We have audited the attached Balance Sheet of M/s. TVS Electronics
 Limited, Jayalakshmi Estates, 29, Haddows Road, Chennai - 600 006 as
 at 31s1 March, 2012, the Statement of Profit & Loss for the year ended
 31st March, 2012 annexed thereto and the Cash Flow Statement for the
 year ended on that date. 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.
 
 1. We conducted our audit in accordance with the Auditing Standards
 generally accepted in India. These 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 evaluating the overall presentation of the
 financial statements. We believe that our audit provides a reasonable
 basis for our opinion.
 
 2. As required by the Companies (Auditor''s Report) Order, 2003 and
 amended by the Companies (Auditor''s Report) (Amendment) Order, 2004
 issued by the Central Government 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.
 
 3. Further to our comments in the Annexure referred to above, we state
 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
 those books;
 
 (c) The Balance Sheet, Statement of Profit and Loss and Cash Flow
 Statement referred to in this report are in agreement with the books of
 account;
 
 (d) In our opinion, the Balance Sheet, Statement of Profit and Loss 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.
 
 (e) On the basis of written representations received from the Directors
 of the Company and taken on record by the Board of Directors, we report
 that no Director is disqualified from being appointed as a Director in
 terms of clause (g) of sub-section (1) of Section 274 of the Companies
 Act, 1956 on the said date;
 
 (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
 notes thereon, particularly the notes under AS13 (Accounting for
 Investments), 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:
 
 (i) in so far as it relates to the Balance Sheet, of the state of
 affairs of the Company as at 31st March, 2012;
 
 (ii) in so far as it relates to the Statement of Profit and Loss, of
 the profit of the Company for the year ended 31s1 March, 2012; and
 
 (iii) in so far as it relates to the Cash Flow Statement, of the cash
 flows for the year ended on that date.
 
 1. a) The Company has maintained proper records showing full
 particulars including quantitative details and situation of the fixed
 assets.
 
 b) The assets are physically verified, in phases, by the Management
 during the year as per the regular programme of verification, which in
 our opinion is reasonable having regard to the size of the Company and
 the nature of its assets. No material discrepancies were noticed on
 such physical verification. The discrepancies noticed on such
 verification have been appropriately dealt with in the books of account
 of the Company.
 
 c) During the year the Company has disposed off unused assets and the
 loss arising there from is disclosed as exceptional item of expenditure.
 The assets disposed off during the year are not substantial and
 therefore do not affect the going concern status of the Company.
 
 2. a) The stock of raw materials, stores, spare parts and
 
 finished goods other than in transit were physically verified during
 the year by the Management. In our opinion, the frequency of
 verification is reasonable.  In respect of inventory with third
 parties, which have not been physically verified, there is a process of
 obtaining confirmation from such parties.
 
 b) In our opinion and according to the information and explanations
 given to us, the procedures of physical verification of inventory
 followed by the Management are reasonable and adequate in relation to
 the size of the Company and the nature of its business.
 
 c) In our opinion, the Company has maintained proper records of
 inventory. The discrepancies noticed on verification between the
 physical stocks and the book records were not material and have been
 properly dealt with in the books of account.
 
 3. a) During the year, the Company has granted unsecured loan of Rs 521
 lakhs (Balance as at 31.03.2012 Rs 200 lakhs) to a Company covered in
 the Register maintained under Section 301 of the Companies Act, 1956.
 The rate of interest and other terms and conditions of the loan are not
 prima facie prejudicial to the interest of the Company. The receipt of
 Principal amount and interest thereon are regular. As on the date of
 Balance Sheet there was no overdue amount recoverable on the said
 unsecured loans.
 
 b) During the year the Company has not availed any loan from companies
 covered in the Register maintained under Section 301 of the Companies
 Act, 1956.
 
 4. In our opinion and according to the information and explanations
 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 inventory and fixed assets and for
 the sale of goods and services.  During the course of our audit, no
 major weaknesses have been noticed in the internal control system.
 
 5. a) Based on the audit procedures applied by us and
 
 according to the information and explanations provided by the
 Management, we are of the opinion that the contracts or arrangements
 that need to be entered in the Register maintained in pursuance of
 Section 301 of the Companies Act, 1956 have been properly entered in
 the said Register.
 
 b) In our opinion and according to the information and explanations
 given to us, the transactions entered in the Register maintained under
 Section 301 and exceeding during the financial year by Rs 5.00 lakhs in
 respect of each party have been made at prices which are reasonable
 having regard to the prevailing market prices at the relevant time.
 
 6. The Company has not accepted any deposits from the public.
 
 7. The Company has an internal audit system, which in our opinion, is
 commensurate with its size and nature of its business.
 
 8. We have broadly reviewed the books of account 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 and are of the opinion that, prima facie, the prescribed
 accounts and records have been made and maintained.
 
 9. a) According to the records provided to us, the Company
 
 is generally regular in depositing undisputed statutory dues including
 Provident Fund, Investor Education and Protection Fund, Employees''
 State Insurance, Income-Tax, Sales-Tax, Wealth Tax, Service Tax,
 Customs Duty, Excise Duty, Cess and other statutory dues with the
 appropriate authorities. However marginal delay was noticed in respect
 of one Employee State Insurance remittance.
 
 b) According to the information and explanations given to us, no
 undisputed amounts payable in respect of Income Tax, Wealth Tax, Sales
 Tax, Service Tax, Customs Duty, Excise Duty and Cess were in arrears,
 as at 31st March, 2012 for a period of more than six months from the
 date they became payable.
 
 c) According to the information and explanations given to us, the
 following are the details of the disputed dues, that were not deposited
 with the concerned authorities.
 
 Name of the    Nature of dues   Amount       Forum where dispute is
 Statue                          (Rs in       Pending
                                 lakhs)
 
 Sales Tax      Statutory Forms  270.08       Assistant Commissioner
 Acts of        Entry Tax/                    /Deputy Commissioner
 various        Warranty                      Appellate Authorities -
 States         replacement                   Commercial Taxes of
                stock related/                various states.
                Turnover dispute 
 
 Income Tax     a) Cost of       220.20       Commissioner of Income Tax
 Act, 1961      acquisition of                (Appeal), Chennai.
                certain capital 
                asset sold and 
                determination of 
                capital gain. 
      
                b) Claim of TDS   49.65
                disallowed.
 
                c) Inventory     193.82
                write-off 
                disallowed.
 
                d) Wrong levy of  14.42
                interest under 
                various 
                provisions of 
                the Act.
 
 Service Tax    Dispute on       121.15      Customs, Excise and Service
                availment of                 Tax Appellate Tribunal,
                input tax credit             Chennai (CESTAT).
                for exempted 
                and dutiable 
                goods.
 
 Excise         Refund disputed   13.23      Customs, Excise and Service
                                             Tax Appellate Tribunal, 
                                             Chennai (CESTAT).
 
 Customs        Special           10.25      The Commissioner of Customs
                Additional Duty              (Appeals), Chennai
                refund claim                  
                rejected by
                department.
 
 10. The Company neither has accumulated losses as at the end of the
 financial year nor has incurred cash losses during the financial year
 and in the immediately preceding year.
 
 11. Based on our verification and according to the information and
 explanations given by the Management, the Company has not defaulted in
 repayment of dues to any financial institution or bank.
 
 12. Based on our examination and 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.
 
 13. The Company is not a chit / nidhi / mutual benefit fund / society
 and as such clause (xiii) of the Order is not applicable.
 
 14. The Company is not dealing or trading in shares, securities,
 debentures and other investments. All investments are held in the
 Company''s own name except in the case of investment in wholly owned
 subsidiaries where certain number of shares are held by nominees as
 provided in Section 49 (3) of the Companies Act, 1956.
 
 15. The Company has not given any guarantee for loans taken by others
 from bank or financial institution.
 
 16. In our opinion, the term loans were applied for the purpose for
 which the loans were obtained.
 
 17. On the basis of our examination, the Company has not used the funds
 raised on short-term basis for long-term investments.
 
 18. During the year, the Company has not allotted any shares on
 preferential basis to parties and companies covered in the Register
 maintained under Section 301 of the Companies Act, 1956.
 
 19. During the year, the Company has not issued any debentures.
 
 20. During the year, the Company has not raised any money by public
 issue.
 
 21. Based on the audit procedures adopted and information and
 explanations given to us by the Management, no fraud on or by the
 Company has been noticed or reported during the course of our audit.
 
                                              For SUNDARAM & SRINIVASAN
 
                                                  Chartered Accountants 
 
                                          Firm Registration No: 004207S
 
 
 
                                                     M BALASUBRAMANIYAM
 
                                                                Partner
 
 Chennai                                           Membership No. F7945
 
 May 3,2012.