1

NOTICE TO THE MEMBERS

NOTICE IS HEREBY GIVEN THAT THE TWENTY FIRST ANNUAL GENERAL MEETING of the Members of theCompany will be held on Monday, September 30, 2013 at 9:00 AM at Swathi Gardenia, No. 2740 E Block,Sahakaranagar, Bangalore - 560 092, to transact the following business.

ORDINARY BUSINESS

1. To consider, approve and adopt the Audited Balance Sheet as on 31st March 2013, the Profit and LossAccount for the year ended 31st March 2013 and the Reports of the Directors and Auditors of the Company.

2. To appoint Mr. Ajay S. Kirloskar, who retires by rotation and is eligible for re-appointment.

3. To appoint M/s Divakara & Associates, Chartered Accountants, Bangalore, as Auditors of the Companyto hold office from the conclusion of this Annual General Meeting until the conclusion of the ensuing AnnualGeneral Meeting and to fix their remuneration.

By Order of the Board

Date : August 28, 2013 (Sd/-)Place : Bangalore Sukumar R. Kirloskar, Chairman

Notes

1. A MEMBER ENTITLED TO ATTEND AND VOTE IS ENTITLED TO APPOINT A PROXY TO ATTEND AND VOTE ON POLLINSTEAD OF HIMSELF AND SUCH PROXY NEED NOT BE A MEMBER.

2. The instrument appointing proxy should be deposited with the Company atleast 48 hours before the commencementof the Meeting.

3. Members are requested to notify any change in their address.

4. The Register of Members and Share Transfer Book will remain closed from 21.09.2013 to 30.09.2013 (both days inclusive)for the purpose of determining shareholders for sending AGM Notice.

5. Members are requested to bring their own copies of Annual accounts already dispatched to them.

6. For the convenience of members & proxies attending the meeting, the attendance slip and proxy forms to be used.

DIRECTOR’S REPORT

The Directors present the 21st Annual Report of your Company with Audited Financial Statements for theyear ended 31st March 2013 along with the Auditors’ Report.

REVIEW OF OPERATIONSThe Company had no commercial operations duing the year. There was no operational income from multimediapublishing during the year (previous year NIL), while expenditure before interest and depreciation was atRs. 0.27 million (previous year Rs. 0.29 million). Overall loss for the year was at Rs. 1.09 million (previousyear Rs. 1.12 million). There is no change in the outlook with regard to the Company’s prospects for revivalin the multimedia publishing industry.

REDUCTION OF CAPITALYour Company’s petition for reduction of capital is pending before the Honourable High Court of Karnataka.

ENERGY, TECHNOLOGY, FOREIGN EXCHANGEA statement giving details of conservation of energy, technology absorption, foreign exchange earnings andoutgo as per the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 isannexed to this Report.

PUBLIC DEPOSITSThe Company has not accepted any deposit from the public during the year under review.

PERSONNELThe Statement under Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars ofEmployees) Rules, 1975, as amended is not given as there are no employees drawing remuneration as perprovisions of this Section.

DIRECTORSMr. Ajay S. Kirloskar retires by rotation at the ensuing Annual General Meeting and being eligible offershimself for re-appointment.

AUDITORSM/s Divakara & Associates, retiring Auditors, have furnished a certificate of their eligibility for re-appointmentas required under the provisions of Companies Act, 1956. The members of the Company are requested toappoint them as statutory Auditors of the Company.

REPLY TO AUDITOR’S OBSERVATIONSNo provision has been made till date in respect of interest on the loan balance claimed by Central Bank ofIndia as the same has been contested by the Company and is undeterminable pending a settlement. Theconfirmation of balances could not be obtained as the said balances are under dispute. No provision hasbeen made till date in respect of the claim made by Tata Finance Limited as the arbitration award has beenchallenged by the Company before the City Civil Judge, Bangalore. No provision has been made till datein respect of the claim by the Income Tax Department, as the Company has challenged the claim. TheCompany does not have a formal internal audit system as the present level of operations do not justify thecost of implementing one.

ACKNOWLEDGEMENTYour Directors wish to place on record their sincere appreciation for the support of shareholders, bankersand financial institutions.

For and on behalf of the Board

(Sd/-)Date : May 31, 2013 Sukumar R. KirloskarPlace : Bangalore Chairman

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I. ANNEXURE TO THE DIRECTORS’ REPORT

A. CONSERVATION OF ENERGY

The Operations of your Company are not energy intensive. Adequate measures have been taken toreduce energy consumption. Efforts are being made on an on-going basis to conserve and optimize theuse of energy in regular operations by investments in latest techniques and equipments.

B. RESEARCH AND DEVELOPMENT

Specific areas where the company carries out R & DCompany carries out R & D in the field of multimedia content development although no R & D was carriedout during the Year.

Benefits derivedDevelopment of new mult imedia products and upgradation of exist ing products.

Future Plan on R & DIn view of the Company’s financial situation, no future plan on R&D is planned at present.

Expenditure on R & DR & D is undertaken by the projects department when there are financial resources allocated and noseparate records of the expenditure incurred on R & D as such is maintained.

Technology AbsorptionThe Company has not absorbed any technology from foreign companies / parties.

C. FOREIGN EXCHANGE EARNING & OUTGO

The information on Foreign Exchange earning and outgo are contained in the notes to the accounts inSchedule 11(B9&10).

II. ANNEXURE TO THE DIRECTORS’ REPORT

In compliance of Section 217(2AA) of the Companies Act, 1956 as amended by the Companies Act, 2000,the Directors of the Company confirm:

1. That the applicable accounting standards have been followed in the preparation of final accounts and thatthere are no material departures;

2. That such accounting policies have been selected and applied consistently and such judgements andestimates made are reasonable and prudent so as to give a true and fair view of the state of affairs ofthe Company as at March 31, 2013 and of the loss of the Company for the year ended on that date;

3. That proper and sufficient care has been taken for the maintenance of adequate accounting records inaccordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Companyand for preventing and detecting fraud and other irregularities;

4. That the annual accounts have been prepared on a going concern basis.

For and on behalf of the Board

(Sd/-)Date : May 31, 2013 Sukumar R. KirloskarPlace : Bangalore Chairman

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CORPORATE GOVERNANCE REPORT

1. THE COMPANY’S CORPORATE GOVERNANCE PHILOSOPHY

Kirloskar Multimedia Limited defines Corporate Governance as a systemic process by which companies aredirected and controlled to enhance their wealth generating capacity. It is a combination of voluntary practicesadopted by a Company interwoven with laws, regulations, procedures and disclosures.

It is aimed in the long run to maximize shareholder and employee value as well as to attract, retain andmotivate employees.

Corporate Governance is, in a larger context, to be experienced as a movement throughout the Companyand not merely as an exercise or as a means to an end in complying with statutory requirements, but asan end by itself, which transcends beyond mere disclosures and statutory compliances.

The Company has initiated the process of Corporate Governance in compliance with Clause 49 of the ListingAgreement with The Stock Exchange, Mumbai and Clause 51 of the Listing Agreement with the BangaloreStock Exchange Ltd. A sincere attempt has been made to comply with Corporate Governance code and inthis regard, hereby submit a report on the matters mentioned in the said clauses and practices which arefollowed by the Company.

2. BOARD OF DIRECTORS

During the year, the Board of Directors had an optimum combination of Executive and Non-Executive Directorswith not less than 50% of the Directors being Non-Executive Directors. The non-executive directors areeminent professionals, drawn from amongst persons with experience in business/finance/law/public enterprises.

The Company is not paying sitting fees or any remuneration to the non-executive directors.

The Board had met 5 times during the year under review on the following dates : July 31, 2012; October31, 2012; January 31, 2013; March 31, 2013 & May 31, 2013.

The following table gives details of designation, category of directors and their attendance, last AGM attendedand number of directorships held by them in other companies.

No. of Board Attendance Nos. of otherCategory meetings at last D i r e c t o r sh i p

Name of the Director of Directors attended AGM held

Mr. Sukumar R. Kirloskar Chairman & 5 Yes 1Non-Executive Director

Mrs. Padmaja S. Kirloskar Non-Executive Director 5 No 0

Mr. Ajay S. Kirloskar Managing Director& Executive Director 5 Yes 2

Mr. M. C. Jayasimha Non-Executive Director 5 No 0

Mr. M. S. Srinath Non-Executive Director 5 No 0

None of the Directors is a member in more than 10 committees or acts as a Chairman of more than 5committees across all companies in which he is a Director.

Disclosure regarding appointment or re-appointment of Directors -

Mr. Ajay S. Kirloskar, who retires by rotation at the ensuing Annual General Meeting and who is eligible forre-appointment, is one of the Promoters of the Company.

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Remuneration of Directors

Remuneration paid/payable to Directors for the year under review:

Director Sitting SalariesFees & Perquisites (Rs) Commission Total (Rs)

Mr. Sukumar R. Kirloskar NIL NIL NIL NILMrs. Padmaja S. Kirloskar NIL NIL NIL NILMr. Ajay S. Kirloskar NIL NIL NIL NILMr. M. C. Jayasimha NIL NIL NIL NILMr. M. S. Srinath NIL NIL NIL NIL

3. AUDIT COMMITTEE

The Audit Committee inter alia provides assurance to the Board on the adequacy of internal control systemand financial disclosures. According to the provisions of Clause 49 of Listing Agreement with The StockExchange, Mumbai and Clause 51 of Listing Agreement of the Bangalore Stock Exchange Ltd., and read withthe provisions of Section 292A of the Companies Act, 1956 as inserted by the Companies Amendment Act,2000, the Audit Committee of your Company comprised of Mr. M. S. Srinath, Independent Director asChairman of the Committee and with Mr. M. C. Jayasimha, Independent Director and Mr. Ajay S. Kirloskar,Managing Director as members.

The Audit Committee has met five times on July 31, 2012; October 31, 2012; January 31, 2013; March33, 2012 & May 31, 2013 during the year for finalization of accounts and such other additional matters. Allthe members of the Committee were present in these meetings.

4. REMUNERATION COMMITTEE

Since no remuneration is provided to any of the non-executive directors, no committee for regulating thepayment of remuneration has been formed.

5. SHARE HOLDERS COMMITTEE

Shareholders / Investors Grievance Committee

The Shareholders / Investors Grievance Commitee, consisting of Mr. M. C. Jayasimha - Independent Director,as Chairman, and Mr. M. S. Srinath - Independent Director and Mr. Sukumar R. Kirloskar, Non-ExecutiveDirector, as members, specifically looks into matters such as redressing of shareholder and investorscomplaints.

No. of Complaints received: 4No. of Complaints redressed: 4

No. of Pending Share Transfers: 0

Share Transfer CommitteeThe Company from the beginning has formed Share Transfer Committee to look into the issues like Transferof shares, Transmission of Shares, Splitting, Consolidation of Shares, Issue of Duplicate Share Certificatesetc., comprising of two Directors. Now that the Company is under the compulsory demat scheme, thequestion of issue of duplicate for lost/mutilated certificates does not arise.

6. GENERAL BODY MEETING

Particulars of AGM/EGM held for the previous financial year:

AGM/EGM Date Venue Time No of SpecialResolutions Passed

20th AGM Sep 29, 2012 Swathi Gardenia 9.00 A.M. -

7. DISCLOSURE

• There are no material transaction with its promoters, the Directors or the Management, their subsidiariesor relatives, etc., which requires separate disclosure.

• Trading of the Company’s scrip was suspended on and by The Stock Exchange, Mumbai, as the Companywas not able to pay the listing fees due to its adverse financial position.

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8. MEANS OF COMMUNICATION

• Half yearly report sent to eachhousehold of shareholders : No

• Quarterly resultsWhich newspapers normally published in : Normally in Business Standard & Udayvani;

Could not be published due to adverse financialcondition.

• Any Web site, where displayed : http://www.bseindia.com/qresann/result.asp?scripcd=32352&scripname=KIRLOSKAR+ML

• Displays official news releases and presentations made to institutional investors

or to the analysts : No

• Whether Management Discussion andAnalysis report is a part of annual report or not: Yes

9. GENERAL SHAREHOLDERS INFORMATION

• AGM : Date, time and venue : 30 September 2013, 9.00 AMSwathi Gardenia, No. 2740 E Block, Sahakaranagar,

Bangalore - 560 092

• Financial Calendar : April to March

• Date of Book Closure : 21.09.2013 to 30.09.2013Both days inclusive

• Dividend Payment Date : NA

• Listing on Stock Exchange : Bangalore Stock Exchange Ltd.,Stock Exchange Towers, 51, 1st Cross,J. C. Road, Bangalore - 560 027

The Stock Exchange, MumbaiPhiroze Jeejeebhoy Towers,Dalal Street, Mumbai - 400 023

• Stock Code

Bangalore Stock Exchange Ltd., : KMMLThe Stock Exchange, Mumbai : 532352 (Demat segment)

32352 (Normal Segment)

International SecuritiesIdentification number (ISIN) : INE175B01010

• Market Price Date : Year 2012-13 High LowHigh, Low during each month in April No Trading No Tradinglast financial year (At BgSE) May No Trading No Trading

June No Trading No TradingJuly No Trading No TradingAugust No Trading No TradingSeptember No Trading No TradingOctober No Trading No TradingNovember No Trading No TradingDecember No Trading No TradingJanuary No Trading No TradingFebruary No Trading No TradingMarch No Trading No Trading

• Registrar and Share Transfer Agents : Karvy Computershare Pvt. Ltd.,No.51/2, T.K.N. ComplexVanivilas Road,Opp.National CollegeBasavangudi,Bangalore - 560 004.

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• Share Transfer System : Karvy Computershare are the share transfer agentsof the company. Transfer of shares are approved bythe share transfer committee formed by the Boardin its meeting held on 28.07.2000 which meets atfrequent intervals. After approval, the Memorandumof transfer is sent to Karvy, who will endorse thetransfer and despatch the certificates to the transfereeswithin 30 days from the date of receipt.

• Distribution of Share-holding : Category No of Shares % to Equity

Promoters 6,609,060 45.27Private Corporate Bodies 1,535,525 10.52Indian Public 6,441,815 44.12NRI’s/OCB’s 13,600 0.09

• Dematerialization of shares and liquidity : The shares are traded in demat form only.

• Outstanding GDRs/ADRs/Warrants orany Convertible instruments : NA

• Plant Locations : Kirloskar Multimedia LimitedKempapura, HAF PostBangalore - 560 024

• Address of Correspondence : Kirloskar Multimedia LimitedKempapura, HAF PostBangalore - 560 024

Auditors’ Certificate

To the Members:

As required by the Guidance Note issued by the Institute of Chartered Accountants of India, we have to statethat no investor grievance is pending for a period exceeding one month against the Company as per therecords maintained by the Investor’s Grievance Committee.

For Divakara & AssociatesChartered Accountants

(Sd/-)Place : Bangalore POLALI DIVAKAR RAODate : 31.05.2013 (Proprietor)

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MANAGEMENT DISCUSSION & ANALYSIS

Industry StructureThe multimedia products industry that the Company operates in a subset of the consumer products industry.End consumers are reached through various channels including retail, direct marketing, affinity groups, theinternet, direct-order catalogs, etc. The Company’s products are additionally meant for the educationalmarket consisiting of educators, schools and learning institutions. Distribution structures are well definedand are mature, consisting of channel specific whole-salers, distributors and retailers. The market opportunityfor the Company’s products are world-wide, and each market territory has its own unique differences formarketing and distribution. Products to be sold to the European Union, for instance, require languageconversion and localisation for each different country. Product awareness is supported by public relationsactivities that result in reviews in consumer magazines and trade journals. Purchase is typically an impulsebuy determined by attractiveness of point-of-purchase display which in most instances is the packagingitself. Prominence in display in the retail environment is also a significant factor in product success.Competition is intense.

Opportunities and ThreatsA growing international consumer multimedia products market with new technology delivery platformsprovides opportunities for new and expanding models for the development and delivery of interactivemultimedia content. While this represents an ongoing, expanding opportunity with the possibility of significantup-sides, the publishing model is high risk as substantial investment and lead-time is necessary for newcontent development combined with brand development, marketing and distribution. Even so, productsuccess is dependent on consumer acceptance assuming adequate distribution exists. Established distributionchannels are extremely difficult to penetrate. Ongoing R&D, investment in product development, andconstant product technological upgradation is a necessity. Product development necessitates a large poolof creative and technical talent supported by adequate marketing and distribution. Being adequatelycapitalised in addition to having definitive and dependable product revenue streams is a prerequisite for ahealthy cash-flow that can support a publishing endeavour. The Company’s track record in building such apublishing business is indicative of the several challenges, difficulties and risks that exist in the market.

Segment Wise PerformanceThe Company had no operating income from its multimedia publishing business.

OutlookThe Company has not had any past success in its efforts to build a successful multimedia products publishingbusiness. It has been the experience of the Company that to take on the risks posed in this industry requiresa fundamental financial base that the Company has lacked, as product development costs lead revenuestreams which have been uncertain. The Company has not had any commercial operations during the yeardue to it’s financial situation. The Company’s products face technological obsolescence in the absence ofupgradation and no longer meet the latest standards for technology delivery. It is unlikely that the Companycan revive it’s multimedia products publishing business without making a completely new beginning withnew investment leading to existing product upgradation and new products, coupled with sizable investmentin marketing and distribution, which in view of the present financial condition is unlikely.

Risks and ConcernsThe Company is in a dire situation consequent to it’s poor financial position. It is unlikely that the Company’smultimedia product publishing business can be revived. The Company at present lacks the financial meansto pursue any new alternative opportunity within the multimedia industry. There are significant liabilitiesthat the Company still carries. Consequently, it is unlikely that the Company can be revived in its presentform.

Internal Control Systems and their AdequacyThere are reasonable internal procedures commensurate with the size of the Company and the nature ofits business with regard to purchase of plant and machinery, equipment and other assets, and sales.

Financial PerformanceThe Company’s financial performance has been severely affected by factors beyond its control.

Cautionary StatementManagement discussion and analysis about the Company’s objectives and expectations may be forwardlooking statements subject to applicable securities laws and regulations. Actual results could differ materiallyfrom those expressed or implied depending upon demand and supply conditions, changes in governmentregulations, economic developments within India and overseas.

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INDEPENDENT AUDITORS’ REPORT

To the Members of Kirloskar Multimedia Limited

Report on the Financial Statements

We have audited the accompanying financial statements of KIRLOSKAR MULTIMEDIA LIMITED, whichcomprise the Balance Sheet as at March 31,2013, and the Statement of Profit and Loss Account and CashFlow Statement for the year then ended, and a summary of significant accounting policies and otherexplanatory information.

Management’s Responsibility for the Financial Statements:

Management is responsible for the preparation of these financial statements, that give a true and fair viewof the financial position and financial performance of the Company in accordance with the AccountingStandards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 (“the Act”). Thisresponsibility includes the design, implementation and maintenance of internal control relevant to thepreparation and presentation of the financial statements that give a true and fair view and are free frommaterial misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conductedour audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants ofIndia. Those Standards require that we comply with ethical requirements and plan and perform the auditto 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 disclosures in thefinancial statements. The procedures selected depend on the auditor’s judgment, including the assessmentof the risks of material misstatement of the financial statements, whether due to fraud or error. In makingthose risk assessments, the auditor considers internal control relevant to the Company’s preparation andfair presentation of the financial statements in order to design audit procedures that are appropriate in thecircumstances. An audit also includes evaluating the appropriateness of accounting estimates made bymanagement, 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 ouraudit opinion.

Basis for qualified opinion

Note number 4.4, regarding non provision of interest in respect of facilities from Central Bank of India tilldate and its consequential effect on the losses of the Company; and

Note number 14, regarding not obtaining confirmation of balances in respect of Secured Loans, Liabilities,Deposits, Margin Money Deposits with Banks and other loans and advances and its consequential effect onthe losses of the Company; and

Note number 15, regarding non provision for the claim against the Company by Tata Finance Limited till dateand its consequential effects on the losses of the Company; and

Note number 16, regarding non provision for the claim against the Company by Income Tax Departmenttowards Income Tax and Interest amounting to Rs. 3.93 Lakhs and its consequential effects on the lossesof the Company.

Qualified Opinion.

In our opinion and to the best of our information and according to the explanations given to us, except forthe effects of the matter described in the Basis for qualified opinion paragraph, financial statements givethe information required by the Act in the manner so required and give a true and fair view in conformitywith the accounting principles generally accepted in India:

(a) in the case of Balance Sheet, of the state of affairs of the Company as at March 31,2013; and(b) in the case of Profit & Loss Account, of the Losses for the year ended on that date;(c) in the case of Cash Flow Statement, of the Cash flows for the year ended on that date;

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Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor’s Report) Order, 2003 (“the Order”) issued by the CentralGovernment of India in terms of sub-section (4A) of section 227 of the Act, we give in the Annexurea 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 beliefwere 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 faras appears from our examination of those books.

c. the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement dealt with by this Reportare in agreement with the books of account.

d. except for the effects of the matter described in the basis for qualified opinion paragraph, theBalance Sheet, Statement of Profit and Loss and Cash Flow Statement comply with the AccountingStandards referred to in subsection (3C) of section 211 of the Companies Act, 1956;

e. On the basis of written representations received from the Directors as on 31.03.2013, and takenon record by the Board of Directors, none of the Directors is disqualified as on 31.03.2013 frombeing appointed as Director of the Company in terms of Clause (g) of sub-section (1) to Section274 of the Act.

f. Since the Central Government has not issued any notification as to the rate at which the cess isto be paid under section 441A of the Companies Act, 1956 nor has it issued any Rules under thesaid section, prescribing the manner in which such cess is to be paid, no cess is due and payableby the Company.

for DIVAKARA & ASSOCIATES., Chartered Accountants

Firm Regn No. 000763S

PLACE : Bangalore (Sd/-) POLALI DIVAKAR RAO

DATE : May 31, 2013 (Proprietor)

Membership No. 23377

ANNEXURE REFERRED TO IN PARAGRAPH (1) OF OUR REPORT OF EVEN DATE

RE : KIRLOSKAR MULTIMEDIA LTD.,

i) a) The Company has maintained proper records showing all particulars including quantitativedetails and situation of Fixed Assets.

b) According to the information and explanations given to us, the Fixed Assets have beenphysically verified by the management at reasonable intervals, which in our opinion,is reasonable, having regard to the size of the Company and nature of the assets.No material discrepancies were noticed on such verification.

c) In our opinion, the Company has not disposed off a substantial part of Fixed Assets,during the year and the going concern status of the Company is not affected.

ii) The Company is a Service Company, primarily rendering Information Technologies Services – Multimedia.Further, as informed to us the Company does not hold any physical inventories. Thus, paragraph 4 (ii) ofthe order is not applicable.

iii) We are informed that the Company has not taken/ granted any loans, secured or unsecured, from / tocompanies, firms or other parties listed in the register maintained under Section 301 of the Companies Act,1956.

iv) In our opinion, and according to the information and explanation given to us, there are adequate internalcontrol system commensurate with the size of the Company and the nature of its business for the purchaseof inventory and fixed Assets and for the sale of services. During the year there were neither purchase ofInventories nor sale of services.

11

v) According to the information and explanations given to us, there are no transactions and arrangements,the particulars of which need to be entered into the Register maintained under Section 301 of theCompanies Act, 1956.

vi) The Company has not accepted any deposits from the public within the meaning of Section 58A, 58AAor any other relevant provisions of the Companies Act, 1956 and the rules framed there under.

vii) The Company does not have an Internal Audit System commensurate with its size and nature of itsbusiness.

viii) The Central Government has not prescribed maintenance of cost records Under Section 209(1)(d) of theCompanies Act, 1956 for the products of the Company.

ix) a) The company is generally regular in depositing undisputed statutory dues including ProvidentFund, Employees State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, CustomsDuty, Excise Duty, Cess and any other Statutory dues with the appropriate authorities exceptRs. 82,987 being fines and penalty payable to ESIC which are outstanding as at 31.03.2013for a period of more than six months from the date they became payable.

b) According to the information and explanations given to us and on the basis of our examinationof the accounts there are no disputed amounts of Income Tax/Sales Tax/Service Tax/Customs Duty/Excise Duty/ Cess as on 31st March 2013 except a claim against the Companyby the Income Tax Department towards Income Tax and Interest amounting to Rs. 3.93 Lakhsfor which the Companyhas not made any provision in the Books of Accounts.

x) The Company is registered for a period not less than 5 years and accumulated losses at the end of thefinancial year are not less than 50% of its net worth. The Company has incurred cash losses during thefinancial year and in the immediately proceeding financial year.

xi) The Company has defaulted in the repayment of Loans to KSFC and Central Bank of India. As on 31stMarch 2013, the entire amount outstanding, as disclosed in the financial statements, to the said financialinstitutions and Bank is overdue.

xii) As the Company has not granted Loans & Advances on the basis of security by way of pledge of shares,debentures and other securities, the question of reporting on clause No. 4 (xii) of the Order does notarise.

xiii) The provisions of any special statute applicable to Chit fund, Nidhi, Mutual Benefit fund or societies arenot applicable to the company.

xiv) The Company is not dealing or trading in shares, securities, debentures and other investments. Accordingly,Clause 4 (xiv) of the Order is not applicable.

xv) According to the information and explanations give to us, the Company has not given any guarantee forloans taken by others from Banks or other financial institutions. Accordingly, Clause 4 (xv) of the Orderis not applicable.

xvi) The Company has not raised any term loans during the year.

xvii) According to the information and explanation given to us and on overall examination of the balance sheetof the company, we report that no funds raised on short-term basis have been used for long-terminvestment by the Company during the year.

xviii) The Company has not made any preferential allotment of shares to parties and companies covered inthe register maintained Under Section 301 of the Act, during the year.

xix) The Company has not issued any debentures during the year and hence the question of creating securitiesfor the debentures issued does not arise.

xx The Company has not made any public issue during the year and as such reporting on clause No. 4 (xx)of the Order does not arise.

xxi During the course of our examination of the books and records of the Company, carried out in accordancewith the generally accepted auditing practices in India, and accordingly to the information and explanationsgiven to us, we have neither come across any instance of fraud on or by the Company, noticed arereported during the year, nor we have been informed such case by the management.

for DIVAKARA & ASSOCIATES., Chartered AccountantsFirm Regn No. 000763S

PLACE : Bangalore (Sd/-) POLALI DIVAKAR RAO

DATE : May 31, 2013 (Proprietor)

Membership No. 23377

BALANCE SHEETas at 31.03.2013

Figures as at the end of

Note No. Current Reporting Previous ReportingPeriod Period(Rs.) (Rs.)

EQUITY AND LIABILITIES:

Shareholders' FundsShare Capital 1 14,60,00,000 14,60,00,000Reserves & Surplus 2 -16,77,28,105 -16,66,41,533

Current LiabilitiesTrade Payables 3 5,41,107 4,98,657Other Current Liabilities 4 2,21,05,064 2,10,61,492

TOTAL 9,18,066 9,18,616

ASSETS:Non Current Assets

Fixed Assets - Tangible Assets 5 - -Non-Current Investments 6 57,75,925 57,75,925Less: Provision for permanent diminution 57,75,925 57,75,925 in the value of Asset - -

Long Term Loans & Advances 7 3,67,157 3,67,157

Current AssetsCash and Bank Balances> Cash and Cash Equivalents 7,427 7,977> Other Bank Balances 8 4,89,180 4,89,180

Other Current Assets 9 54,302 54,302

TOTAL 9,18,066 9,18,616

Significant Accounting Policies 1 to 22

Notes on Financial Statements

To be read with our report of even date

For Divakara & Associates For and on behalf of the BoardChartered AccountantsFRN: 00763S

(Sd/-) (Sd/-) (Sd/-)

POLALI DIVAKAR RAO SUKUMAR R. KIRLOSKAR AJAY S. KIRLOSKAR(Proprietor) Chairman Managing DirectorMembership No. 23377

PLACE : BANGALORE DATE : May 31, 2013

12

13

PROFIT & LOSS ACCOUNTfor the Year Ended 31.03.2013

Figures as at the end of

Note No. Current Reporting Previous ReportingPeriod Period

Income

Other Income 10 0 73

TOTAL REVENUE 0 73

Expenditure

Finance Cost 11 8,20,600 8,20,550Other Expenses 12 2,65,972 2,98,800

TOTAL EXPENSES 10,86,572 11,19,350

Loss for the year -10,86,572 -11,19,277

Earnings Per ShareShare of Face Vlue of Rs. 10 each Basic & Diluted (0.07) (0.08)

Significant Accounting Policies 1 to 22Notes on Financial Statements

To be read with our report of even date

For Divakara & Associates For and on behalf of the BoardChartered AccountantsFRN:000763S

(Sd/-) (Sd/-) (Sd/-)

POLALI DIVAKAR RAO SUKUMAR R. KIRLOSKAR AJAY S. KIRLOSKAR(Proprietor) Chairman Managing DirectorMembership No. 23377

PLACE : BANGALOREDATE : May 31, 2013

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CASH FLOW STATEMENT FOR THE YEAR ENDED 31.03.2013

Figures as at the end of

Current Reporting Previous ReportingPeriod Period

A. CASH FLOW FROM OPERATING ACTIVITIESNet Profit / (Loss) before Tax -10,86,572 -11,19,277

Operating Profit before Working Capital Changes -10,86,572 -11,19,277

Adjustment for(Increase)/Decrease in Other Current Assets - 1,407Increase/(Decrease) in Other Current Liabilities 10,86,022 11,18,800Operating Profit Before Taxes -550 930

B. CASH FLOW FROM INVESTING ACTIVITIESCash generated / (used in) from investing activities - -

- -

C. CASH FLOW FROM FINANCING ACTIVITIESCash generated / (used in) from finance activities - -

- -

Net Increase in Cash and Cash equivalents) ( A+B+C) -550 930Cash and Cash equivalents at the beginning of the year 7,977 7,047Cash and Cash equivalents (Cl.Bal) at the end of the year 7,427 7,977

Net Increase in Cash & Cash Equivalents -550 930

For Divakara & Associates For and on behalf of the BoardChartered AccountantsFRN: 000763S

(Sd/-) (Sd/-) (Sd/-)

POLALI DIVAKAR RAO SUKUMAR R. KIRLOSKAR AJAY S. KIRLOSKAR(Proprietor) Chairman Managing Director

PLACE : BangaloreDATE : May 31, 2013

AUDITORS’ CERTIFICATE

We have examined the attached Cash Flow Statement of Kirloskar Multimedia Limited for the period ended31st March, 2013. The Statement has been prepared by the Company in accordance with the requirementsof listing agreements with Stock Exchanges and is based on and derived from the audited accounts of thecompany for the period ended 31st March 2013.

Place : Bangalore For Divakara & AssociatesDATE : May 31, 2013 Chartered Accountants

(Sd/-)Divakar

(Proprietor)

15

SIGNIFICANT ACCOUNTING POLICIES

i. Accounting Conventions and Basis of Presentation for Accounting:The Financial Statements have been prepared under the historical cost convention in accordance withthe generally accepted accounting policies in India and comply with the mandatory accounting standardsunder Section 211 (3c) of the Companies Act, 1956.

All income and expenditure to the extent considered receivable / payable with reasonable certaintyare accounted for on accrual basis.

ii. Cash Flow StatementCash flow statement has been prepared in accordance with the indirect method prescribed in AccountingStandard - 3 issued under the Companies (Accounting Standards) Rules, 2006 and as required by theSecurities and Exchange Board of India.

iii Fixed Assets:Fixed assets are stated at cost less depreciation.

iv. Investments:Investment in wholly-owned subsidiary is shown at cost. Provision is made for any diminution, otherthan temporary in the accounts.

v. Depreciation on Fixed Assets:Depreciation on Fixed Assets is provided on Straight Line Method at the rates specified in ScheduleXIV to the Companies Act, 1956 as amended vide Notification No. GSR 757 (E) dated 16.12.1993issued by the Department of Company Affairs, Government of India, New Delhi.

vi. Revenue Recognition:Interest income is accounted on accrual basis.

vii. Preliminary Expenses:Preliminary expenses are written off over a period of 10 years in equal installments.

viii. Retirement Benefits:No provision for retirement benefits has been made as the Company does not have any employees.

ix. Taxes on Income:Current Tax is determined as the amount of tax payable in respect of taxable income for the period.Deferred tax is recognised subject to the consideration of prudence, on timing differences, being thedifference between taxable income and accounting income that originate in one period and is capableof reversal in one or more subsequent periods.

x. Earnings per Share (EPS):In determining Earnings Per Share, the Company considers the net profit after tax expense. Thenumber of shares used in computing basic earnings per share is a weighted average number of sharesoutstanding during the period. Number of shares used in computing diluted earnings per sharecomprises the weighted average shares considered for deriving basic earnings per share, and also theweighted average number of equity shares that could have been issued on the conversion of all dilutivepotential equity shares.

xi. Prior Period, Extraordinary Items & Changes in Accounting Policies:Prior period and extraordinary items are shown separately in the financial statements.

xii. Contingencies and Events Occuring after the Balance Sheet date:There are no contingencies and events occurring after the balance sheet date affecting the financialposition of the Company.

xiii. Provisions, Contingent Liabilities and Contingent Assets:In preparation of accounts, the Company has made required provisions for all the liabilities, whichcan be measured by using a substantial degree of estimation. The amount of Contingent Liabilitiesnot provided in the accounts is disclosed in the notes forming part of the accounts. Assets in the natureof contingent assets are not recognised in the accounts.

16

NOTES ON FINANCIAL STATEMENTSFOR THE YEAR ENDED 31ST MARCH 2013

As at 31.03.2013 As at 31.03.2012(Rs.) (Rs.)

1 SHARE CAPITAL Par Value No of Shares Amount No of Shares Amountof Share

a. Authorised10 1,50,00,000 15,00,00,000 1,50,00,000 15,00,00,000

b. Issued, subscribed and fully paid up 10 1,50,00,000 15,00,00,000 1,50,00,000 15,00,00,000

c. Reconciliation Shares outstanding at the beginning of the year 1,46,00,000 14,60,00,000 1,46,00,000 14,60,00,000 Add: Allotment of shares duing the year - - - - Shares outstanding at the yend of the year 1,46,00,000 14,60,00,000 1,46,00,000 14,60,00,000

d. There are no special rights or preferences attached to any shares, and also there are no restrictions including restrictionon dividend and repayment of capital, if any

Par Value No of Shares Amount No of Shares Amountof Share

e. Shareholding pattern on at reported date 10 1,46,00,000 14,60,00,000 1,46,00,000 14,60,00,000

Par Value No of Shares % Held No of Shares % Heldf. List of shareholders holding of Share over 5% shares - Ajay S. Kirloskar 10 58,45,775 40.04% 58,45,775 40.04% - Sukumar R. Kirloskar 10 7,23,275 4.95% 7,23,275 4.95%

g. As on reporting date, shares reserved for issue under options and contract / commitments for the sale of shares /disinvestment, including terms and amount: NIL

h. Shares information related to immediate preceding 5 years from reporting date:

Shares allotted as fully paid up pursuant to contract(s) without payment being received in cash : NA

Shares allotted as fully paid up bonus shares : NA

Shares bought back - Aggregate number and amount : NA

i. Terms of securities convertible into equity / preference sharesas at reporting date : NIL

j. Calls unpaid as at reporting dateCalls unpaid by Directors and Officers as at reporting date : NIL

k. Forfeited shares as at reported date : NIL

2 RESERVES & SURPLUSProfit & Loss AccountAs per last Balance Sheet -16,66,41,533 -16,55,22,256Add: Loss for the Year -10,86,572 -11,19,277

-16,77,28,105 -16,66,41,533

3. TRADE PAYABLESKarvy Computer Share Pvt. Ltd. 3,53,884 3,11,434ESIC 82,987 82,987Indus Law 40,500 40,500Jayakumar S Patil 45,000 45,000Audit Fee 11,236 11,236STPI 7,500 7,500

5,41,107 4,98,657

4. OTHER CURRENT LIABILITIESCurrent portion of Long Term Borrowings Secured- Non-Convertible Debentures - KSFC 40,00,000 40,00,000- Central Bank of India - Loan Recalled 59,34,400 59,34,400Other Liabilities- CDSL 2,75,555 2,41,847- The Stock Exchange, Mumbai 3,46,229 3,12,521- Bangalore Stock Exchange 2,95,141 2,55,815- Directors Curent Account 31,40,329 30,57,207- Advance for Sale of Equipment 1,40,000 1,40,000- KSFC Interest payable 77,51,000 69,31,000- NSDL 2,22,410 1,88,702

2,21,05,064 2,10,61,492

17

GROSS BLOCK(at cost) DEPRECIATION NET BLOCK (Straight line method)

Sl. Additions/ Transfers/No Description As at Deletions/ As at Upto For the deletions Upto As at As at

of Asset 01-Apr-12 Transfers 31-Mar-13 31-Mar-12 year During the 31-Mar-13 31-Mar-13 31-Mar-12 during the year

year

1 Computers 50,893,156 0 50,893,156 50,893,156 0 0 50,893,156 0 0

Total 50,893,156 0 50,893,156 50,893,156 0 0 50,893,156 0 0

Previous Year 50,893,156 0 50,893,156 50,893,156 0 0 50,893,156 0 0

4.1 Non-Convertible Debentures from KSFC referred above is secured by way of hypothecation of Stock of Current Assets,Semi-Finished, Finished Goods and Book Debts, Machinery & Equipment, both present and future and also guaranteedby the Directors personally.

4.2 Loan from Central Bank of India consists of the following long pending liabilities:- Foreign Bills Purchased 43,34,400- Packing Credit 16,00,000(The above loans are secured by way of hypothecation of multimedia titles and movable property, stock-in-trade andforeign bill to the extent of Rs. 45 Lakhs and secured by the Directors personally).

4.3 The Long term borrowing balances are subject to confirmation.

4.4 No provision has been made till date in respect of interest on the loan balance claimed by Central Bank of India asthe same has been contested by the Company, which is pending for settlement.

4.5 The Company has made provision for interest in respect of non-convertible debentures issued in favour of KarnatakaState Financial Corporation as per the sanction terms. The Corporation has filed a suit against the Company forrecovery of the debenture redemption amount along with interest, which the Company has contested.

5 FIXED ASSETS

6 NON-CURRENT INVESTMENTSIn Wholly Owned Subsidiary: 57,75,925 57,75,925- 175,000 Equity Shares of US$1 each in Kirloskar Multimedia, Inc, USA 57,75,925 57,75,925

7 OTHER LONG TERM LOANS & ADVANCESKEB Deposit 60,300 60,300TDS 3,06,857 3,06,857

3,67,157 3,67,157

8 CASH & BANK BALANCE>Cash & Cash EquivalentsCash on Hand 1,582 1,582Bank Balance with Scheduled Bank- In Curent Account - SBM Account 5,845 6,395

7,427 7,977> Other Bank BalanceBank Guarantee Margin Money with Canara Bank 19,164 19,164Margin Money on FBP with Central Bank of India 4,70,016 4,70,016

4,89,180 4,89,180

9 OTHER CURRENT ASSETSPF Advance Payment 54,302 54,302

54,302 54,302

10 OTHER INCOMEInterest on IT Refund 0 73

0 73

11 FINANCE COSTBank Charges 600 550KSFC Interest 8,20,000 8,20,000

8,20,600 8,20,550

18

Current Year Previous Year(Rs. in Lakhs) (Rs. in Lakhs)

12 OTHER EXPENSESAnnual Listing Fees 1,40,450 1,37,875Auditors Remuneration - 11,236Legal & Professional Charges 51,099 80,966Miscellaneous Fees 74,423 68,723

2,65,972 2,98,800

13 Contingent Liability on account of Current Year Previous Year(Rs. in Lakhs) (Rs. in Lakhs)

Interest claimed by Central Bank of India 28.27 28.27not acknowledged as debt by the Company

Amount claimed by Tata Finance Limited 7.10 7.10not acknowledged as debt by the Company

Amount claimed by Income Tax Department 3.93 3.93towards Income Tax and Interest U/s 201(1A)and 220(2)

14. Balances under unsecured loans, other liabilities, in deposit account with banks, margin money heldon FBP with Central Bank of India and other loans and advances are subject to confirmation whereverapplicable.

15. No provision has been made till date in respect of the claim made by Tata Finance Limited as thearbitration award has been challenged by the Company before the City Civil Judge, Bangalore.

16. No provision has been made in respect of claim made by the Income Tax Department towards IncomeTax and Interest U/s 201(1A) and 220(2).

17. There are no Micro and Small enterprises, to whom the Company owes dues, which are outstandingfor more than 45 days as at 31st March 2013. This information is required to be disclosed underthe Micro, Small and Medium Enterprises Development Act, 2006. Has been determined to theextent such parties have been identified on the basis of information available with the Company.

18. Managerial Remuneration: Paid/or payable during the year in respect of Directors of the Companyis Rs. NIL (Previous Year: Rs. NIL)

19. Earnings / Expenditure In Foreign Currency during the year is Rs. NIL (Previous Year: Rs. NIL)

20. Related Party Transactions: Name of the related party - Kirloskar Multimedia, Inc., - No transactionsduring the year.

21. No provision has been made for taxes on income as the Company has incured losses during the yearand Deferred Tax Asset is not created in the absence of certainty of sufficient future income againstwhich Deffered Tax Asset can be realised.

22. The Petition for reduction of share capital is pending before the Honourable High Court of Karnataka.

23. Figures in bracket based on the context either represent negative values or the of the previous year.Previous year’s figures have been regrouped / reclassified wherever necessary for comparability.

TO BE READ WITH OUR REPORT OF EVEN DATE

For and on behalf of the Boardfor Divakara & AssociatesChartered AccountantsFRN: 000763S

(Sd/-) (Sd/-) (Sd/-)

POLALI DIVAKAR RAO SUKUMAR R. KIRLOSKAR AJAY S. KIRLOSKAR(Proprietor) Chairman Managing Director

PLACE : BangaloreDATE : May 31, 2013

Balance Sheet Abstract and Company’s General Business Profile

I Registration Details

Registration No. 13492 State Code 8 Balance Sheet Date 31.03.2013

II Capital Raised during the year (Amount in Rs.)

Public Issue Nil Rights Issue Nil Bonus Issue Nil Private Placement Nil

III Position of Mobilisation and Deployment of Funds (Amount in Rs.)

Source of Funds Paid-up-Capital 146,000,000 Unsecured Loan Nil Secured Loans 9,934,400

Application of Funds Net Fixed Assets 0 Investments 5,775,925 Net Current Assets 9,18,066 Miscellaneous Expenditure 0 Accumulated Losses 16,77,28,105

IV Performance of Company (Amount in Rs.)

Turnover 0 Total Expenditure 10,86,572 Net Loss -10,86,572 Dividend Rate Nil Earning Per Share -0.07

V Generic Names of the three principle products/services of company(as per monetary terms)

Item Code (ITC Code) 8524 Product Description Development of Software/Multimedia Titles

To be read with our report of even date

For Divakara & Associates For and on behalf of the BoardChartered Accountants

(Sd/-) (Sd/-) (Sd/-)

POLARI DIVAKAR RAO SUKUMAR R. KIRLOSKAR AJAY S. KIRLOSKAR(Proprietor) Chairman Managing Director

PLACE : BangaloreDATE : May 31, 2013

19

20

Statement of Subsidiary Company

KIRLOSKAR MULTIMEDIA INC - Financial Statements for the year ended 31st December, 2012

DIRECTORS’ REPORT

The Directors submit their report together with the financial statements of the Company for the period ended31st December 2012.

BUSINESS OF THE COMPANY

During the period under review the Company has not conducted any business activity in the USA. TheCompany operated a branch in London until March 31, 1996.

COUNTRY OF INCORPORATION

The Company was incorporated in USA on 30th June, 1995.

BOARD OF DIRECTORS

Mr. Ajay S. Kirloskar is the sole director of the Company.

AUDITORS

Since the Company has not conducted any business in the US during the period, the financial statementsare not required to be audited under the US Law. Hence, the auditors have not been appointed.

By order of the Board

(Sd/-)

AJAY S KIRLOSKARDirector

Statement of Subsidiary Company (Continued)KIRLOSKAR MULTIMEDIA INC - Financial Statements for the year ended 31st December, 2012

BALANCE SHEET AS AT 31ST DECEMBER, 2011

As at 31.12.2012 As at 31.12.2011US$ US$

FIXED ASSETSCURRENT ASSETSLESS:CURRENT LIABILITIES

PROFIT & LOSS ACCOUNT (LOSS) $175,000 $175,000

TOTAL $175,000 $175,000FINANCED BYEQUITY $175,000 $175,000

TOTAL $175,000 $175,000

for KIRLOSKAR MULTIMEDIA, INC.

(Sd/-)

AJAY S. KIRLOSKARDirector

REGISTERED OFFICEC/o. 650 Page Mill RoadPalp Alto, CA 94304-1050, USA

KIRLOSKAR MULTIMEDIA LIMITED ATTENDANCE SLIPRegd. Off : Kempapura, HAF Post BANGALORE - 560 024

THIS ATTENDANCE SLIP DULY FILLED-IN IS TO BE HANDED OVER ATTHE ENTRANCE OF THE MEETING HALL

Name of the attending Member(In Block Letters)

Member’s Folio Number/ID No.

No. of shares held

Name of Proxy(in Block Letters, to be filled-in if the proxy attends instead of the member)

I hereby record my presence at the TWENTY FIRST ANNUAL GENERAL MEETING to be held at 9.00 A. M.on Monday, the 30th September, 2013 at Swathi Gardenia, No. 2740 E Block, Sahakaranagar, Bangalore -560 092.

Place : Bangalore .............................................DATE : September 30, 2013 Member’s/Proxy’s Signature

KIRLOSKAR MULTIMEDIA LIMITED PROXY FORMRegd. Off : Kempapura, HAF Post BANGALORE - 560 024

I/We of

in the district of

being a member/members of the above named Company, hereby appoint

of in the district of

or failing him/her of in the district of

as my/our Proxy in my/our absence to attend and vote for me/us on my/our behalf at the Nineteenth AnnualGeneral Meeting of the Company to be held at 9.00 A. M. on Monday, the 30th September, 2013 at SwathiGardenia, No. 2740 E Block, Sahakaranagar, Bangalore - 560 092.

Signed this day the .....................................................2013 Affix Stamp

Note

1. A member entitled to attend and vote is entitled to appoint a proxy to attend and vote on poll insteadof himself and such proxy need not be a member.

2. Stamp should be affixed at the place provided for the signature affixed by the member/members.

3. The proxy Form thus completed be deposited at the Registered Office of the Company, not less than 48hours before the time for holding the meeting.

FORM A

1 Name of the Company Kirloskar Fdultirnedia Limited

2 Annual Financial Statements for theyear ended

3t$t March 2013

3 fype of Audit Observations 1 The Company does not have an [nternal Audit Systemcommensurate with its size and nature of business

2 (i) Non provision of interest in respect of facilities fromCentrat Bank of lndia titl date and its consequentialeffect on the losses of the Company; and

(ii) Not obtaining confirrnation of balances in respect ofSeeured Loans, Liabitities, Deposits, Margin MoneyDeposlts with Banks and other toans and advances andits consequentiaf effect on the [osses of the Company;and

(iii)Non provision for the clatm against the Company byfata Finance Limited tltt date and its consequentialeffects on the losses of the Company; and

(iv) No'n provislon for the claim against the Company bylncome Tax Depaftment towards lneome Tax andlnterest amountlng to Rs. 3.93 Lakhs and itsconsequential effects on the losses of the Company.

4 Frequency of 0bservation Since 2002 - 2003

Managing Dlrector

For DIVAF,AHA & F.SSOCIATES

CA Polsii D;:.r,!rar RaoProprietor

Memladrohip Ho. 023377Fi::rr Ileg. ltro. OGO763S

eci Accountants

FORM B

1 Name of the Company Kirtoskar hllultimedia l-imited

2 Annuat Financial Statements for. theyear ended

31st March 2013

3 Type of Audit Observations 1 The Company does not have an lnternal Audit Systemcommensurate with its size and nature of husiness

? (i) Non provision of interest in respect of faeitlties fromCentrat Bank of tndia tilt date and its consequentialeffect on the [osses of the Company; and

(ii) Not obtaining confirrnation of ba[ances in respect oSecured Loans, Liabilities, Deposlts, Margin MoneyDeposits with Banks and other [oans and advancesand its consequential effect on the losses of theCompany; and

(iiil Non pmvision for the claim against the Company byTata Finance Limited titl date and its consequentialeffeets on the losses of the Cornpany; and

(iv) Non provision for the elairn agalnst tFre Company bylncorne Tax Department towards [ncome Tax andlnterest amounting to Rs. 3.93 Lakhs and its

consequential effects on the losses of the Company.

4 Frequency of Observation $ince 2002 - 2003

Page -2

5 Draw attention to retevant notes in the

aRnual financial statements and

management response to the

qualificatiorr ln the DirectoCs Report

The fottowing reply to the Auditor's Qbservations have been

provided in the Director's Report at Page 2 of the Annua[

Report.

1 The Company does not have a fonnal intenrnal audit system

as the present [evet of operattons do not iustify the cost of

implementinq one.

2 No provision has been made titt date in respect of

interest on the loan balance claimed by Centrat Bank

of lndia as the

Company and

settlement.

has been contested bY the

undeterminable Pending asame

is

(iii)

lflv)

As halances in question are old batances canied

fonruard over the years and some are subject matter of

legal action, the Dlrectors fee[ that obtaining the

eonfirmatlen of balances is prejudicial to the interests

of the Company.

No provision has been made titldate in respect of fre

claim made by Tata Flnance Limited as the arhltration

award has been challenged by the Company before

the City CivilJt"ldge, Bangalore.

No provision has heen made till date in respect of the

ctaim by the lncome Tax Depa(ment as the Cornpany

has chaltenqed the claim.

b Additionatr Oomments from the Board I

Atrdit Committee Chair

NIL

For Kirloskar Muttlmedla Ltd., Iirr IJfVTIKARA & ASSOCIATESChertered Accountants

CA Pola-li Dl.rehar RaoProg:r'ie"lor

Mernbdi::;1iiP I{o- 023377Firrn lteg. I{o. OOO7635