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Midvalley Entertainment Ltd.

BSE: 533310 Sector: Media
NSE: N.A. ISIN Code: INE422B01016
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Midvalley Entertainment Ltd. (MIDVALLEYENTER) - Auditors Report

Company auditors report

Independent Auditor's Report

To

THE MEMBERS

M/S. MIDVALLEY ENTERTAINMENT LIMITED

CHENNAI.

Report on Financial Statements

We have audited the accompanying financial statements of M/S. MIDVALLEYENTERTAINMENT LIMITED which comprise the Balance Sheet as at 31st March 2014 andthe Statement of Profit and Loss for the period 01.05.2013 to 31.03.2014 and a summary ofsignificant accounting policies and other explanatory information.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation of these financial statements that give atrue and fair view of the financial position financial performance and cash flows of theCompany in accordance with the Accounting Standards referred to in sub-section (3C) ofsection 211 of the Companies Act 1956 ("the Act"). This responsibility includesthe design implementation and maintenance of internal control relevant to the preparationand presentation of the financial statements that give a true and fair view and are freefrom material misstatement whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on these financial statements based on ouraudit. We conducted our audit in accordance with the Standards on Auditing issued by theInstitute of Chartered Accountants of India. Those Standards require that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance aboutwhether the financial statements are free from material misstatement. An audit involvesperforming procedures to obtain audit evidence about the amounts and disclosures in thefinancial statements. The procedures selected depend on the auditor’s judgmentincluding the assessment of the risks of material misstatement of the financialstatements whether due to fraud or error. In making those risk assessments the auditorconsiders internal control relevant to the Company’s preparation and fairpresentation of the financial statements in order to design audit procedures that areappropriate in the circumstances. An audit also includes evaluating the appropriateness ofaccounting policies used and the reasonableness of the accounting estimates made bymanagement aswell as evaluating the overall presentation of the financial statements.

Basis of Adverse Opinion:-

1. The company has maintained records showing full particulars includingquantitative details and situation of Fixed Assets. However the fixed asset register isyet to be updated.

2. According to the records of the Company the company is not regular indepositing undisputed statutory dues including Income tax deducted at source Cess andother statutory dues with the appropriate authorities. The company has to pay the incometax & Fringe Benefit tax for the years March’2006 March 2007 2008 2009 &2010 amounting to Rs.3642653/- Rs.57540364/- Rs.35117320/- Rs.4776704/- andRs.7766000/- & FBT Rs.165000/- (excluding interest) TDS of Rs.9901254/- ESIPF & Professional Tax of Rs.133849/- respectively. According to the information andexplanation given to us disputed Income Tax amounting to Rs.91.71 lacs/- is outstanding asat 31st March 2014 out of which company had paid Rs.30 lakhs under protest in respect ofwhich the company has made an appeal with the CIT (appeals).

3. In the absence of confirmation of parties balances relating to sundrydebtors loans and advancesthe recoverability of such amounts appear to be in doubt inrespect of which no provision has been made by the company and the consequent effect onthe accounts of the company the profits the value of the assets and liabilities of thecompany which is not determinable.

4. The company has not transacted any business during the year and hence raise seriousdoubts as to the company being a "going concern". However the accounts havebeen prepared on a going concern basis.

5. The company has not provided for gratuity on actuarial valuation basis.

6. The company has not filed its income tax return for the A.Y. 2010-2011 2011-20122012-2013& 2013-2014.

Adverse Opinion

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion.

In our opinion and to the best of our information and according to the explanationsgiven to us the financial statements give the information required by the Act in themanner so required and subject to Note 1(g) 20 (c) and basis of adverse opinionpara 1 to 6 enumerated above give a true and fair view in conformity with theaccounting principles generally accepted in India:

a) in the case of the Balance Sheet of the state of affairs of the Company as at 31thMarch 2014;

b) in the case of the Profit and Loss Account of the Loss for the period 01.05.2013 to31.03.2014;

c) in the case of the cash flow statement for the period 01.05.2013 to 31.03.2014;

Report on Other Legal and Regulatory Requirements:-

1. As required by the Companies (Auditor’s Report) Order 2003 ("theOrder") issued by the Central Government of India in terms of sub-section (4A)ofsection 227 of the Act we give in the Annexure a statement on the matters specified inparagraphs 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 ourknowledge 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 theCompany so far as appears from our examination of those books

c) the Balance Sheet Statement of Profit and Loss and Cash Flow Statement dealt withby this Report are in agreement with the books of account.

d) in our opinion the Balance Sheet and Statement of Profit and Loss comply with theAccounting Standards referred to in subsection(3C) of section 211 of the Companies Act1956 subject to Note 1 (g) 20 (c) and basis of adverse opinion para 1 to6enumerated above;

e) On the basis of written representations received from the directors as on31st March2014 and taken on record by the Board of Directors none of the directors is disqualifiedas on 31st March 2014 from being appointed as a director in terms of clause (g) ofsub-section (1) of section 274 of the Companies Act 1956.

f) Since the Central Government has not issued any notification as to the rate at whichthe cess is to be paid under section 441A of the Companies Act 1956 nor has it issued anyRules under the said section prescribing the manner in which such cess is to be paid nocess is due and payable by the Company.

For Venkatesh & Co.
Chartered Accountants
F.R.No. 004636S
(Sd/-)
Place: Chennai CA .Dasaraty. V
Date: 29.05.2014 M.NO.26336
Partner

Annexure to Independent Auditors’ Report

(Referred to in paragraph 1 under the heading of "Report on other Legal andRegulatory Requirements" of our Report of even date)

On the basis of such checks as we considered appropriate and according to theinformation and explanation given to us during the course of our audit we report that:

1. a) The company has maintained records showing full particulars includingquantitative details and situation of Fixed Assets. However the fixed assets registeris yet to be updated.

b)We are informed that the Management at reasonable intervals has physically verifiedthe Fixed Assets of the Company and that no material discrepancies were noticed on suchverification.

c) No substantial part of fixed assets have been disposed off during the year.

2. a) The stocks of Movies Serials and Programmes have been physically verified atreasonable intervals by the management.

b) The procedures of physical verification of inventories followed by the managementare reasonable and adequate in relation to the size of the company and the nature of itsbusiness.

c) The company is maintaining proper records of inventory and no material discrepanciesare noticed on such physical verification.

3. a) The Company has granted interest free advances to parties covered in theregister maintained under section 301 of the companies Act 1956. (No of Parties 3– 3398242).These advances have been made without stipulations as to repayment ofPrincipal.

b) The Company has taken unsecured loans without any stipulation as to the repayment ofprincipal and interest to parties covered in the register maintained under section 301 ofthe companies Act 1956. (No of Party – 1 – Rs.8786143)

c) In respect of other advances made by the company we are unable to comment on therecoverability of the same.

4. In view of the fact that there have been no purchases/ sales made during the year nocomments are offered with regard to the internal controls on purchases / sales.

5. a) The particulars of contracts referred to in section 301 of the Act have beenentered in the register required to be maintained under that section. b) According to theinformation and explanations given to us there were no transactions of purchase of FilmRights and Distribution Rights made in pursuance of contracts or arrangements entered inthe register maintained under section 301 of the Companies Act 1956 and aggregating Rs.5Lacs or more during the year

6. The company has not accepted any deposits from the public. The provisions ofsections 58 A & 58 AA of the companies Act 1956 and the Rules framed there under isnot applicable.

7. In our opinion the company has no separate internal audit system. However theexisting Internal Control measures are commensurate with its size and nature of itsbusiness.

8. The central government has not prescribed the maintenance of cost records u/s.209(1) (d) of the Companies Act 1956 to the company.

9. a) According to the records of the Company the company is not regular in depositingundisputed statutory dues including Income tax deducted at source Sales tax Customsduty Cess and other statutory dues with the appropriate authorities. The company has topay the income tax & Fringe Benefit tax for the years March’2006 March 20072008 2009 & 2010 amounting to Rs.3642653/- Rs.57540364/- Rs.35117320/-Rs.4776704/- and Rs.7766000/- & FBT Rs.165000/- (excluding interest) &TDSof Rs.9901254/- ESI PF & Professional Tax of Rs.133849/- respectively.According to the information and explanation given to us disputed Income Tax amounting toRs.91.71 lacs/- is outstanding as at 31st March 2014 out of which company had paid Rs.30lakhs under protest in respect of which the company has made an appeal with the CIT(appeals).

10. The Company has accumulated losses of Rs.149545051/- at the end of the financialyear. The Company has incurred cash loss of Rs. 6164422/- (5678313/-)in the currentfinancial year under report.

11. The Company has not defaulted in repayment of dues to Banks during the year.

12. The Company has not granted any loans and advances on the basis of security by wayof pledge of shares debentures and other securities.

13. The Company has not given any guarantee for loans taken by others from Bank orfinancial institutions.

14. The company has not obtained any term loans during the year.

15. As per the records of the company no funds were raised on short term basis andused for long term investment and vice versa.

16. The Company has not made preferential allotment of shares to parties and companiescovered in the register maintained under section 301 of the Companies Act 1956.

17. The Company has not issued any debentures so creation of securities in respect ofdebentures does not arise.

18. The company has not raised any money by public issues during the period covered byour audit report.

19. According to the information and explanations furnished to us no fraud has beennoticed or reported during the year.

For Venkatesh & Co.
Chartered Accountants
F.R.No. 004636S
(Sd/-)
Place: Chennai CA .Dasaraty. V
Date:29.05.2014 M.NO.26336
Partner