised any money by way of a public issue;
 
 (xxi) According to the information and explanations given to us, no
 material fraud on or by the Company has been noticed or reported during
 the year.
 
                                                    For N.M. Raiji & Co.
                                                   Chartered Accountants
 
                                                             J.M. Gandhi
                                                                 Partner
 Mumbai, June 25, 2009                              Membership No: 37924