1.  We have audited the attached Balance Sheet of PARAMOUNT
 COMMUNICATIONS LIMITED as at 31st March, 2011 and also 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 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 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 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.
 
 4.  Without qualifying our opinion, we draw attention to, Note 3 of
 schedule  ACI-V ACI- to the financial statements regarding non provision of
 proportionate premium on redemption of US  ACQ- 7.50 Million 1 ACU- Foreign
 Currency Convertible Bonds amounting to Rs. 128,893,428/-. The same has
 been disclosed as a contingent liability. Management has represented,
 that the redemption premium will be offset against the securities
 premium account.
 
 5.  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 our knowledge and belief were necessary for the purposes of our
 audit ADs-
 
 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 ADs-
 
 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 ADs-
 
 d) In our opinion, the Balance Sheet, Profit  ACY- Loss Account and the
 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 ADs-
 
 e) On the basis of written representations received from the directors
 and taken on record by the Board of Directors, we report that none of
 the directors is disqualified as on 31st March, 2011 from being
 appointed as a director of the Company in terms of clause (g) of
 sub-section (1) of Section 274 of the Companies Act, 1956 ADs-
 
 f) 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 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 ADs-
 
 i.  in the case of the Balance Sheet, of the state of affairs of the
 Company as at 31st March, 2011 ADs-
 
 ii.  in the case of the Profit  ACY- Loss Account, of the loss for the year
 ended on that date ADs- and
 
 iii.  in the case of the Cash Flow Statement, of the cash flows of the
 Company for the year ended on that date.
 
 Annexure referred to in paragraph ''3'' of the Auditors'' Report to the
 Members of Paramount Communications Limited on the accounts for the
 year ended March 31, 2011
 
 (i) (a) The Company is maintaining proper records to show full
 particulars, including quantitative details and situation of fixed
 assets.
 
 (b) As explained to us, the Company has a programme of physically
 verifying all its fixed assets over a period of three years, which in
 our opinion is reasonable having regard to the size of the Company and
 the nature of its fixed assets.  In accordance with this programme,
 some of the fixed assets were physically verified by the management
 during the year. The discrepancies noticed on such verification between
 the physical balances and the fixed assets records were not material
 and have been properly dealt with in the books of account.
 
 (c) In our opinion and according to the information and explanations
 given to us, a substantial part of the fixed assets has not been
 disposed off by the Company during the year.
 
 (ii) (a) During the year, the inventories have been physically verified
 by the management. 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 of 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.
 
 (c) On the basis of our examination of the record of inventories, we
 are of the opinion that, the Company is maintaining proper records of
 inventories. The discrepancies noticed on physical verification of
 inventories as compared to book records were not material and have been
 properly dealt with in the books of account.
 
 (iii) (a) There is one party covered in the register maintained under
 Section 301 of the Companies Act, 1956 to which Company has given
 deposit as per contractual obligations. The maximum amount involved
 during the year was Rs.18,000,000/- and the yearend balance of deposit
 granted to such party was Rs. 18,000,000/-. (Refer Note No.26 of
 Schedule  ACI-V ACI-)
 
 (b) In our opinion, terms and conditions on which deposit has been
 given to party listed in the register maintained under Section 301 of
 Companies Act, 1956 are not, prima facie, prejudicial to the interest
 of the Company. No interest was charged from this party, since this is
 deposit against premises taken on rent.
 
 (c) As per stipulation no repayment was due from the party and no
 interest was charged from this party, since this was deposit against
 premises taken on rent. (Refer Note No.26 of Schedule  ACI-V ACI-).
 
 (d) There is no overdue amount of deposit granted to the party listed
 in the register maintained under section 301 of the Companies Act,
 1956.
 
 (e) The company has taken deposits from one Company and two parties
 covered in register maintained under section 301 of the Companies Act,
 1956. The maximum amount involved during the year was Rs. 4,837,865/-
 and the yearend balance of deposits taken from parties was Rs. Nil.
 
 (f) In our opinion, the rate of interest and other terms and conditions
 on which deposits have been taken from Companies, firms or other
 parties listed in the register maintained under Section 301 of
 Companies Act, 1956 are not, prima facie, prejudicial to the interest
 of the Company.
 
 (g) The Company is regular in repaying the principal amounts as
 stipulated and also in the payment of interest where applicable in case
 of deposits taken from 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 explanations
 given to us, there are adequate internal control systems, commensurate
 with the size of the Company and the nature of its business with regard
 to the purchase of inventories, fixed assets and with regard to the
 sale of goods. There are no sales of services during the year. Further,
 on the basis of our examination and according to the information and
 explanations given to us, we have not come across nor have been
 informed of any continuing failure to correct major weaknesses in the
 internal control system.
 
 (v) (a) According to the information and explanations given to us, we
 are of the opinion that during the year, the particulars of contracts
 or arrangements referred to in section 301 of the Act have been entered
 in the register required to be maintained under that section.
 
 (b) In our opinion and according to the information and explanations
 given to us, the transactions made in pursuance of such contracts or
 arrangements and exceeding the value of Rupees five lakhs in respect of
 any party have been made at prices which are reasonable having regard
 to prevailing market prices at the relevant time.
 
 (vi) As, the Company has not accepted any deposits from the public,
 paragraph 4(vi) of the order is not applicable.
 
 (vii) In our opinion, the Company has an adequate internal audit system
 commensurate with its size and nature of its business.
 
 (viii) We have broadly reviewed the books of account maintained by the
 Company pursuant to the Rules made by the Central Government for the
 maintenance of cost records under section 209 (1)(d) of the Companies
 Act, 1956 and are of the opinion that, prime facie, the prescribed
 accounts and records have been made and maintained. We have not,
 however, made a detailed examination of the records with a view to
 determine whether they are accurate or complete.
 
 (ix) (a) According to the records of the Company and information and
 explanations given to us and the records of the Company examined by us,
 the Company has been generally regular in depositing the undisputed
 statutory dues including provident fund, employees state insurance,
 income tax, Investor education and protection fund, sales tax, wealth
 tax, service tax, customs duty, excise duty, cess and other material
 statutory dues applicable to it with the appropriate authorities,
 though there has been delay of few days in deposit of tax deducted at
 source (TDS) in January, 2011. We are informed there are no undisputed
 statutory dues as of March 31, 2011 outstanding for a period of more
 than six months from the date they become payable.
 
 (b) There are no dues in respect of income tax, sales tax, wealth tax,
 service tax, customs duty, excise duty and cess that have not been
 deposited with appropriate authorities on account of any dispute other
 than those mentioned below :-
 
 Name of     Nature of the        Amount Period to 
                                         which      Forum where dispute
 the Statute Due                    Rs.  the amount
                                         relates    is pending
 
 Income Tax 
 Act         Income Tax        2,911,035   2005-06  Commissioner 
                                                    (Appeals)/
                                                    Assessing Officer
 
             Income Tax          398,103   2006-07  Appellat Tribunal
 
 Central 
 Excise Act  Excise Duty      69,906,060   2007-08,
                                          2008-09  ACY-
                                           2009-10  CESTAT
 
             Excise Duty         412,328   2007-08,
                                           2008-09  Commissioner 
                                                    (Appeals)
 
 Finance Act Service Tax       1,328,068  2008-09  ACY- 
                                           2009-10  Commissioner 
                                                    (Appeals)
 
 Customs Act Custom Duty       1,836,570   2008-09  Commissioner 
                                                    (Appeals)
 
 (x) Accumulated losses of the company are less than fifty percentage of
 its net worth. The Company has incurred cash losses during the year.
 However, the company has not incurred cash losses in the immediately
 preceding financial year.
 
 (xi) Based on our audit procedures and as per the information and
 explanations given by the management, there are no dues to debenture
 holders. There have been defaults in repayment of dues to the banks and
 a financial institution during the year.  Dues to Banks have been
 subsequently rescheduled up to 31st March, 2011by way of Corporate Debt
 Restructuring package (CDR) and rescheduling as disclosed in Note No.6
 of the Schedule V. Interest of Rs. 3,964,725/- on loan from a financial
 institution was due on various dates during the year and was
 outstanding as on 31st March, 2011. (Refer note No.6 of Schedule V).
 
 (xii) As the Company has not granted any loans and advances on the
 basis of security by way of pledge of shares, debentures and other
 securities, paragraph 4(xii) of the order is not applicable.
 
 (xiii) As the Company is not a chit fund / nidhi / mutual benefit funds
 / society to which the provisions of special statute relating to chit
 fund are applicable, paragraph 4(xiii) of the order is not applicable.
 
 (xiv) As the Company is not dealing or trading in shares, securities,
 debentures and other investments, paragraph 4(xiv) of the order is not
 applicable.
 
 (xv) The company has given guarantee for loans taken by two corporate
 from banks. According to the information and explanations given to us,
 we are of the opinion that the term and conditions thereof are not
 prime facie prejudicial to the interest of the company (Refer Note No 2
 (i), (ii)  ACY- (iii) of Schedule  ACI-V ACI-).
 
 (xvi) In our opinion and on the basis of information and explanations
 given to us, term loans obtained during the year were applied for the
 purposes for which the loans were obtained.
 
 (xvii) According to the information and explanations given to us and on
 an overall examination of the balance sheet of the Company, we report
 that during the year short term funds have not been used to finance
 long term investments.
 
 (xviii) During the year, the company has allotted equity shares on
 preferential basis to a company covered in the Register maintained
 under Section 301 of the Companies Act, 1956, consequent upon
 conversion of warrants. The price at which, these equity shares have
 been issued has been determined as per the Securities and Exchange
 Board of India (Issue of Capital and Disclosure Requirements)
 Regulations 2009, which in our opinion , is not prejudicial to the
 interest of the company.
 
 (xix) The Company has not issued any debentures during the year.
 
 (xx) The Company has not raised any money by a public issue during the
 year. Accordingly, paragraph 4(xx) of the order is not applicable.
 
 (xxi) Based upon the audit procedures performed and information and
 explanations given by the management, we report that, no fraud on or by
 the Company has been noticed or reported during the year ended March
 31, 2011.
 
 
                                              For JAGDISH CHAND  ACY- CO.
 
                                                CHARTERED ACCOUNTANTS
 
                                                         (J.C. GUPTA)
 
 Place : New Delhi                                            PARTNER
 
 Dated : 12th August, 2011                                M. No. 6107
 
                                    Firm Registration Number: 000129N