Glory Polyfilms Ltd.

Report on the Financial Statements We have audited the accompanying financial statements of GLORY FILMS LIMITED, which comprise the Balance Sheet as at 31st March, 2013, the Statement of Profit and Loss and the Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information. Management''s Responsibility for the Financial Statements The Company''s Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 (the Act). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error. Auditors'' Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with the ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers the internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the Management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion and to the best of our information and according to the explanations given to us, the financial statements 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: (a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2013; (b) in the case of the Statement of Profit and Loss, of the LOSS of the Company for the year ended on that date, and (c) in the case of the Cash Flow Statement, of the cash flows of the Company for the year ended on that date. Report on Other Legal and Regulatory Requirements 1. As required by the Companies (Auditor''s Report) Order, 2003(the Order) issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order. 2. As required by Section 227(3) of the Act, 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 audit. (b) In our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books. (c) The Balance Sheet, Statement of Profit and Loss, and the Cash Flow Statement dealt with by 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 comply with the Accounting Standards referred to in sub-section (3C) of section 211 of the Act. (e) On the basis of the written representations received from the directors as on 31st March, 2013 taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2013 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Act. ANNEXURE TO INDEPENDENT AUDITORS'' REPORT - 31ST MARCH 2013 (Referred to in our Report of even date) We report the following: (i) In respect of its fixed assets: (a) The Company is maintaining proper records showing full particulars, including quantitative details and situation of fixed assets. (b) The fixed assets are physically verified by the management, which in our opinion is reasonable having regard to the size of the company and the nature of its assets. Pursuant to above verification no material discrepancies between the book records and the physical inventory have been noticed. (c) During the year, in our opinion, no substantial part of fixed assets has been disposed off by the Company. (ii) In respect of its inventory: (a) As explained to us, inventories were physically verified by the management at the end of the year. (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 were reasonable and adequate in relation to the size of the Company and the nature of its business. (c) In our opinion and according to the information and explanations given to us, Company has maintained proper records of its inventories and no material discrepancies were noticed on physical verification. (iii) (a) The Company has granted loans to 3 parties covered in the register maintained u/s 301 under Companies Act, 1956 and maximum amount involved during the year was Rs. 106.16 Lacs and yearend balance of loan granted to such parties was Rs. (13.46) Lacs. (b) In our opinion and according to the information and explanations given to us, the rate of interest wherever applicable and other terms and conditions are not prima facie prejudicial to the interest of the Company. (c) The Company is regular in receipt of principal amount and interest wherever stipulated. (d) There is no overdue more than Rs. 1.00 Lac from such parties. (e) The Company has taken unsecured loans from 1 party covered in the register maintained u/s 301 under Companies Act, 1956 and maximum amount involved during the year was Rs. 5.30 Lacs and yearend balance of loan taken from such parties was Rs. Nil. (f) In our opinion and according to the information and explanations given to us, the rate of interest wherever applicable and other terms and conditions are not prima facie prejudicial to the interest of the Company. (g) The Company is regular in payment of principal amount and interest wherever stipulated. (iv) 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, for the purchase of inventory and fixed assets and for the sale of goods. During the course of our audit no major weaknesses has been noticed in the internal controls. (v) (a) According to information and explanation given to us, the transactions made in pursuance of contracts or arrangements, that need to be entered into register in pursuance of Section 301, of the Act, have been so entered. (b) In our opinion and according to the information and explanations given to us the transactions of purchases of goods and materials and sale of goods, material and services, made in pursuance of contracts and arrangements entered in register maintained under Section 301 of the Companies Act 1956, and exceeding the value of rupees five lakhs in respect of one party during the year have not been made on cash basis, at prices which are reasonable having regard to prevailing market prices at the relevant time. (vi) In our opinion and according to the information and explanations given to us the Company has accepted deposit falling within the purview of sections 58 A and 58 AA and the compliances for the same is pending. (vii) In our opinion, the company has an internal audit system commensurate with its size and nature of its business. (viii) We have broadly reviewed the books of account and records maintained by the company pursuant to the Companies (Cost Accounting Records) Rules, 2011 prescribed 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 prima facie the prescribed accounts and records have been made and maintained. We have, however, not made a detailed examination of the records with a view to determining whether they are accurate or complete. (ix) (a) According to the information and explanations given to us, in our opinion, the undisputed statutory dues including Provident Fund, Investors Education and Protection Fund, Employees'' State Insurance, Income Tax, Sales Tax, Wealth Tax, Customs Duty, Excise Duty, Cess and other material statutory dues as applicable have generally been regularly deposited by the company during the year with the appropriate authorities. According to the information and explanations given to us, there are no arrears of outstanding statutory dues, except TDS / TCS deducted but not paid Rs. 20,88,726/- as mentioned above as at 31st March, 2013 for the period of more the six months from the date they became payable. (b) According to the records of the Company and the information and explanations given to us, there are no dues of Sales tax, Income tax, Custom duty, Wealth Tax, Excise Duty and Cess, which have not been deposited on account of any dispute except for the following Income Tax dues: Assessment Year Amount (In Rs.) Remark 2006-2007 44,05,855 CIT Appeal effect order pending. Pending this refund of AY 09-10 of Rs. 12,68,950/- adjusted against this demand. 2007-2008 12,70,056 CIT Appeal has partly allowed and TDS credit not allowed of Rs. 4,60,204/- 2007-2008 5,576 FBT 2008-2009 60,43,410 Rectification filed for non granting of TDS credit of Rs. 42,93,134/- & Ad- vance Tax of Rs. 10,00,000/- (x) The company does not have accumulated losses as at 31st March 2013 exceeding fifty percent of its net worth and has incurred cash losses during the financial year as also in the immediately preceding financial year. (xi) In our opinion and according to the information and explanations given to us, the company has nonpayment / delayed payment of loans taken from Banks details of which are as under: Particulars As at 31st March 2013 As at 31st March 2012 Period of Amount of Period of Amount of default default default default Term Loans SBI T/L 30333132640 Principal 15 months 45,240,914 3 months 7,899,267 Interest 15 months 53,759,086 3 months 10,100,733 SBI T/L 30863834293 (WCTL) Principal 6 months 17,957,647 3 months 2,691,169 Interest 6 months 5,042,353 3 months 708,831 SBI T/L 30963573756 (FITL) Principal 6 months 5,632,179 3 months 225,301 Interest 6 months 1,467,821 3 months 174,699 IOB Term Loan A/c 280800010 Principal 14 months 14,380,731 2 months 2,274,731 Interest 14 months 12,317,269 2 months 1,539,269 Other loans Vehicle Loans Kotak Mahindra Prime Ltd - CF - 6148966 Principal 1 month 52,900 Nil Nil Interest 1 month 1,500 Nil Nil Kotak Mahindra Prime Ltd - CF - 6273439 Nil Nil Principal 1 month 60,146 Nil Nil Interest 1 month 2,460 Nil Nil Loan against Keyman Insurance Policy Principal 5,253,750 Nil Nil Interest 629,574 Nil Nil Further, Company has over utilization of Cash Credit Facilities from State Bank of India, Indian Oversea Bank, Central Bank of India & Dena Bank resulting the account of the Company is considered as Non Performing by these bank. Name of Bank Sanction Amount Balance as on31.3.13 State Bank of India 16,50,00,000 25,34,47,610 Indian Overseas Bank 7,65,00,000 14,88,71,522 Central Bank of India 15,00,00,000 15,46,71,793 Dena Bank 12,85,00,000 15,24,55,002 (xii) In our opinion and according to the information and explanations given to us, the company has not granted any loans and advances on the basis of security by way of pledge of share, debentures and other securities. (xiii) The provisions of any special statute as specified under clause (xiii) of the order are not applicable to the company. (xiv) In our opinion, the Company is not a dealer or trader in shares, securities, debentures and other investments. (xv) The Company has given a corporate guarantee of Rs. 760 lacs to a bank for loans taken by a company in which directors relatives are interested. According to the information and explanations given to us, the guarantee if not revoked, the other term and conditions, whereof, are not prejudicial to the interest of the company. (xvi) In our opinion, and according to the information and explanations given to us, no new term loan has been disbursed during the year. (xvii) On the basis of an overall examination of the balance sheet of the company, in our opinion and according to the information and explanations given to us, there are no funds raised on a short-term basis which have been used for long-term investment. (xviii) The Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Act during the year. (xix) As the company has no debentures outstanding at any time during the year, Clause 4 (19) of the order is not applicable to the company. (xx) During the Year company has not raised any fund through public issue. (xxi) According to the information and explanations given to us, during the year, no fraud on or by the company has been noticed or reported. For Mittal & Associates Firm Reg. No-106456W Chartered Accountants M. Mehta Partner M.No. 42990 Place: Mumbai Date: May 30, 2013