Zee Entertainment Enterprises

1.  We have audited the attached Balance Sheet of Zee Entertainment
 Enterprises Limited (“the Company”) as at March 31, 2009, 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 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 (Auditors’ Report) Order, 2003 (the
 ‘Order’) issued by the Central Government of India in terms of Section
 227(4A) of the Companies Act, 1956 (“the Act”), and on the basis of
 such checks as we considered appropriate and according to the
 information and explanations given to us, we annex hereto a statement
 on the matters specified in paragraph 4 and 5 of the said order.
 
 4.  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 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, 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 and Loss Account and Cash
 Flow Statement dealt with by this report comply with the accounting
 standards referred to in Section 211 (3C) of the Act;
 
 (e) On the basis of written representations received from the directors
 and taken on record by the Board, we report that none of the Director
 is disqualified as at March 31, 2009 from being appointed as a director
 in terms of Clause (g) of sub-section (1) of Section 274 of the Act;
 
 (f) In our opinion and to the best of our information and according to
 the explanations given to us, the said accounts read together the
 significant accounting policies and notes to accounts as per Schedule
 18, give the information required by the Act, 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;
 
 ii) In the case of the Profit and Loss Account, of the Profit for the
 year ended on that date; and
 
 iii) In the case of the Cash Flow Statement, of the cash flows for the
 year ended on that date
 
 Annexure referred to in Paragraph (3) of Auditors’ Report to the
 members of Zee Entertainment Enterprises Limited on the accounts for
 the year ended March 31, 2009
 
 1. a) The Company has maintained proper records showing full
 particulars, including quantitative details and situation of its fixed
 assets.
 
 b) According to the information and explanations given to us, there is
 a regular program of physical verification of fixed assets except lying
 with third parties which in our opinion is reasonable having regard to
 the size of the Company and the nature of its assets. Pursuant to the
 program, the physical verification was carried out during the year and
 discrepancies noticed on such verification, which were not material,
 have been properly dealt with in the books of accounts.
 
 c) During the year, there was no disposal of substantial part of fixed
 assets.
 
 2.  a) The inventory has been physically verified (copyrights of
 programs/film rights verified with reference to title
 documents/agreements) by the management at reasonable intervals during
 the year.
 
 b) In our opinion, 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 and no discrepancies were noticed on physical verification as
 compared to the book records.
 
 3.  a) The Company has not granted any loan, secured or unsecured to
 companies, firms or other parties covered in the register maintained
 under Section 301 of the Act.
 
 b) The Company has not taken any loan, secured or unsecured from
 companies, firms or other parties covered in the register maintained
 under Section 301 of the Act.
 
 4.  In our opinion and according to the information and explanations
 given to us, there is adequate internal control system commensurate
 with the size of the Company and the nature of its business with regard
 to purchases of inventory, fixed assets and sale of goods and services.
 During the course of our audit, we have not observed any continuing
 failure to correct major weaknesses in the internal control system in
 respect of the aforesaid areas.
 
 5.  According to the information and explanations given to us, there
 are no contracts or arrangements the particulars of which are required
 to be entered into the register in pursuance of Section 301 of the Act.
 
 6.  The Company has not accepted any deposits from the public during
 the year.
 
 7.  The Company has an internal audit system commensurate with the size
 and nature of its business.
 
 8.  We are informed that the Central Government has not prescribed the
 maintenance of cost records under Section 209 (1) (d) of the Act in
 respect of the Company’s activities.
 
 9.  According to the records of the Company examined by us and
 information and explanations given to us:
 
 a) The Company has been generally regular except delay in few cases in
 depositing its Statutory dues including Provident Fund, Investor
 Education and Protection Fund, Employees State Insurance, Income Tax,
 Sales Tax, VAT, Wealth Tax, Service Tax, Customs Duty, Excise Duty,
 Cess and others as applicable. There are no undisputed amounts payable
 in respect of the aforesaid dues which have remained outstanding as at
 March 31, 2009 for a period of more than six months from the date they
 became payable.
 
 b) There are no disputed amounts on account of Income Tax, Sales Tax,
 VAT, Service Tax, Customs Duty, Excise Duty and Cess, which have not
 been deposited except Wealth tax of Rs./ Thousand 13 for A.Y.  1997-98
 appeal pending with Income Tax Appellate Tribunal.
 
 10.  The Company does not have accumulated losses at the end of the
 financial year and has not incurred cash losses during the current
 financial year or in the immediately preceding financial year.
 
 11.  On the basis of our examination of records and according to the
 information and explanations given to us, the Company has not defaulted
 in repayment of dues to banks and financial institutions.
 
 12.  According to the information and explanations given to us, the
 Company has not granted any loans or advances on the basis of security
 by way of pledge of shares, debentures and other securities.
 
 13.  The Company is not chit fund or a nidhi/ mutual benefit fund/
 society.
 
 14.  The Company is not dealing in or trading in shares, securities,
 debentures and other investments.
 
 15.  In our opinion and according to the information and explanations
 given to us, the terms and conditions of guarantees given by the
 Company for loans taken by subsidiaries and others are prima facie not
 prejudicial to the interests of the Company.
 
 16.  According to the information and explanations given to us, the
 term loan raised during the year have been applied for the purposes for
 which they were raised.
 
 17.  On the basis of overall examination of the Balance Sheet and cash
 flows of the Company and related information as made available to us,
 we report that no short-term funds have been used for long-term
 investments.
 
 18.  The Company has not made preferential allotment of shares to
 companies and parties covered in the register maintained under Section
 301 of the Act during the year.
 
 19.  The Company has not issued any secured debentures during the year.
 
 20.  The Company has not raised any money by public issue during the
 year.
 
 21.  Based on audit procedures and according to the information and
 explanations given to us, no fraud on or by the Company has been
 noticed or reported during the year.
 
 Mohan Bhandari
 Partner
 Membership No. 12912
 
 For MGB & Co.
 Chartered Accountants
 Mumbai, June 26, 2009