Network 18 Media & Investments

1.  We have audited the attached Balance Sheet of Network18 Media &
 Investments Limited as at March 31,2009 and the Profit & Loss Account
 for the year ended on that date and the Cash Flow Statement for the
 year ended on that date both annexed hereto . 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 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 check, evidence supporting the amounts
 and disclosures in the financial statements. An audit also includes
 assessing the accounting principles used and significant estimates made
 by the 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 Company Law Board in terms of Section 227(4A) of the Companies
 Act,1956 ,we annex hereto a statement on the matters specified in
 paragraph 4 of the said Order, to the extent applicable to the company.
 
 4.  (i) Attention is invited to Note 27 of Schedule 14 , regarding non
 compliance with capital adequacy and concentration of investments norms
 forming part of the Non Banking ( Non Deposit Accepting or Holding)
 Companies Prudential Norms (Reserve Bank) Directions ,2007 issued by
 the Reserve Bank of India.  
 
 (ii) The company has paid a remuneration of Rs 11.46 millions to its
 Managing Director, which in view of losses, needs to be approved by the
 Central Government.
 
 We are unable to comment on the adjustments and impact, if any, on the
 fnancial statements in respect of the non compliance.
 
 5.  Further to our comments in the annexure referred to in Paragraph 4
 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 our audit.
 
 b.  in our opinion, proper books of account have been kept as required
 by law , so far as appears from our examination of the 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 & Loss Account and Cash
 Flow Statement dealt with by this report are in compliance with the
 mandatory Accounting Standards referred to in sub section 3(c) of
 Section 211 of the Companies Act,1956.
 
 e.  In our opinion and to the best of our information and according to
 the explanations given to us , the said accounts read together with the
 significant accounting policies and notes thereon, subject to our
 comments in Para 4 above, give the information as 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 31,2009 ,and
 
 ii) 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 of the
 Company for the year ended on that date
 
 6.  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
 that date from being appointed as a Director in terms of clause (g) of
 sub-section (1) of Section 274 of the Companies Act,1956.
 
 
 ANNEXURE
 
 Annexure referred to in Para 3 of our Report of even date, to the
 members of Network18 Media & Investments Limited
 
 As required by the Companies (Auditor’s Report) Order, 2003 on the
 basis of such checks as we considered appropriate, and, according to
 the information and explanations given to us, we report that :- 1.  The
 company has maintained proper records showing full particulars
 including quantitative details and situation of fixed assets.
 
 2.  The fixed assets have been physically verified by the management
 during the period and no material discrepancies were noticed .
 
 3.  A substantial part of fixed assets have not been disposed off
 during the year.
 
 4.  The company’s business as at the year end does not generate
 tangible inventories. Para 4(ii)(b) and 4 (ii) (c) are therefore not
 applicable to the company.
 
 5.  The company had granted unsecured loans of Rs 281.7 millions to 2
 companies covered in the Register maintained under Section 301 of the
 Act. The rate of interest on these loans and the other terms and
 conditions are not prima facie, prejudicial to the interest of the
 company. No repayment terms are specified for the loans but the
 borrowers have repaid all sums except a sum of Rs 30.3 million as at
 year end.
 
 6.  The company has not taken any loans, from a company listed in the
 Register maintained under Section 301 of the Act .
 
 7 There is an internal control procedure commensurate with the size of
 the company and the nature of its business for the purchase of Fixed
 Assets and for the sale of services. The company’s operations do not
 generate any inventory. During the course of our audit , we have not
 observed any continuing failure to correct weaknesses in the internal
 control system.
 
 8.  The particulars of all contract or arrangements referred to in
 Section 301 of the Act , have been entered in the Register required to
 be maintained under that section . Transactions made in pursuance of
 such arrangements have been made at prices which are, prima facie,
 reasonable having regard to the prevailing market prices at the
 relevant time.
 
 9.  The company has not accepted deposits from the public during the
 period.
 
 10.  The company has an internal audit system commensurate with its
 size and the nature of its business.
 
 11.  Maintenance of cost records has not been prescribed by the Central
 Government under Section 209(1) (d) of the Companies Act,1956, for any
 of the products of the Company.
 
 12.  The company has been generally been regular in depositing
 undisputed statutory dues on account of Income tax, Provident Fund,
 Service Tax and Employees State Insurance dues .The company’s current
 operations do not require it to deposit any amounts towards Investor
 Education and Protection Fund, Wealth Taxes , Sales Taxes, Customs Duty
 , Excise and such cess(s).There are no undisputed sums payable towards
 Income tax ,Provident Fund, Service Tax and Employees State Insurance
 dues , which were outstanding at the year end for a period of more than
 six months from the date they became payable.
 
 13.  The company’s losses as at March 31,2009 do not exceed 50% of its
 Net Worth . The company has incurred cash losses in the year under
 review and but did incur cash losses in the immediately preceding
 financial year.
 
 14.  The company has not defaulted in repayment of dues to a financial
 institution or bank or debenture holders.
 
 15.  No loans/ advances have been granted on the basis of security of
 pledge of shares, debentures and other securities .
 
 16.  The company’s activities do not require compliance with any
 special statute applicable to chit fund companies.
 
 17.  In respect of dealings or trading in shares and securities the
 company has maintained proper records of the transactions and contracts
 and timely entries have been made . All shares / securities have been
 held by the company in its own name .
 
 18.  The company has given guarantees for loans taken by others from
 Financial Institutions / Banks , the terms of which are prima facie ,
 not prejudicial to the company’s interest .
 
 19.  Term Loans were used for the purpose they were obtained .
 
 20.  Loans of Rs 700 millions raised as Short term loans were used for
 Long term investments.
 
 21.  The company has not made a preferential allotment Equity Shares to
 any party listed in the Register maintained u/s 301 of the Companies
 Act.
 
 22.  The company has created security in respect of debentures issued.
 
 23.  The management has disclosed the end use of money raised through
 rights issue and the same has been verified.
 
 24.  No fraud on or by the company has been noticed or reported during
 the year .
 
 
                                         For G S Ahuja & Associates 
                                              Chartered Accountants
      
 Noida                                                   G S Ahuja
 June 30, 2009                                          Proprietor,
                                              Membership No. 87732