To the Members of gradiente Infotainment Limited
1. We have audited the attached Balance Sheet of gradiente Infotainment
Limited as at 31st March, 2004 the Profit and Loss Account and also 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 statement based on our audit.
2. 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 statement. 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
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 Order.
4. Further to our comments in the Annexure referred to above, we report
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 accounts as required by law have
been kept by the Company so far as appears from our examination of
iii) The Balance Sheet, Profit and Loss account and Cash Flow Statement
dealt with by this report are in agreement with the books of account:
iv) In our opinion, the Balance Sheet, Profit and Loss Account and Cash
Flow Statement dealt with by this report are in Compliance with the
Accounting Standards referred to in sub-section (3C) of section 211 of
the Companies Act, 1956;
v) On the basis of written representations received from the Directors,
as on 31st March, 2004 and taken on record by the Board of Directors,
we report that none of the Directors are disqualified as on 31st March
2004 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, the said accounts read 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 confirmity
with the accounting principles generally accepted in India.
(a) In the case of Balance Sheet, of the state of affairs of the
Company as at 31st March, 2004.
(b) In the case of the Profit and Loss Account, of the Profit for the
year ended on that date and
(c) In the case of the Cash Flow Statement, of the cash flows for the
year ended on that date.
Date: 23-08-2004 U. SRINIVASA MURTHY
Place: Hyderabad CHARTERED ACCOUNTANT
ANNEXURE TO THE AUDITORS REPORT
Re: GRADIENTE INFOTAINMENT LIMITED
Referred to in Paragraph 3 of our report of even date
(i) (a) The Company has maintained proper records showing full
particulars including quantitative details and situation of fixed
(b) As explained to us, the fixed assets of the Company have been
physically verified during the year by the management, which in our
opinion, is reasonable, considering the size and the nature of its
business. The frequency of verification is reasonable and no material
discrepancies have been noticed on such physical verification.
(c) There is no substantial disposal of fixed assets during the year.
(ii) (a) The inventory has been physically verified during the year by
the management. In our opinion, the frequency of verification is
(b) The procedures of physical verification of inventories followed by
the management are reasonable and adequate in relation to the size of
the company and the nature of its business:
(c) The company is maintaining proper records of inventory and no
material discrepancies were noticed on physical verification.
(iii) (a) The company has neither granted nor taken any loans to and
from companies, firms or other parties covered in the Register
maintained u/s 301 of the Company.
(b) In our opinion, the rate of interest and other terms and conditions
of loans given by the company, are not prima facie prejudicial to the
interest of the Company.
(c) In respect of loans given by the Company, where stipulations have
been made, they have generally repaid the principal amounts as
stipulated and have been regular in payment of interest, wherever
(d) In respect of loans given by the Company there are no overdue
amounts more than Rs. 1,00,000/-.
(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 with regard to purchase of inventory, fixed assets and with
regard to the publications, advertisement and print media.
(v) (a) According to the information and explanations given to us, we
are of the opinion that the transactions made in pursuance of contracts
or arrangement, that need to be entered into the register maintained
under section 301 of the Companies Act, 1956 have been recorded in the
(b) In our opinion and according to the information and explanations
given to us, each of these transactions have been made at prices which
are reasonable have ing regard to the prevailing market prices at the
(vi) The Company has not accepted any deposits from the public,
attracting the provisions of Section 58A and 58AA of the Companies Act,
1956, and the rules framed thereunder.
(vii) In our opinion, the Company has an Internal Audit Systems
commensurate with the size an the nature of its business.
(viii) In our opinion, the Company is not required to maintain the cost
accounts and records prescribed by the Central Government under Section
209(1)(d) of the companies Act, 1956.
(ix) a. The Company is regular in depositing undisputed statutory dues,
including Provident Fund, Investor Education and Protection Fund,
Employees State Insurance, Income Tax, Sales Tax, Wealth Tax, Customs
duty, Excise duty, cess and other statutory dues with the appropriate
authorities. According to the information and explanations given to us,
there no undisputed amounts payable in respect of such statutory dues
were in arrears as at 31 st March, 2004 for a period more than six
months from the date they became payable :
b. According to the information & explanations given to us, there are
no dues of Sales Tax, Income Tax, Customs Duty, Wealth Tax, Excise Duty
and Cess which have been deposited on account of any dispute.
(x) In our opinion, the accumulated losses of the company are not more
than fifty percent of its net worth. The company has not incurred cash
losses during the financial year covered by our audit and the
immediately preceding financial year.
(xi) In our opinion and according to the information and explanations
given to us, the company has not defaulted in repayment of dues to a
financial institution, bank or debenture holders.
(xii) The Company is not a chit fund or a advances on the basis of
security by way of pledge of shares, debentures holders.
(xiii) The Company is not a chit fund or a nidhi/mutual benefit
fund/society. Therefore, the provisions of clause 4(xiii) of the
companies (Auditor's Report) Order, 2003 is not applicable to the
(xiv) The Company is not dealing or trading in shares, securities,
debentures or other investments. Therefore the provision of clause
4(xiv) of the companies (Auditors Report) order 2003 is not applicable
to the company.
(xv) According to the information and explanations given to us, the
company has not given any guarantee for loans taken by others from
Banks and Financial Institutions.
(xvi) The company has not taken any term 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
investment and vice versa.
(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.
(xix) The company has not issued any Debentures during the year.
(xx) The Company has not raised any money by way of Public Issues
during the year.
(xxi) According to the information and explanations given to us, no
fraud, on or by the company, has been noticed or reported during the
course of our audit.
Date: 23-08-2004 U. SRINIVASA MURTHY
Place: Hyderabad CHARTERED ACCOUNTANT