1. We have audited the attached Balance Sheet of DEN Networks Limited,
(the Company) as at 31 March, 2010, the Profit and Loss Account and
the Cash Flow Statement of the Company for the year ended on that date,
both annexed thereto. These financial statements are the responsibility
of the Companys 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 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 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
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 purposes of our
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
c. the Balance Sheet, the Profit and Loss Account and the Cash Flow
Statement dealt with by this report are in agreement with the books of
d. in our opinion, the Balance Sheet, the Profit and 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;
e. in our opinion and to the best of our information and according to
the explanations given to us, the said accounts, together with the
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:
i. in the case of the Balance Sheet, of the state of affairs of the
Company as at March 31, 2010;
ii. in the case of the Profit and Loss Account, of the profit of the
Company 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.
5. On the basis of written representations received from the Directors
as on 31 March, 2010 taken on record by the Board of Directors, none of
the Directors is disqualified as on March 31, 2010 from being appointed
as a director in terms of Section 274(1)(g) of the Companies Act, 1956.
Annexure to the Auditors Report (Referred to in paragraph 3 of our
report of even date)
i. Having regard to the nature of the Companys business, clauses ii,
viii, xii, xiii, xiv, xv, xviii and xix of Companies (Auditors Report)
Order, 2003 are not applicable.
ii. In respect of its fixed assets:
a. The Company has maintained proper records showing full particulars,
including quantitative details and situation of fixed assets.
b. According to the information and explanations given to us, the
Company has a regular programme of physical verification of its fixed
assets by which fixed assets are verified by the management in a phased
manner over a period of three years. In accordance with this
programme, certain fixed assets were verified during the year and no
material discrepancies were noticed on such verification. In our
opinion, this periodicity of physical verification is reasonable having
regard to the size of the Company and the nature of its assets.
c. The fixed assets disposed off during the year, in our opinion, do
not constitute a substantial part of the fixed assets of the Company
and such disposal has, in our opinion, not affected the going concern
status of the Company.
iii. a. The Company has not granted any loans, secured or unsecured to
parties listed in the register maintained under Section 301 of the
Companies Act, 1956.
b. The Company has taken interest free unsecured loan from one party
listed in the register maintained under Section 301 of the Companies
Act, 1956. The year end balance of the loan aggregates to Rs.
21,952,000 and the maximum amount outstanding during the year was Rs.
c. The rate of interest and other terms and conditions of such loans
are, in our opinion, prima facie not prejudicial to the interest of the
d. The payment of principal amount in respect of such loan is
regular/as per stipulations.
iv. In our opinion and according to the information and explanations
given to us and having regard to the explanations that some capital
items for which the procurement decision was taken based on operational
requirements and some the fixed assets purchased are of specialized
nature and, therefore, suitable alternative sources do not exist for
obtaining comparable quotations, there are adequate internal control
procedures commensurate with the size of the Company and the nature of
its business for the purchase of fixed assets and sale of goods and
services. The operations of the Company do not give rise to purchase
v. To the best of our knowledge and belief and according to the
information and explanations given to us, we are of the opinion that:
a. The particulars of contracts or arrangements referred to in section
301 of the Companies Act, 1956 have been entered in the register
required to be maintained under that section; and
b. According to information and explanations given to us, having
regard to the explanation that some of the services purchased and sold
are of a specialised nature for which there are no alternate sources of
supply to enable comparison of prices, transactions made in pursuance
of contracts or arrangements entered in the register maintained under
Section 301 of the Companies Act, 1956 and exceeding the value of Rs. 5
lakhs in respect of any party during the year have been made at prices
which are reasonable to prevailing market prices at the relevant time.
vi. According to the information and explanations given to us, the
Company has not accepted any deposits from the public during the year,
within the meaning of Sections 58A and 58AA or any other relevant
provisions of the Companies Act, 1956 and the Companies (Acceptance of
Deposits) Rules, 1975.
vii. In our opinion, the Company has an adequate internal audit system
commensurate with the size of the Company and nature of its business.
viii. According to the information and explanations given to us in
respect of statutory dues:
a. The Company has been generally regular in depositing its undisputed
statutory dues including Provident Fund, Employees State Insurance,
Income Tax, Sales Tax, Value added Tax, Wealth Tax, Service tax,
Customs Duty, Work Contract Tax, Cess and other material statutory dues
within the prescribed time with the appropriate authorities during the
year. There are no undisputed amounts payable in respect of these dues
which have remained outstanding as at 31 March, 2010 for a period of
more than six months from the date they became payable.
We are informed that the Companys operations did not give rise to any
Excise Duty and Investor Education and Protection Fund.
b. According to the information and explanations given to us, there
are no amount of Income Tax, Sales Tax, Value added Tax, Wealth Tax,
Service tax, Customs Duty, Work Contract Tax and Cess which have not
been deposited on account of any disputes.
ix. Clause 4(x) of the Companies (Auditors Report) Order, 2003
regarding accumulated losses of the Company at the end of the financial
year exceeding fifty percent of its net worth is not applicable to the
Company since the Company has been registered for a period of less than
x. In our opinion and according to the information and explanations
given to us, the Company has not defaulted in the repayment of dues to
banks and financial institutions. The Company has not issued any
xi. In our opinion and according to the information and explanations
given to us, the term loans have been applied for the purpose for which
they were obtained.
xii. In our opinion and according to the information and explanations
given to us, and on an overall examination of the Balance Sheet, we
report that funds raised on short term basis have not been used during
the year for long term investment.
xiii. The Company has raised money by way of initial public offering of
equity share during the year. The Management has disclosed the end use
of money raised by public issue in note 20 of schedule 15 and we have
verified the same.
xiv. To the best of our knowledge and according to the information and
explanations given to us, no fraud by the Company and fraud on the
Company has been noticed or reported during the year.
For DELOITTE HASKINS & SELLS
(Registration No. 015125N)
(Membership No. 87104)
May 28, 2010