1. We have audited the attached balance sheet of Prime Focus Limited
(''the Company'') as at March 31,2012 and also the related statement of
profit and loss and the cash flow statement for the year ended March
31,2012 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 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 evaluatingthe 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, as
amended by the Companies (Auditor''s Report) (Amendment) order, 2004,
issued by the Central Government of India in terms of Sub-Section (4A)
of section 227 of'' The Companies Act, 1956'' of India (''the Act'') and on
the basis of such checks of the books and records of the Company as we
considered appropriate and according to the information and
explanations given to us, we enclose in the Annexure a statement on the
matters specified in paragraphs 4 and 5 of the said Order.
4. As more fully described in Note 5(a) to the financial statements
the Company has not revalued the FCCB of$ 55 million at the exchange
rate prevailing as at March 31,2012, March 31,2011, March 31,2010,
March 31,2009 and March 31,2008, which in our opinion is not in
accordance with Accounting Standard 11 The Effects of Changes in
Foreign Exchange Rates and not provided for the premium payable on
redemption of these FCCB. Had the Company revalued the bonds as at
March 31,2012, the profit for the year ended March 31,2012 and the
reserves as at that date wouldhave been lower by Rs.383.22 million
andf636.19 million respectively and Foreign Currency Monetary Item
Translation Difference account would have been Rs.NH. Further, had the
Company provided for the premium on redemption, the securities premium
as at March 31,2012 would have been lower byRs. 889.01 million.
Consequent to the above, the FCCB balance at March 31,2012 would have
been higher by ^1525.20 million. This had caused us to qualify our
audit opinion on the financial statements relating to preceding year.
5. Further to our comments in the Annexure referred to above, we
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
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
iii. The balance sheet, statement of profit and loss and cash flow
statement dealt with by this report are in agreement with the books of
iv. Subject to our comment in paragraph 4 above, in our opinion, the
balance sheet, statement of profit and loss 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 the written representations received from the
directors, as on March 31, 2012, and taken on record by the Board of
Directors, we report that none of the directors is disqualified as on
March 31,2012 from being appointed as a director in terms of clause (g)
of sub-section (1) of section 274 of the Companies Act, 1956;
vi. In our opinion and to the best of our information and according to
the explanations given to us, and subject to our comments in paragraph
4 above, 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
a. in the case of the balance sheet, of the state of affairs of the
Company as at March 31,2012;
b. in the case of the statement of profit and loss, of the profit for
the year ended March 31,2012; and
c. in the case of cash flow statement, of the cash flows for year
ended March 31,2012.
ANNEXURE REFERRED TO IN PARAGRAPH  OF OUR REPORT OF EVEN DATE Re:
Prime Focus Limited
i. (a) The Company has maintained proper records showing full
particulars, including quantitative details and situation of fixed
(b) We have been informed that all the fixed assets have not been
physically verified by the management during the year. However, there
is a regular programme of verification. For the assets physically
verified by the management during the year, the Company is in process
of reconciling the assets physically verified with the books of
(c) There was no substantial disposal of fixed assets duringthe year.
ii. The Company does not have any inventory. Accordingly, the
provisions of clause 4(ii) (b) and (c) of the Companies (Auditor''s
Report) Order, 2003 (as amended) (CARO) are not applicable to the
iii. (a) The company has granted interest free unsecured loan to its
subsidiary aggregating toRs. 352.55 million covered in the register
maintained under section 301 of the Companies Act, 1956. At the year
end, the outstanding balances of such loans aggregated to Rs. 49.04
million and the maximum amount involved duringthe year wasRs. 216.86
(b) In our opinion, the rate of interest at which loans have been given
is not, prima facie, prejudicial to the interest of the Company.
(c) In the absence of any terms of agreement as to receipt of loan
granted, we are not in a position to comment upon the clause (iii)(c)
and (iii) (d) of the order.
iv. In our opinion and according to the information and explanations
given to us, we have been explained that major purchase of fixed assets
is of specialized equipments, for which comparative quotes cannot be
obtained in all the case, considering the above, we believe that there
is an adequate internal control system commensurate with the size of
the Company and the nature of its business, for the purchase of fixed
assets. During the course of our audit, no significant weakness has
been noticed in the internal control system in respect of these areas.
However, the internal control system for the sale of film related
services is inadequate since the Company does not have formal
documentation with customers in few cases, which is an industry issue
per management. In our opinion this is a continuing failure to correct
major weakness in the internal control system.
v. (a) According to the information and explanations provided by the
management, we are of the opinion that the particulars of contracts or
arrangements referred to in section 301 of the Act that needs to be
entered into the register maintained under section 301 have been so
(b) In respect of transactions made in pursuance of such contracts or
arrangements exceeding value of Rupees five lakhs entered into during
the financial year, because of the unique and specialized nature of the
items involved and absence of any comparable prices, we are unable to
comment whether the transactions were made at prevailing market prices
at the relevant time.
vi. The Company has not accepted any deposits from the public.
vii. The Company has an internal audit system, the scope and coverage
of which, in our opinion requires to be enlarged to be commensurate
with the size and nature of its business.
viii. To the best of our knowledge and as explained, the Central
Government has not prescribed maintenance of cost records under clause
(d) of sub-section (1) of section 209 of the Act for the services of
ix. (a) Undisputed statutory dues including provident fund, investor
education and protection fund, or employees'' state insurance,
income-tax, sales-tax, wealth-tax, service tax customs duty, cess have
generally been regularly deposited with the appropriate authorities
except for slight delays observed in case of payment of JDS. The
provisions relating to excise duty are not applicable to the Company.
(b) Accordingto the information and explanations given to us, no
undisputed amounts payable in respect of providentfund, investor
education and protection fund, employees'' state insurance, income-tax,
wealth-tax, service tax, sales-tax, customs duty, cess and other
undisputed statutory dues were outstanding, at the year end, for a
period of more than six months from the date they became payable. The
provisions relating to excise duty are not applicable to the Company.
(c) According to the records of the Company, there are no dues
outstanding of income-tax, sales-tax, wealth-tax, service tax, customs
duty and cess on account of any dispute. The provisions relating to
excise duty are not applicable to the Company.
x. The Company has no accumulated losses at the end of the financial
year and it has also not incurred cash losses in the current and
immediately preceding financial year.
xi. As per the information and explanations given to us by the
management, we are of the opinion that the Company has not defaulted in
repayment of dues to a financial institution, bank or debenture
xii. According to the information and explanations given to us and
based on the documents and records produced 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. In our opinion, the Company is not a chit fund or a nidhi /
mutual benefit fund / society. Therefore, the provisions of clause
4(xiii) of the CARO are not applicable to the Company.
xiv. In our opinion, the Company is not dealing in or trading in
shares, securities, debentures and other investments. Accordingly, the
provisions of clause 4(xiv) of the CARO are not applicable to the
xv. According to the information and explanations given to us, the
Company has not given any guarantee for loans taken by others from bank
or financial institutions.
xvi. Based on information and explanations given to us by the
management, term loans were applied for the purpose for which the loans
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 no funds raised on short-term basis have been used for long-term
xviii.The Company has not made any preferential allotment of shares to
parties or companies covered in the register maintained under section
301 of the Act.
xix. According to the information and explanation given to us, the
company has not issued debentures during the year.
xx. The Company has not raised money by public issues duringthe year.
xxi. Based upon the audit procedures performed for the purpose of
reporting the true and fair view of the financial statements and as per
the information and explanations given by the management, we report
that no fraud on or by the Company has been noticed or reported
duringthe course of our audit.
For MZS & Associates
Firm Registration No:106400w
Partner (M. No. 108053)