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DIGITAL ELECTRONICS LIMITED

38th

A N N U A L R E P O R T

2010 - 2011

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DIRECTORS

MR. KISHORE R. DALAL

MR. SUNIL K. DALAL

MRS. MAMTA S. DALAL

MRS. MAMTA A. MANGALDAS

MR. V. H. SHANBHAG

BANKERS

HDFC BANK LIMITED - FORT BRANCH

ICICI BANK - ANDHERI BRANCH

ROYAL BANK OF SCOTLAND- NARIMAN POINT BRANCH

(FORMERLY KNOW AS ABN AMRO BANK)

AUDITORS

MZS & ASSOCIATES

CHARTERED ACCOUNTANTS

1116, RAHEJA CHAMBERS

NARIMAN POINT,

MUMBAI - 400 021.

COMPLIANCE & INVESTOR GRIEVENCE OFFICER

VIVEKANAND H. SHANBAG

REGD.OFFICE

86 - JOLLY MAKER CHAMBER NO.II,

EIGHTH FLOOR, NARIMAN POINT,

MUMBAI - 400 021

EMAIL : [email protected]

WEBSITE :www.digitalelectronicsindia.com

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NOTICE is hereby given that the 38th Annual General Meeting of the Members of DIGITAL ELECTRONICS

LIMITED will be held on Friday, 30th September 2011 at 11 a.m. at the registered office of the Company at

86, Jolly Maker Chambers No. II, Nariman Point, Mumbai 400021 to transact the following business:

1 To receive, consider and adopt the Balance sheet as at 31st March 2011 the Profit and Loss Account

for the year ended on that date together with the Reports of the Directors and Auditors thereon.

2 To appoint a Director in place of Mrs. Mamta Dalal, who retires at this meeting, but being eligible

offer herself for re-appointment.

3 To appoint a Director in place of Mr. Kishore Dalal, who retires at this meeting, but being eligible

offer himself for re-appointment.

4 To appoint M/S. MZS & Associates as Statutory Auditors of the Company for the period commencing

from the conclusion of this meeting until conclusion of the next Annual General Meeting and to

authorize the Board to fix their remuneration.

By order of the Board of Directors,

For Digital Electronics Limited

Sunil K. Dalal

Director

Place: Mumbai

Date: May 30th 2011.

Registered Office :

86, Jolly Maker Chambers II,

225, Nariman Point,

Mumbai – 400 021. (M.S.) India.

NOTES:

1. A member entitled to attend and vote at the meeting is entitled to appoint a proxy to attend the

meeting and the proxy need not be a member of the Company. Under the Companies Act, 1956,

voting is by a show of hands unless a poll is demanded by a member or members present in person,

or by proxy, holding at least one-tenth of the total shares entitled to vote on the resolution or by those

holding paid-up capital of at least Rs. 50,000. A proxy shall not vote except on a poll.

2. The instrument appointing the proxy must be deposited at the registered office of the Company not

Less than 48 hours before the commencement of the meeting.

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3. The register of members and share transfer books of the Company will remain closed from September

24th 2011 to September 30th 2011 (both days inclusive) for the purpose of Annual General Meeting.

4. Corporate Members are requested to send to the Company a duly certified copy of the Board Resolution

authorizing their representative to attend and vote at the Annual General Meeting.

5. Members desirous of obtaining any information on the Accounts and Operations of the Company are

requested to write at least one week before the meeting so that the same could be complied in advance.

6. Members are requested to notify changes, if any. In their registered addresses to the Company. Members

are requested to bring their copy of Annual Report to the meeting.

7. All documents referred to in the notice are open for inspection at the registered office of the Company

between 11.00 a.m. and 1.00 p.m on all working days (except Saturday and Sunday) upto the date of

the meeting.

Members are requested to address all correspondence, including dividend matter to The Compliance and

Grievance Officer at Registered Office of Digital Electronics Limited, 86, Jolly Maker Chamber II, Nariman

Point Mumbai – 400 021. Tel: 2287 3545, Fax No: 2288 4424.

As per the provisions of the Companies Act, 1956, facility for making nominations is available for

shareholders in respect of the shares held by them. Nomination forms can be obtained from the registered

office of the Company.

Members seeking any information or clarification on the Annual Report are requested to send in written

queries to the Company at least one week before the meeting to enable the Company to compile the

information and provide replies at the meeting.

By order of the Board of Directors,

For Digital Electronics Limited

Sunil K. Dalal

Director

Place: Mumbai

Date: May 30th 2011.

Registered Office :

86, Jolly Maker Chambers II,

225, Nariman Point,

Mumbai – 400 021. (M.S.) India.

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DIRECTORS’ REPORT

To

The Members of

Digital Electronics Limited

Dear Members,

Your Directors have pleasure in presenting the 38th Annual Report of the Company together with the

audited statement of accounts of the Company for the year ended 31st March 2011.

Financial Results:

(Amount in Rupees)

Year ended

31st March 2011 31st March 2010

Total Income 18,27,149 78,54,404

Profit / (Loss) before Depreciation (14,83,092) 45,56,105

Depreciation 295,879 380,975

Profit / (Loss) before Taxation (17,78,971) 41,75,130

Provision for Tax

Current Year — 5,00,000

Deferred Tax 70,691 5,97,597

Profit / (Loss) for the year (18,49,662) 30,77,533

Profit / (Loss) of earlier years 15,79,31,956 15,48,54,423

Profit / (Loss) carried to Balance Sheet 15,60,82,294 15,79,31,956

Dividend:

In view of the loss for the year, the Directors regret their inability to recommend any dividend to the

shareholders for the year.

Fixed Deposits :

The Company has not invited or accepted any fixed deposit from the public pursuant to section 58A of

the Companies Act, 1956 during the year under review.

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Directors :

In accordance with the provisions of Sections 255/256 of the Companies Act, 1956 Mr. Kishore Dalal and

Mrs. Mamta Dalal, Directors retire at the ensuing annual general meeting, they are eligible for re-

appointment. The shareholders may consider their re-appointment.

Compliance Certificate :

A Compliance Certificate as required under the proviso to sub-section (1) of section 383A of the Companies

Act, 1956 read with the Companies (Compliance Certificate) Rules, 2001 is attached to this report.

Other Information :

Information in accordance with provisions of Section 217(1) (e) of the Companies Act, 1956 read with

Companies (Disclosure of Particulars in the report of Board of Directors) Rules, 1988:

a) Conservation of Energy and Technology absorption:

The operations of your Company are not energy-intensive. Adequate measures, however, been taken

to reduce energy consumption by using energy efficient computer terminals and by the purchase of

energy efficient equipment with latest technology. The Company constantly evaluates new

technologies and makes use of the same to make the infrastructure more energy-efficient. The research

and development of new services, designs, processes, and methodologies are of prime concern to the

Company, but the cost incurred is not material.

b) Foreign Exchange :

The earnings in foreign exchange amounted to Rs.Nil/-, while the foreign exchange out go was of

Rs. 18,000/- as travelling expenses during the financial year.

c) Particulars of Employees :

There was no employee who was in receipt of remuneration over & above the limits prescribed under

section 217(2AA) of the Companies Act, 1956 as such no statement is furnished under the said section.

Directors’ Responsibility Statement as per Section 217 (2AA) of the Companies Act, 1956

a) The Directors state that the financial statements for the year ended are in full conformity with the

requirements of the Generally Accepted Accounting Principles (GAAP) and the accounting standards

issued by the Institute of Chartered Accountants of India till date.

b) The Directors accept the responsibility for the integrity and objectivity of these financial statements

as reflected through the consistent applicability of the accounting policies as well as for the estimates

made and the judgment exercised relating to matters not concluded to by the year-end. The Director

believe that the financial statements reflect fairly the form and substance of the transactions concluded

and reasonably present the Company’s financial condition and true and fair view of the results of the

operations for the year and the state of affairs of the business as at the end of the financial year.

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c) The Company has installed a computerized accounting system for maintenance of adequate accounting

records. The periodic internal checks and controls are observed to provide reasonable assurance that

the established policies and the procedures of the Company have been followed for safeguarding the

assets of the Company and for preventing any form of fraud and other irregularities thereto and

subject to the inherent limitations in any system, procedure and coverage thereof the same should be

recognized as proper and sufficient in weighing the assurance provided by any system of internal

controls.

d) The accounts have been prepared on going concern basis.

Auditors :

MZS & Associates, Chartered Accountants, Mumbai statutory auditors retire at the ensuing annual general

meeting and being eligible offer themselves for re-appointment.

As regards the observations of auditors in their audit report, the Directors feel that the said observations

are self explanatory requiring no additional clarifications.

Appreciation :

The Directors take the opportunity to express their gratitude for the support and cooperation your company

has received from the various departments of Central and State Government, Bankers, Customers, Suppliers

and Contractors of the company during the year under review. In concluding this report, the Board

acknowledges their deep sense of gratitude to the shareholders for the confidence they have reposed in

the Directors.

FOR & ON BEHALF OF THE BOARD OF DIRECTORS

SUNIL K. DALAL V H SHANBHAG

Director Director

Place : Mumbai

Dated : 30th May, 2011

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COMPLIANCE CERTIFICATE

TCIN : U32109MH1973PTC016345

Nominal Capital Rs. 50,00,000/-

To

The Members,

Digital Electronics Limited

86, Jolly Maker Chamber No.11,

Nariman Point, Mumbai - 400 0021.

We have examined the registers, records, books and papers of DIGITAL ELECTRONICS LIMITED, ( the

company) as required to be maintained under the Companies Act, 1956, (the Act) and the rules made

there under and also the provisions contained in the Memorandum and Articles of Association of the

Company for the financial year ended on 31st March, 2011 (financial year). In our opinion and to the best

of our information and according to the examination carried out by us and explanations furnished to us

by the company, its officers and agents, we certify that in respect of the aforesaid financial year.

1. The company has kept and maintained all registers as stated in Annexure ‘A’ to this certificate, as perthe provisions of the Act and the rules made there under and all entries therein have been duly

recorded.

2. The Company has filed the forms and returns as stated in Annexure ‘B’ to this certificate, with the

Registrar of Companies, required under the Act and the rules made there under. The Company was

not required to file any forms and returns with the Regional Director, central Government, Company

Law Board or other authorities under the Act and the rules made there under.

3. The Company is a Public Limited Company and its shares are listed on the Bombay Stock Exchange

Ltd. (BSE) at Mumbai but trading in shares of the Company presently remains suspended.

4. The Board of Directors duly met 8 times on dates indicated below, in respect of which meetings

proper notices were given and the proceedings were properly recorded and signed in the Minutes

Book maintained for the purpose :

Quarter Date of Board Meetings

April to June 28/4/2010

July to September 10/07/2010 : 18/08/2010

October to December 03/09/2010 : 27/10/2010 : 10/12/2010

January to March 28/01/2011 : 07/02/2011

5. The Company closed its Register of Members from 24th September 2010 to 30th September 2010 andcompliance of Section 154 of the Act was not made.

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6. The Annual General meeting for the financial year ended on 31/03/2010 was held on 30/09/2010 andthe resolutions passed thereat were recorded in Minutes Book maintained for the purpose.

7. Our Extra ordinary General Meeting of the shareholders was held during the financial year on 25/08/2010 and the resolution passed thereat recorder in Minutes Book maintained for the purpose.

8. The company has not made any loans to its directors and/or persons or firms referred to in Section295 of the Act.

9. The Company has not entered into any transaction in respect of the matters specified in section 297of the Act during the year.

10. The Company has made requisite entries in the register maintained under section 301 of the Act.

11. As there were no instances falling within the purview of Section 314 of the Act, the company was notrequired to obtain any approvals from the Board, Members or central Government during the financialyear.

12. The Company has not issued any duplicate share certificates during the financial year.

13. The Company :

(a) was not required to deliver any share certificates during the financial year as there was noallotment, transfer/transmission of any securities during the financial year.

(b) was not required to deposit any amount in a separate bank account for payment of dividend asno dividend was declared during the financial year.

(c) was not required to post any dividend warrants to its members as no dividend was declaredduring the financial years.

(d) did not have any amounts in unpaid dividend account, application money due for refund, matureddeposits, matured debentures and the interest accrued thereon which have remained unclaimedor unpaid for a period of seven years and were required to transfers to Investor Education andProtection Fund.

(e) complied with the requirements of section 217 of the Act.

14. The Board of directors of the Company is duly constituted. The appointments of directors have beenduly made. There was no appointment of additional directors or alternate directors or directors to fillcasual vacancies during the financial year.

15. The Company has not appointed Managing Director and the provisions of Section 269 read withSchedule XIII of the Act were not attracted.

16. The Company has not appointed any sole-selling agents during the financial year.

17. The Company was not required to obtain any approvals of the Central Government, Company LawBoard, regional Director, Registrar and/or such other authorities prescribed under the variousprovisions of the Act during the financial year.

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18. The Directors have disclosed their interest in other firms/companies by notices addressed to theBoard of Directors pursuant to the provisions of the Act and the rules made there under.

19. The Company has not issued any shares / debentures or other securities during the financial year.

20. The Company has not bought back any shares during the financial year.

21. There was no redemption of any preference shares/debentures during the financial year.

22. There were no transactions/events necessitating the company to keep in abeyance rights to dividend,rights shares and bonus shares pending registration of transfer of shares.

23. The Company has not invited or accepted any public deposits and as such the provisions of Section58A and 58AA of the Act were not attracted.

24. The Company did not have any borrowing during the financial year and the provisions of Section293(1)(d) of the Act were not attracted.

25. The Company has made investments in shares/debentures of other bodies corporate in compliancewith provisions of section 372A of the Act. The Company has not made loans or given guarantees toother bodies corporate.

26. The Company has not altered the provisions of the Memorandum with respect to situation of thecompany’s registered office from one state to another during the year under scrutiny.

27. The Company has not altered the provisions of the Memorandum with respect to the objects of theCompany during the year under scrutiny.

28. The Company has not altered the provisions of the Memorandum with respect to name of the companyduring the year under scrutiny.

29. The Company has not altered the provisions of the Memorandum with respect to share capital of thecompany during the year under scrutiny.

30. The Company has not altered its Articles of Association during the financial year.

31. As informed by the Company, there was/were no prosecutions initiated against or show cause notice(s)received by the company and no fines or penalties or any other punishment imposed on the companyduring the financial year, for the offence under the Act.

32. The Company has not received any money as security from its employees during the financial year.

33. The Company has not deducted any contribution towards Provident Fund and the provisions ofSection 418 of the Act were not attracted.

FOR APS & COCOMPANY SECRETARIES

CS A. P. SOJMUMBAI PROPRIETORDATED : 30/05/2011 FCS 3407 = CP 1973

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ANNEXURE A

Registers as maintained by the Company

Statutory Registers

Name of Register Under Section

Register of Charges 143

Register of Members 150

Minutes Books of Board & General Meeting 193

Register of Contracts 301

Register of Directors 303

Register of Director’s Shareholdings 307

Register of Investments/Loans/Guarantees 372A

ANNEXURE B

Forms and Returns as filed by the Company with Registrar of Companies, Maharashtra during thefinancial year ended on 31st March 2011.

1. Form No. 20B with Annual Return made up to 30/9/2010 being the date of annual general Meeting.Filed on 24/11/2010 Under Section 159 of the Act, vide SRN No P61029559 with normal filingfees.

2. Form No. 23AC and Form No. 23ACA with copy of Annual Accounts for the Financial Yearended 31/03/2010. filed on 09/12/2010 under section 220 of the Act. vide SRN NO P64174352with requisite filing fees including additional fees.

3. Form No. 66 with Compliance Certificate dated 30/08/2010 in respect of the financial year ended31st March 2010 in terms of proviso to sub-section (1) of Section 383A of the Act read with theRules 3(2) of the Companies (Compliance Certificate) Rules, 2001 filed on 08/12/2010, vide SRNNo 64131600 with requisite filing fees including additional fees.

FOR APS & COCOMPANY SECRETARIES

CS A. P. SOJMUMBAI PROPRIETORDATED : 30/05/2011 FCS 3407 = CP 1973

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AUDITORS’ REPORT

To the Members of Digital Electronic Limited

1. We have audited the attached Balance Sheet of Digital Electronic Limited (‘the Company’), as at

March 31, 2011 and also the related Profit and Loss Account and Cash Flow Statement for the year

ended on that date all of which have been signed under reference to this Report. These financial

statements are the responsibility of the management of the Company. Our responsibility is to express

an opinion on these financial statements based on our audit.

2. We have 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 from material misstatements. An audit includes examining,

on a test check basis, evidences 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 reasonable basis for our opinion.

3. As required by the Companies (Auditor’s Report) Order, 2003, as amended by the Companies (Auditor’s

Report) (Amendment) order, 2004, issued by the Central Government of India in terms of Sub-Section

(4A) of section 227 of ‘The Companies Act, 1956’ of India (‘the Act’) and on the basis of such checks

of the books and records of the Company as we considered appropriate and according to the information

and explanations given to us, we enclose in the Annexure a statement on the matters specified in

paragraphs 4 and 5 of the said Order.

4. Further to our above comments :

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 audit;

ii. 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 those books;

iii. the Balance Sheet, Profit and Loss Account and Cash Flow Statement referred to in this Report

are in agreement with the books of account;

iv. in our opinion, the Balance Sheet and Profit and Loss Account 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 in so far as they apply to the Company;

v. on the basis of information and explanations given to us and written representations received

from such directors, and taken on record by the Board of Directors, we report that none of the

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directors of the Company is disqualified as on March 31, 2011 from being appointed as director

in terms of section 274(1)(g) of the Companies Act, 1956.

vi. As stated in note 11 to the financial statement, even though the company is listed on Bombay

Stock Exchange (BSE) in India, it has not complied with various listing requirements and

accordingly, the trading of shares of the company on such stock exchange has been suspended.

We are not able to ascertain the impact of such non-compliance.

vii. As stated in note 12 to the financial statement, the company has invested in the shares of company

under the same management amounting to Rs. 317.99 lacs (previous year Rs. 299.99 lacs). The

management is of the opinion that this investment is fully realizable in the context of the long

term potential of that business. Accordingly provision has not been made against this investment.

The ultimate impact of such non-provision on profits and reserves is presently not ascertainable.

viii. in our opinion and to the best of our information and according to the explanations given to us,

and subject to our comments in paragraph (vi) and (vii) above, the said accounts read together

with the significant accounting policies and other notes thereon give the information required

by the Companies Act, 1956, in the manner so required and give a true and fair view:

a) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2011;

b) in the case of the Profit and Loss Account, of the loss of the Company for the year ended onthat date; and

c) in the case of Cash Flow Statement, of the cash flows for the year ended on that date.

For MZS & Associates

Chartered Accountants

ICAI Regn No: 106400W

Sd/-

Abuali Darukhanawala

Partner (M. No. 108053)

Mumbai: 30 May, 2011

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Annexure to the Auditors’ Report

(Referred to in Paragraph (3) thereof)

With reference to the Annexure referred to in paragraph 3 of the report of the Auditors’ to the members of

the Digital Electronic Limited (‘the Company’) on the financial statements for the year ended March 31,

2011, we report that:

1. (a) The Company is still in the process of compiling records to show full particulars including

quantitative details and situation of its fixed assets.

(b) As explained to us, the fixed assets have been physically verified by the management and no

material discrepancies were noticed on such verification.

(c) As explained to us, the company has not disposed off a substantial part of fixed assets during the

year.

2. As explained to us, during the year no trading activity was carried out, and hence clause 4(ii) of the

order is not applicable.

3. (a) According to the information and explanation given to us, the company has not granted any

loans, secured or unsecured to companies, firm or other parties covered in the register maintained

u/s 301 of the Act, accordingly sub clause (b), (c), and (d) of clause 4(iii) is not applicable to the

company.

(e) According to information and explanation given to us, the company has not taken any loans,

secured or unsecured from companies, firm or other parties covered in the register maintained

u/s 301 of the Act, accordingly sub clause (f) and (g) of clause 4(iii) is not applicable to the

company.

4. In our opinion there are adequate internal control procedures commensurate with the size of the

Company and nature of its business for the purchase of inventories and fixed assets and for sale of

goods and services. During the course of our audit and according to the information and explanations

given to us, we have neither come across nor have been informed of any instance of major weaknesses

in internal control.

5. (a) In respect of transactions entered in the register maintained in pursuance of section 301 of the

Companies Act, 1956, to the best of our knowledge and belief and according to the information

and explanations given to us, particulars of contracts or arrangements that needed to be entered

into the register have been so entered.

(b) in respect of the transactions made in pursuance of such contracts or arrangements exceeding

value Rs. Five lacs entered into during the financial year, because of the unique and specialized

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nature involved and in absence of any comparable prices, we are unable to comment whether the

same are made at prevailing market prices. For price justification reliance is placed on the

information and explanation given by the management.

6. In our opinion and according to information and explanation given to us, the Company has not

accepted any deposits from the public to which the directives issued by the Reserve Bank of India

and the provisions of Section 58A, 58AA or other relevant provisions of the Act and the rules framed

thereunder are applicable. We have also been informed that no order has been passed by the Company

Law Board or Reserve Bank of India or any court or any other tribunal in this regard.

7. The Company does not have an internal audit system.

8. We have been informed that the Central Government has not prescribed maintenance of cost records

under section 209(1)(d) of the Companies Act, 1956.

9. (a) According to the information and explanations given to us and on the basis of our examination

of the books of account, the Company has been generally regular in depositing undisputed

statutory dues including Provident Fund, Income Tax, VAT Tax, Service Tax, Custom Duty, Excise

Duty and Cess during the year with the appropriate authorities though there has been a slight

delay in a few cases. There are no undisputed dues payable for a period of more than six months

from the date they become payable except for service tax of Rs. 52,175/- and sales tax of Rs.

110,667/-which remained unpaid as on 31st March, 2011.

(b) According to the information and explanations given to us and as per the records of the Company,

the following dues of sales tax, income tax, wealth tax, service tax, customs duty, excise duty

and cess have not be deposited on account of some dispute or are partly deposited under protest

Sr Period to Name of Nature of Amount (Rs.) Forum where

No which relates the Statute the dues dispute is pending

1 AY 2005-06 Income Tax Income tax 5,00,000 ITO

2 AY 2006-07 Income Tax Income tax 4,60,107 ITO

3 AY 2007-08 Income Tax Income tax 93,43,650 ITAT

10. The company does not have accumulated losses as at 31st March 2011. However the company has

incurred cash losses during the financial year ended on that date.

11. On the basis of information and explanations given to us and on the basis of verification of the books

of account, the Company has not defaulted in repayment of dues to financial institutions / banks or

debenture holders.

12. According to the information and explanations given to us, the Company has not granted loans and

advances on the basis of security by way of pledge of shares, debentures and other securities.

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13. The provisions of any special statute as specified under clause 4(xiii) of the order are not applicable

to the Company.

14. According to the information and explanations given to us the Company is not dealing or trading in

shares, securities, debentures and other investments. The company has invested surplus funds in

marketable securities and mutual funds. According to the information and explanations given to us

proper records have been maintained of the transactions and contracts and timely entries have been

made therein. The marketable securities and mutual funds have been held by the company in its own

name.

15. According to the information and explanations given to us, the Company has given a guarantee against

fixed deposit for loan taken by a third party from a bank amounting to Rs. 3.60 lacs.

16. According to the information and explanations provided to us and on an overall examination, the

company has not taken any term loan.

17. According to the information and explanation given to us and over all examination of the Balance

sheet of the Company, we report that, funds raised on short term purposes have, prima facie, not

been utilized for long term purposes and vice-versa.

18. According to information and explanation given to us, the Company has not made any preferential

allotment of shares during the year.

19. According to the information and explanation given to us, the Company has not issued any debentures

during the year.

20. The company has not raised any money by public issues during the year.

21. To the best of our knowledge and according to the information and explanations given to us, there

have been no cases of fraud on or by the Company noticed or reported during the year.



ICAI Regn No. 106400W

Sd/-



Mumbai

Date : 30 May, 2011

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BALANCE SHEET AS AT MARCH 31, 2011

Schedule March 31, 2011 March 31, 2010Rupees Rupees

SOURCES OF FUNDS

SHAREHOLDERS’ FUNDSShare Capital 1 2,376,000 2,376,000Reserves and Surplus 2 241,290,689 243,140,349

Sub Total 243,666,689 245,516,349

TOTAL 243,666,689 245,516,349

APPLICATION OF FUNDS

FIXED ASSETSGross Block 3 6,880,138 6,880,138Less: Depreciation 4,761,724 4,465,845

Net Block 2,118,414 2,414,293

INVESTMENTS 4 241,570,917 243,757,416

DEFERRED TAX ASSETS 204,523 275,214

CURRENT ASSETS,LOANS AND ADVANCESCash and Bank Balances 5 1,162,407 1,775,301Loans and Advances 6 27,556,944 26,938,021

Sub Total 28,719,351 28,713,322

LESS: CURRENT LIABILITIES AND PROVISIONSCurrent Liabilities 7 3,024,516 3,721,896Provisions 8 25,922,000 25,922,000

Sub Total 28,946,516 29,643,896

Net Current Assets (227,165) (930,574)

TOTAL 243,666,689 245,516,349

NOTES TO ACCOUNTS 12

The Schedules referred to above and the notes to accounts form an integral part of the Balance Sheet.

As per our report of even date

For MZS & Associates For and on behalf of the Board of DirectorsChartered Accountants

Abuali Darukhanwala Sunil Dalal Mamta Dalal V.H.ShanbhagPartner Director Director DirectorM No: 108053Place : Mumbai Place : MumbaiDate : 30 May 2011 Date : 30 May 2011

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INCOME

Other Income 9 1,827,149 7,854,404

TOTAL 1,827,149 7,854,404

EXPENDITURE

Operating and Establishment Expenses 10 3,301,653 3,285,354

Finance Charges 11 8,588 12,942


TOTAL 3,606,120 3,679,274

Profit before Tax and Prior Year Adjustments (1,778,971) 4,175,130

Net Profit before Taxation (1,778,971) 4,175,130

Less: Provision for Taxation- Current Year - 500,000

- Deferred Tax 70,691 597,597

- Earlier Year - -

Net Profit after Taxation (1,849,662) 3,077,533

Balance brought forward from previous year 157,931,956 154,854,423

Balance carried to Balance Sheet 156,082,294 157,931,956

Basic and Diluted Earnings per share (7.78) 12.95(weighted average nbo of shares 237,600(previous year 237,600)

Notes to Accounts 12

The Schedules referred to above and the notes to accounts form an integral part of the Profit and Loss Account.


For MZS & Associates For and on behalf of the Board of DirectorsChartered Accountants

Abuali Darukhanwala Sunil Dalal Mamta Dalal V.H.ShanbhagPartner Director Director DirectorM No: 108053Place : Mumbai Place : MumbaiDate : 30 May 2011 Date : 30 May 2011

PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2011

DigitalElectronics

18

March 31, 2011 March 31, 2010 Rupees Rupees

A Cash flow from operating activities :Net Profit before tax (1,778,971) 4,175,130Additions/(Deductions)Dividend income (937,862) (964,079)Interest (204,614) (266,238)(Profit) / Loss on sale of assets - (275,015)Profit on sale of Investments (634,673) (5,153,266)Provision for dimunition in value of Investment - -Reversal of Provision for dimunition in value of Investment - (778,257)Loss on revaluation of Shares & Mutual Funds 1,409,154 -Depreciation 295,879 380,975

Operating Profit before working capital changes (1,851,088) (2,880,750)Adjustment for :Trade and other receivables - -Deposits - -Advance Recoverable in Cash or Kind (380,853) 1,639,381Current Liabilities (697,380) 1,435,656

Cash Generated from operations (2,929,322) 194,287Direct taxes paid (including Fringe Benefit Tax) (238,054) (383,799)

Net cash from operating activities (3,167,376) (189,512)

B Cash flow from investing activties : [ Inflow/(Outflow) ]Purchase of Fixed Assets - -Proceeds on sale of Fixed Assets - 344,650Purchase of Investment (144,257,308) (375,173,619)Sale of Investments / Refund of Advance for Investment 145,669,310 370,099,219Interest 204,614 266,238Dividend received 937,862 964,079

Net cash used in investing activities 2,554,479 (3,499,433)

C Cash flow from financing activities [ Inflow/(Outflow) ]Proceeds/(Repayments) of bank borrowings - (115,448)

Net cash used in financing activities - (115,448)

D Net increase in Cash and Cash equivalents (A+B+C) (612,895) (3,804,393)

E Cash and Cash equivalents at the beginning of the year 1,775,301 5,579,694

F Cash and Cash equivalents at the close of the year (D+E) 1,162,407 1,775,301

Net Increase /(Decrease ) in Cash and Cash equivalents (612,895) (3,804,393)

For MZS & Associates FOR AND ON BEHALF OF THE BOARD OF DIRECTORSChartered Accountants

Abuali Darukhanawala Sunil Dalal Mamta Dalal V.H.ShanbhagPartner Director Director DirectorM No: 108053

Place : Mumbai Place : MumbaiDate : 30 May 2011 Date : 30 May 2011

CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH 2011

DigitalElectronics

19

SCHEDULE 1 :

SHARE CAPITALAuthorised500,000 Equity Shares of Rs. 10/- each 5,000,000 5,000,000(Previous Year 500,000 Equity Shares of Rs.10/- each)

5,000,000 5,000,000

Issued, Subscribed and Paid-up237,600 ( Previous Year 237,600 ) equity shares of 2,376,000 2,376,000Rs.10/- each fully paid-up

TOTAL 2,376,000 2,376,000

SCHEDULE 2 :

RESERVES AND SURPLUS

Capital Reserve 82,730,368 82,730,366

General Reserve 2,478,027 2,478,027

Balance in Profit and Loss Account 156,082,294 157,931,956

TOTAL 241,290,689 243,140,349

SCHEDULES FORMING PART OF THE BALANCE SHEET

March 31, 2011 March 31, 2010Rupees Rupees

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DigitalElectronics

24

SCHEDULE 5 :

CASH AND BANK BALANCES

Cash-on-hand 324,857 324,857

Balances with Scheduled Banks

In Current Account 437,550 623,800

In Fixed Deposit Account 400,000 826,645

(Refer Note 7 to Schedule 12 Notes on Accounts)

TOTAL 1,162,407 1,775,301

SCHEDULE 6 :

LOANS AND ADVANCES

Unsecured, Considered good

Deposits 825,800 825,800

Income Tax 26,084,488 25,846,434

Advance Recoverable in cash or kind 646,656 265,787

TOTAL 27,556,944 26,938,021

SCHEDULE 7 :

CURRENT LIABILITIESSundry Creditors (Other than Small Scale Industries)

Trade Creditors 1,375,355 1,375,355

Others 116,366 193,474

Other Liabilities 1,532,795 2,153,067

TOTAL 3,024,516 3,721,896

SCHEDULE 8 :PROVISIONS

Provision for Income Tax 25,922,000 25,922,000

Provision for Gratuity - -

TOTAL 25,922,000 25,922,000

SCHEDULES FORMING PART OF THE BALANCE SHEET


DigitalElectronics

25

SCHEDULES FORMING PART OF PROFIT AND LOSS ACCOUNT


SCHEDULE 9 :

OTHER INCOME

Interest Income (TDS Deducted Rs.16,953/-) 204,614 266,238Profit / (Loss) on Sale of Assets - 275,015Profit on Sale of Investments 634,673 5,153,266Dividend Income 937,862 964,079Miscellaneous Income 50,000 417,550Reversal of Provision for Diminution in Value of Investment - 778,257

TOTAL 1,827,149 7,854,404

SCHEDULE 10 :

OPERATING AND ESTABLISHMENT EXPENSES

Rates and Taxes 13,830 19,114Security Transaction Tax 17,533 221,891Insurance 4,850 14,355Repairs and Maintenance

- Building 538,500 46,639- Others 46,564 82,739

Annual Maintenance Charges - -Postage, Telegram and Telephone 412 823Printing and Stationery 1,124 -Membership & Subscription - 33,108Portfolio Mgmt. Fees 122,154 -Travelling and Conveyance 18,000 2,180,342Legal and Professional Expenses 1,007,926 414,073Audit Fees 62,958 55,150Miscellaneous Expenses 58,648 217,120Loss on revaluation of Shares & Mutual Funds 1,409,154 -Loss on Sales of Investments - -

TOTAL 3,301,653 3,285,354

SCHEDULE 11:

FINANCE CHARGES

INTEREST On Others 1,780 5,960 Bank Charges 6,808 6,982

TOTAL 8,588 12,942

DigitalElectronics

26

SCHEDULE 12

NOTES ON ACCOUNTS

1. SIGNIFICANT ACCOUNTING POLICIES

AS-1 Disclosures of Accounting Policies

Basis of accounting

The financial statements have been prepared under the historical cost convention in accordance

with the accounting standards issued by the Institute of Chartered Accountants of India and the

provisions of the Companies Act, 1956.

The preparation of the accounts, in conformity with generally accepted principles, requires that

the management of the company makes estimates and assumption that affect the reported amounts

of income & expenses of the period, reported balance of assets & liabilities & disclosure relating

to contingent assets & liabilities as of that date of the accounts.

All Significant items of income and expenditure are accounted on accrual basis except for claims/

refunds which are not ascertainable with reasonable accuracy, are accounted on cash basis.

AS-2 Valuation of inventory

Inventories

Inventories are valued at cost of purchase or realizable value whichever is lower on First In First

Out (FIFO) basis.

AS-3 Cash flow Statement

Cash flows are reported using the indirect method, whereby net profit before tax is adjusted for

the effects of transactions of a non-cash nature and any deferrals or accruals of past or future

cash receipts or payments. The cash flows from regular revenue generating, investing and financing

activities of the company are segregated.

AS-5 Net Profit / (Loss) for the period, prior period items and changes in accounting policies

All items of income & expenses, which are recognized in a period, are included in the

determination of net profit or loss for the period. This includes items and the effect of changes in

accounting estimates.

The net profit or loss for the period comprises the following components, each of which is

disclosed on the face of the statement of profit and loss:

(a) profit or loss from ordinary activities; and

(b) extra-ordinary items.

SCHEDULES FORMING PART OF ACCOUNTS AS AT MARCH 31, 2011

DigitalElectronics

27

AS-6 Depreciation Accounting

Depreciation

Depreciation on fixed assets is provided on the written down value of the assets at the rates

prescribed under Schedule XIV of The Companies Act, 1956.

Depreciation on addition to fixed assets is provided pro-rata from the date of capitalisation.

Depreciation on sale/deduction from fixed assets is provided for up to the date of sale, deduction

or discernment as the case may be.

Assets costing Rs. 5,000/- or below are depreciated in full in year of its acquisition.

AS-9 Revenue recognition

Revenue Recognition:

a. Sales of goods are recognized on dispatch to customers and are recorded net of trade discount.

b. Annual maintenance charges are accounted on pro-rata basis over the period of contract.

c. Service income is recognized on the completion of service.

d. Dividend is recorded when right to receive the same is established.

e. Reimbursement expected in respect of expenditure required to ascertain a provision is

recognized only when it is virtually certain that the reimbursement will be received.

AS-10 Fixed Assets

Fixed Assets

Fixed Assets are stated at historical cost, less accumulated depreciation.

Historical cost includes original cost of acquisition or revaluation cost and incidental expenses

related to such acquisition and installation.

AS-11 Effects of changes in Foreign Exchange Rates

The Company has recorded the transactions denominated in foreign currency at the exchange

rate prevailing at the date of the transaction.

Monetary items denominated in foreign currencies at the year-end are translated at the exchange

rates prevailing on the date of the balance sheet.

Any income or expense on account of exchange differences either on settlement or on translation

of transactions other than those in relation to fixed assets is recognised in the profit and loss

account.


DigitalElectronics

28

AS-13 Investments

Trade investments are the investments made to enhance the company’s business interest.

Investments are either classified as current or long term based on the managements intention at

the time of purchase. Current investments are carried at the lower of cost and fair value. Long

term investments are carried at cost and provisions recorded to recognize any decline, other

then temporary, in the carrying value of each investment.

Cost includes original cost of acquisition, brokerage and stamp duty.

AS-15 Employee’s Benefits

From 31st March, 2008 all the employees of the company have resigned, hence no provisions,

except those actually payable, are made in the books of accounts towards retirement benefits of

employees.

AS- 17 Segment Reporting

The Company has only one business segment namely trading in electronic equipment, as a result

segment wise income and expenditure and particulars of Assets and Liabilities is not applicable.

AS-18 Related Party Disclosure

Disclosure in respect of related party transaction pursuant to Accounting Standard 18 issued by

The Institute of Chartered Accountants of India for the year ended.

List of Related Parties

i) Subsidiary - DEL-Automation Pvt. Ltd.

ii) Associates - SoftDEL Systems Pvt. Ltd.

- UniDEL Advisors Pvt. Ltd.

- Shasa Systems Pvt. Ltd.

- Spring Consultants

- Kimasu Investments

- Sumaki Investments

- Ruby Enterprise

- Diamond Enterprise

- Emerald Enterprise

- Saphire Enterprise

iii) Key Management Personnel

Mr. Kishore R. Dalal - Director

Mr. Sunil K. Dalal - Director


DigitalElectronics

29

Transactions with related parties

Nature of Transaction Subsidiary Associates Key Management Total

Personnel

(Rupees) (Rupees) (Rupees)

Income

OFCD Interest received

SoftDEL Systems Pvt. Ltd — 1,60,914 — 1,60,914

(1,84,121) (1,84,121)

Outstanding Payable balance

as on March 31, 2011

DEL Automation Pvt Ltd 13,18,882 — — 13,18,882

(19,18,882) (19,18,882)

SoftDEL Systems Pvt Ltd - NIL NIL

(338) (338)

Outstanding Receivable balance

as on March 31, 2011

UniDEL Advisors Pvt Ltd — 3,76,411 — 3,76,411

(NIL) (NIL)

Figures in brackets are for previous year

AS-20 Earning Per Share:

In determining earning per share, the company considers the net profit after tax and includes the

post tax effect of any extra ordinary / exceptional item. The number of shares used in computing

basic earning per share is the weighted average number of shares outstanding during the period.

The number of shares used in computing diluted earning per share comprises the weighted average

shares consider for deriving basic earning per share, and also the weighted average number of

equity shares that could have been issued on the conversion of all diluted potential equity shares.

The diluted potential equity shares are adjusted for the proceeds receivable, had the shares been

actually issued at fair value (i.e. the average market value of outstanding shares). Diluted potential

equity shares are deemed converted as of the beginning of the period, unless issued at the latter

date. The number of shares and potentially diluted equity shares are adjusted for any stock splits

and bonus shares issues affected prior to the approval of the financial statements by the board of

directors.

AS- 22 Deferred Tax Assets / (Liability):

Income Taxes are computed using the tax effect accounting network were taxes are accrued in

the same period the related revenue and expenses arise. A provision is made for income tax

annually based on the tax liability completed, after considering tax allowance and exemptions.


DigitalElectronics

30

Provisions are recorded when it is estimated that a liability due to disallowances or other matter

is probable.

The differences that result between the profit considered for income taxes and the profit as per

financial statement are identified, and there after a deferred tax Assets or deferred tax liability is

recorded for timing differences, namely the differences that originate in one accounting period

and reverse in another, based on the tax effect of the aggregate amount being consider. The tax

effect is calculated on the accumulated timing differences at the end of an accounting period

based on prevailing enacted or substantially enacted regulations. Deferred tax assets are recognized

only if there is reasonable certainty that they will be realized and reviewed for the appropriateness

of there respective carrying values at each balance sheet date. Tax benefit of deductions earned

on exercise of employee stock option in excess of compensation charge to the profit and loss

account are credited to the share premium account.

AS - 28 Impairment of Assets:

The management periodically accesses, using internal sources, whether there is a indication

that an asset may be impaired. An impairment occurs where the carrying value exceed the present

value of future cash flows expected to arise from the continuing use of assets and its eventual

disposal. The impairment loss to be expensed is determined as the excess of carrying amount

over the higher of the assets net sales price or present value as determined above.

AS - 29 Provision, Contingent Liability and Contingent Assets:

Provision are recognized for liabilities that can be measured only by using a substantial degree

of estimation if,

a) The company has a present obligation as a result of past events

b) The probable outflow of resources is expected to settle the obligation

c) The amount of obligation can be reliably estimated.

Contingent liability is disclosed in case of

a) Present obligation arising out of past event, when it is not probable that an outflow of resources

will be required to settle obligation.

b) A possible obligation, when the probability of outflow of resources is remote

Contingent assets are neither recognized nor disclosed. Provisions, contingent liabilities and

contingent assets are reviewed on each balance sheet date.


DigitalElectronics

31

1. The deferred tax asset/(liability) has been calculated as under:

Particulars Opening Additions / Closing

balance (Set-Off) Balance

Depreciation 156,302 (17,505) 138,797

Unpaid liability under section 43B of Income Tax Act 1961 65,726 - 65,726

Amount Disallowed u/s 40(a) 53,188 (53,188) -

Short Term Capital Loss - - -

Total 275,216 (70,693) 204,523

2. Earning per share is computed in accordance with Accounting Standard 20.

Particulars For the year ended For the year ended

March 31 March 2011 March 31 March 2010

Weighted average number of shares (A) 2,37,600 2,37,600

Net Profit after tax for the year excluding

extraordinary items (B) (1,849,662) 3,077,533

Basic / Diluted EPS (B/A) (7.78) 12.95

3. Sundry debtors, deposits and loans and advances, creditors, other liabilities are subject to

confirmation, reconciliation and verification.

4. In the opinion of the board of directors sundry debtors, deposits, loans and advances are realisable

in the course of business as stated in the balance sheet.

5. Contingent liability not provided for

(i) Bank guarantee given Rs 3,60,000/- (previous year Rs 3,00,000/-)

(ii) Disputed arrears towards society maintenance Rs.9.42 Lacs (previous year Rs 7.84 lacs)

(iii) Contracts remaining to be executed on capital account and not provided for Nil (Previous

Year Nil ).

(iv) Liabilities to Encad Inc. for suit filed against company for compensation. Amount is

unascertainable.

6. The company is in the process of obtaining information from vendors regarding their status

under the Micro, Small and Medium Enterprises Development Act, 2006 and hence disclosure

relating to amount unpaid as at the year end together with interest paid / payable under this Act

have not been given.


DigitalElectronics

32

7. The company is in the process of obtaining information from vendors/suppliers regarding their

status as small scale industry. In the absence of any information, we cannot determine that whether

there are no dues outstanding for a period of more than 30 days as at March 31, 2011, in respect

of small scale industries as defined under clause (j) of section 3 of the Industries (Development

and Regulation ) Act , 1951.

8. As the company has temporarily discontinued its distributorship business in graphic arts systems

and the respective manufacturers have taken over the warranty and service obligations for the

machines in the field no warranty provision has been made in the books during the year. Also for

the same reasons no warranty claims were made by the customers during the year.

9. Fixed Deposit Rs.4, 00,000(previous year Rs. 4,41,112/-) are pledged for guarantees given by bank.

10. Expenditure in foreign currency :

March 31, 2011 March 31, 2010

Travelling Expenses 18,000 224,739

———————— —————————

18,000 224,739

========== ===========

11. Earning in foreign currency : Nil Nil

12. Payment to Auditor’s consists of :

Audit Fees 55,150 55,150

For Taxation,Certification and others 49,635 49,635

——————— ————————

104,785 104,785

=========== ===========

13. The trading of shares of the company on stock exchange has been suspended due to non

compliance of various listing requirements. The company currently is in the process of complying

with these listing requirements.

14. The Company is presently exploring various business opportunities. The Company has in the

meanwhile invested its surplus funds in financial assets. The Company has not applied for

registration with Reserve Bank of India under section 451A of RBI Act, 1934 though as on 31st

March, 2011, the total investment in financial assets exceeded 50% of total assets and income

from Financial Assets exceeded 50% of total income as the Company is of the opinion that the

Registration is required only in case the principal business activity is of Investing whereas the

investment by the Company was only out of its surplus funds.


DigitalElectronics

33

15. Deposits include Rs.1.50 Lacs given to Backbay premises co-operative society for the renovation

purpose of the office premises. The said society has raised arrears of dues for the prior year of

Rs.9.42 Lacs.(previous year Rs. 7.84 lacs) The company has raised a dispute against such arrears

and hence the said deposit has not been provided for.

16. Previous years figures have been regrouped / restated to conform to the current year’s classification.

For MZS & Associates For and on behalf of board of directors


Abuali Darukhanawala Sunil Dalal Mamta Dalal V.H.Shanbhag

Partner Director Director Director

M No: 108053

Place: Mumbai

Date : 30 May 2011


DigitalElectronics

34

Additional Information pursuant to the provisions of PART IV of SCHEDULE VI to the COMPANIES ACT,

1956.

Balance Sheet abstract and Company’s General Business Profile

1. Registration Details

Registration No : U32109MH1973PTC016345 State Code : 11

Balance Sheet Date : 31-03-2011

2. Capital Raised during the Year (Amount Rs. In Lakhs)

Public Issue Nil Right Issue Nil

Bonus Issue Nil Private Placement Nil

3. Position of Mobilisation and development of funds (Amount Rs. In Lakhs)

Total Liabilities 2,437 Total Assets 2,437

SOURCES OF FUNDS

Paid up Capital 24 Reserves & Surplus 2,413

Secured Loans Nil Deferred Tax Liabilties Nil


Net Fixed Assets 21 Investments 2,416

Net Current Assets (2) Deferred Tax Assets(Net) 2

Miscellaneous Expenditure Nil

4. Performance of Company (Amount Rs. In Lakhs)

Turnover (Including other Income) 18 Total Expenditure 36

Profit before Tax (18) Profit after Tax (18)

Earning per share Rs. (7.78) Dividend Nil

5. Generic Names of Principal products / services of Company

Item Code 0203

Product description Electronics Equipment, Computer Peripherals

For and on behalf of board of directors

Sunil Dalal Mamta Dalal V. H. Shanbhag

Director Director Director

Mumbai,

Date : 30 May, 2011

DigitalElectronics

35


C O N S O L I D A T E D A N N U A L R E P O R T

2010-2011

DigitalElectronics

36

DigitalElectronics

37

Auditors’ Report on the Consolidated Financial Statements

To the Members of Digital Electronics Limited

1. We have audited the attached Consolidated Balance Sheet of Digital Electronics Limited (‘the Company’)

and its Subsidiaries, (collectively referred to as the “Digital Electronics Group”) as at March 31, 2011 and

also the related Consolidated Profit and Loss Account and the Consolidated Cash Flow Statement for the

year ended on that date all of which have been signed under reference to this Report. These financial

statements are the responsibility of the management of the Company. Our responsibility is to express an

opinion on these financial statements based on our audit.

2. We have 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 from material misstatements. An audit includes examining, on a test check

basis, evidences 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 reasonable

basis for our opinion.

3. We report that the Consolidated Financials Statements (CFS) of the Company and entities covered in

Digital Electronics Group as referred to in note 1 of part II of schedule 17 have been prepared by the

Company in accordance with the requirements of Accounting Standard (AS) 21 “Consolidated Financial

Statements”, and other applicable accounting standards as notified in Companies (Accounting Standards)

Rules, 2006 (as amended).

4. Based on our audit and to the best of our information and according to the explanations given to us, we

are of the opinion that the attached CFS, read together with the significant accounting policies and other

notes thereon give a true and fair view in conformity with the accounting principles generally accepted in

India:

a) in the case of the Consolidated Balance Sheet, of the state of affairs of Digital Electronics Group as at

March 31, 2011;

b) in the case of the Consolidated Profit and Loss Account, of the Loss of the Digital Electronics Group

for the year ended on that date; and

c) in the case of Consolidated Cash Flow Statement, of the cash flows of Digital Electronics Group for

the year ended on that date.



ICAI Regn No: 106400W



Mumbai :

Date : 30 May, 2011

DigitalElectronics

38

CONSOLIDATED BALANCE SHEET AS AT MARCH 31, 2011


Audited Unaudited

SOURCES OF FUNDS

SHAREHOLDERS’ FUNDSShare Capital 1 2,376,000 2,376,000Reserves and Surplus 2 238,264,252 243,327,631

Sub Total 240,640,252 245,703,631

LOAN FUNDSSecured Loans 3 34,006 128,445

TOTAL 240,674,258 245,832,076


FIXED ASSETSGross Block 4 9,102,588 9,209,937Less: Depreciation 6,557,363 6,185,533

Net Block 2,545,225 3,024,404

INVESTMENTS 5 238,133,094 239,625,317

DEFERRED TAX ASSETS 519,626 493,346

CURRENT ASSETS,LOANS AND ADVANCESInventories 6 129,703 339,953Receivables 7 84,404 2,090,950Cash and Bank Balances 8 2,098,031 2,797,005Loans and Advances 9 29,379,968 30,685,971

Sub Total 31,692,106 35,913,880

LESS: CURRENT LIABILITIES AND PROVISIONSCurrent Liabilities 10 5,688,921 5,352,751Provisions 11 26,526,872 27,872,118

Sub Total 32,215,793 33,224,869

Net Current Assets (523,686) 2,689,010

TOTAL 240,674,258 245,832,076NOTES TO ACCOUNTS 17

The Schedules referred to above and the notes to accounts form an integral part of the Consolidated Balance SheetAs per our report of even date

For MZS & ASSOCIATES For and on behalf of the Board of DirectorsCHARTERED ACCOUNTANTS

ABUALI DARUKHANWALA SUNIL K. DALAL MAMTA S. DALAL V. H. SHANBHAGPARTNER DIRECTOR DIRECTOR DIRECTORM No: 108053Place : Mumbai Place : MumbaiDate : 30 May 2011 Date : 30 May 2011

DigitalElectronics

39

CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2011


INCOMESales and Services 12 10,113,210 9,977,004

Other Income 13 2,040,216 8,599,611

TOTAL 12,153,426 18,576,615

EXPENDITURECost of Sales 14 2,690,551 4,374,037

Operating and Establishment Expenses 15 13,691,602 10,488,301

Finance Charges 16 46,284 47,975


TOTAL 17,102,342 15,752,828

Profit before Tax and Prior Year Adjustments (4,948,916) 2,823,787

Profit / (Loss) before Taxation (4,948,916) 2,823,787

Less: Provision for Taxation- Current Year 5,000 520,000- Deferred Tax (26,279) 484,222- Earlier Year 135,741 -

Profit / (Loss) after Tax (5,063,378) 1,819,565

Balance brought forward from previous year 157,944,236 156,124,672

Balance carried to Balance Sheet 152,880,858 157,944,237

Basic and Diluted earnings per share (21.31) 7.66(weighted average no of shares 237,600(previous year 237,600)

Notes to Accounts 17

The Schedules referred to above and the notes to accounts form an integral part of the Profit and Loss Account.



ABUALI DARUKHANWALA SUNIL K. DALAL MAMTA S. DALAL V. H. SHANBHAGPARTNER DIRECTOR DIRECTOR DIRECTORM No: 108053Place : Mumbai Place : MumbaiDate : 30 May 2011 Date : 30 May 2011

DigitalElectronics

40

March 31, 2011 March 31, 2010 Rupees Rupees

A. Cash Flow from Operating Activities :Net Profit before Tax (4,948,916) 2,823,788Addiditons/ (Deductions) - -

Dividend income (937,862) (964,079)Interest (245,584) (310,703)(Gain) / loss on sale of Investments (704,537) (5,270,245)(Gain) / loss on sale of Assets (12,995) (275,015)Loss on revaluation of Shares & Mutual Funds 1,409,154 (778,257)Depreciation 673,905 842,515

Operating Profit before working capital changes (4,766,835) (3,931,995)

Adjustment for : -Inventories - (143,351)Advance Recoverable in Cash or Kind (170,603) 1,639,381Trade and Other receivables 2,006,546 3,389,434Loans and Advances 2,524,926 (2,082,584)Current Liabilites (263,832) 339,513Provision (1,345,246) 20,354

Cash generated from operations (2,015,044) (769,248)Less: Direct taxes Paid (378,795) (403,799)Net Cash from Operating Activities (A) (2,393,839) (1,173,047)

B. Cash Flows from Investing Activites [ Inflow/(Outflow) ]Purchase of Fixed Assets (235,065) -Purchase of Investments (146,381,720) (377,182,127)Sale of Investments 147,099,445 372,991,488Gain / (loss) on sale of Investments 69,864 116,979Proceeds from Sale of Vehicle 53,334 -Interest Received 245,584 310,703Dividend received 937,862 964,079

Net cash Flows from Investing Activities (B) 1,789,304 (2,454,229)

C. Cash Flows from Financing Activites [ Inflow/ ( Outflow) ]Proceeds/ ( Repayment) of Bank Borrowings - (115,448)Increase/(Decrease) in Secured Loan (94,439) (104,756)

Net cash Flows used in Financing Activites (C) (94,439) (220,204)

D. Net Decrease in Cash and Cash Equivalents (A+B+C) (698,974) (3,847,479)

E. Cash and Cash equivalents at the beginning of the year 2,797,005 6,644,484

F. Cash and Cash equivalents at the close of the year (D+E) 2,098,031 2,797,005


Abuali Darukhanawala Sunil Dalal Mamta Dalal V.H.ShanbhagPartner Director Director DirectorM No: 108053Place : Mumbai Place : MumbaiDate : 30 May 2011 Date : 30 May 2011

CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH 2011

DigitalElectronics

41

SCHEDULE 1:

SHARE CAPITALAuthorised500,000 Equity Shares of Rs. 10/- each 5,000,000 5,000,000

(Previous Year 500,000 Equity Shares of Rs.10/- each) 5,000,000 5,000,000

Issued,Subscribed and Paid-up237,600 ( Previous Year 237,600 ) equity shares of 2,376,000 2,376,000Rs.10/- each fully paid-up

TOTAL 2,376,000 2,376,000

SCHEDULE 2:

RESERVES AND SURPLUS

Capital ReserveOpening Balance 82,730,367Add : Profit on sale of Assets - 82,730,367 82,730,367

Capital Reserve on Consolidation 175,000 175,000

General Reserve 2,478,027 2,478,027

Balance in Profit and Loss Account 152,880,858 157,944,237

TOTAL 238,264,252 243,327,631

SCHEDULE 3:

SECURED LOANS

Secured Loan 34,006 128,445(Secured by Hypothecation of car from bank)

TOTAL 34,006 128,445

SCHEDULES FORMING PART OF THE CONSOLIDATED BALANCE SHEET


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DigitalElectronics

46

SCHEDULE 6:

INVENTORIES[ As valued and certified by the management ]Stock-in-trade 129,703 339,953

TOTAL 129,703 339,953

SCHEDULE 7:

RECEIVABLES(a) Debts outstanding for a period exceeding six months

Considered Good - -Considered Doubtful - -

Sub Total - -(b) Other debts

Considered Good 84,404 2,090,950Less:Provision for Doubtful Debts -

TOTAL 84,404 2,090,950

SCHEDULE 8:

CASH AND BANK BALANCESCash-on-hand 330,174 326,350Balances with Scheduled Banks

In Current Account 708,722 1,134,571

In Fixed Deposit Account 1,059,136 1,336,084

TOTAL 2,098,031 2,797,005

SCHEDULE 9:

LOANS AND ADVANCES

Unsecured, Considered goodDeposits 1,118,300 1,118,300

Income Tax 26,540,389 28,071,535

Advance Recoverable in cash or kind 1,721,279 1,496,136

TOTAL 29,379,968 30,685,971



DigitalElectronics

47



SCHEDULE 10 :

CURRENT LIABILITIES

Sundry Creditors (Other than micro, small and medium enterprises)Trade Creditors 1,375,355 2,996,256

Others 116,366 193,474

Other Liabilities 4,125,325 1,750,864

Statutory dues payable 64,125 170,914

Advances from Customers 7,750 241,244

TOTAL 5,624,796 5,352,751

SCHEDULE 11 :

PROVISIONS

Provision for Income Tax 26,057,000 27,599,484

Provision for Gratuity 253,660 103,586

Provision on Excise Duty 13,359 35,015

Leave Salary payable 202,853 134,033

TOTAL 26,526,872 27,872,118

DigitalElectronics

48

SCHEDULES FORMING PART OF CONSOLIDATED PROFIT AND LOSS ACCOUNT


SCHEDULE 12 :

SALES & SERVICES

Traded goods 4,985,748 7,870,774sService Income [Tax dedcuted at sources Rs. 24,428/-previous year Rs. 39,673/-] 2,266,374 1,027,195

Commission 2,861,088 1,079,035

TOTAL 10,113,210 9,977,004

SCHEDULE 13 :

OTHER INCOME

Interest Income (Tax deducted at source Rs. 21,050/-Previous Year Rs. 4446/- ) 245,584 310,703

Commission (Tax deducted at source Rs. Nil Previous year Rs. Nil) - -

Exchange Gain / ( Loss ) - 343,856

Profit / (Loss) on Sale of Assets 12,995 1,508,197

Profit on Sale of Investments 704,537 4,431,013

Dividend Income 937,862 570,129

Reversal of Provision for Diminution in Value of Investment - 778,257

Miscellaneous Income 139,238 657,458

TOTAL 2,040,216 8,599,611

SCHEDULE 14 :

COST OF SALES

Opening Stock - Traded Goods 339,953 196,602

Add : Purchases 2,480,301 4,517,388

Less : Closing Stock 129,703 2,690,551 339,953

TOTAL 2,690,551 4,374,037

DigitalElectronics

49

SCHEDULES FORMING PART OF CONSOLIDATED PROFIT AND LOSS ACCOUNT


SCHEDULE 15 :

OPERATING AND ESTABLISHMENT EXPENSES

Salaries, Wages and Bonus 3,071,299 1,999,255Contribution to Provident and other Funds 121,911 92,253Staff Welfare expenses 19,572 25,220Rates and Taxes 55,644 64,629Security Transaction Tax 17,533 221,891Insurance 101,249 166,045Repairs and Maintenance - Building 538,500 46,639- Others 280,422 171,642Rent 726,312 695,560Electricity and Water Charges 51,919 63,031Postage,Telegram and Telephone 219,364 247,649Printing and Stationery 23,887 18,640Membership & Subscription Charges - 33,108Sales Promotion 275,060 152,035Travelling and Conveyance 2,654,064 3,599,166Legal and Professional Expenses 1,358,080 685,705Payment to Auditors 162,958 155,150Miscellaneous Expenses 140,171 649,813Compansation of Car 2,100,000 1,200,000Commission Expenses - 121,000Freight & Forwarding Expenses 23,694 21,061Loss on Exchange fluctuation 107,661 -House-keeping Charges 57,049 49,602Warranty Repair 176,099 9,207Loss on revaluation of Shares & Mutual Funds 1,409,154 -

TOTAL 13,691,602 10,488,301

SCHEDULE 16:

FINANCE CHARGES

INTERESTOn Others 11,861 27,762Bank Charges 34,423 20,213

TOTAL 46,284 47,975

DigitalElectronics

50

SCHEDULE 17

Significant Accounting Policies and Notes to Accounts

I. Significant Accounting Policies

1. Basis of preparation of financial statements

The consolidated financials statements (CFS) comprises the financial statements of Digital Electronics

Limited (“the Company”) and its subsidiary (herein after referred to as “Group companies” and together

as “Group”).The financial statements of the group have been prepared under the historical cost

convention in accordance with the accounting standards issued by the Institute of Chartered

Accountants of India and the provisions of the Companies Act, 1956.

The preparation of the accounts, in conformity with generally accepted principles, requires that the

management of the company makes estimates and assumption that affect the reported amounts of

income & expenses of the period, reported balance of assets & liabilities & disclosure relating to

contingent assets & liabilities as of that date of the accounts.

All Significant items of income and expenditure are accounted on accrual basis except for claims/

refunds which are not ascertainable with reasonable accuracy, are accounted on cash basis.

2. Principles of consolidation

The financial statements of the Company and its subsidiary have been combined on a line-by-line

basis by adding together similar items of assets, liabilities, income and expenses, after eliminating

intra-group balances and transactions as per AS-21 – “Consolidated Financial Statements”.

The net profit of the subsidiaries for the year attributable to the share of minority interest is identified

and adjusted against the income in the CFS in order to arrive at the net income attributable to the

interest of shareholders of the Company. Similarly the amount attributable to the share of minority

interest in net assets of consolidated subsidiaries is identifies and presented in the CFS, separate

from the liabilities and the equity of the Company.

The excess/deficit of cost to the Company of its investment over its portion of net worth in the

consolidated entities at the respective dates on which investment in such entities was made is

recognized in the CFS as goodwill/capital reserve on consolidation.

3. Inventories

Inventories are valued at cost of purchase or realizable value whichever is lower on First In First Out

(FIFO) basis.

4. Revenue Recognition:

Revenue is recognized as under:

a) Sales of goods are recognized on dispatch to customers and are recorded net of trade discount.

SCHEDULES FORMING PART OF CONSOLIDATED ACCOUNTS AS AT MARCH 31, 2011

DigitalElectronics

51

b) Annual maintenance charges are accounted on pro-rata basis over the period of contract.

c) Service income is recognized on the completion of service.

d) Dividend is recorded when right to receive the same is established.

e) Reimbursement expected in respect of expenditure required to ascertain a provision is recognized

only when it is virtually certain that the reimbursement will be received.

5. Fixed Assets and depreciation

Fixed Assets are stated at historical cost, less accumulated depreciation.

Historical cost includes original cost of acquisition or revaluation cost and incidental expenses related

to such acquisition and installation. Depreciation on fixed assets is provided on the written down

value of the assets at the rates prescribed under Schedule XIV of The Companies Act, 1956.

Depreciation on addition to fixed assets is provided pro-rata from the date of capitalization.

Depreciation on sale/deduction from fixed assets is provided for up to the date of sale, deduction or

discernment as the case may be.

Assets costing Rs. 5,000/- or below are depreciated in full in year of its acquisition.

6. Foreign currency transactions

The Group has recorded the transactions denominated in foreign currency at the exchange rate

prevailing at the date of the transaction.

Monetary items denominated in foreign currencies at the year-end are translated at the exchange

rates prevailing on the date of the balance sheet.

Any income or expense on account of exchange differences either on settlement or on translation of

transactions other than those in relation to fixed assets is recognised in the profit and loss account.

7. Investments

Trade investments are the investments made to enhance the group’s business interest. Investments

are either classified as current or long term based on the managements intention at the time of purchase.

Current investments are carried at the lower of cost and fair value. Long term investments are carried

at cost and provisions recorded to recognize any decline, other then temporary, in the carrying value

of each investment.

Cost includes original cost of acquisition, brokerage and stamp duty.

8. Employee Benefits

Defined contribution plan

The Group makes defined contribution to the provident fund, which is recognized in the profit and

loss account on an accrual basis.

DigitalElectronics

52

Defined benefit plan

The Group’s liabilities under the Payment of Gratuity Act are determined on the basis of respective

employee’s salary and tenure of employment. The company is required to pay for accumulated leave

for leave balance outstanding as at the end of year, accordingly provision for accumulated leave is

made on the basis of basic salary of employee.

No actuarial valuation as prescribed by AS-15 is being made.

Short-term employee benefits

Short-term employee benefits are recognized as an expense at the undiscounted amount in the profit

and loss account of the year in which the related services are rendered.

9. Taxation

Tax expense comprises current tax and deferred tax.

Income Taxes are computed using the tax effect accounting network were taxes are accrued in the

same period the related revenue and expenses arise. A provision is made for income tax annually

based on the tax liability completed, after considering tax allowance and exemptions. Provisions are

recorded when it is estimated that a liability due to disallowances or other matter is probable.

The differences that result between the profit considered for income taxes and the profit as per

financial statement are identified, and there after a deferred tax Assets or deferred tax liability is

recorded for timing differences, namely the differences that originate in one accounting period and

reverse in another, based on the tax effect of the aggregate amount being consider. The tax effect is

calculated on the accumulated timing differences at the end of an accounting period based on

prevailing enacted or substantially enacted regulations. Deferred tax assets are recognized only if

there is reasonable certainty, that they will be realized and reviewed for the appropriateness of there

respective carrying values at each balance sheet date. Tax benefit of deductions earned on exercise of

employee stock option in excess of compensation charge to the profit and loss account are credited to

the share premium account.

10. Impairment of Assets

The management periodically accesses, using internal sources, whether there is an indication that

an asset may be impaired. An impairment occurs where the carrying value exceed the present value

of future cash flows expected to arise from the continuing use of assets and its eventual disposal.

The impairment loss to be expensed is determined as the excess of carrying amount over the higher

of the assets net sales price or present value as determined above.

11. Provision, Contingent Liability and Contingent Assets

Provision are recognized for liabilities that can be measured only by using a substantial degree of

estimation if,

a) The company has a present obligation as a result of past events

DigitalElectronics

53

b) The probable outflow of resources is expected to settle the obligation

c) The amount of obligation can be reliably estimated.

Contingent liability is disclosed in case of

a) Present obligation arising out of past event, when it is not probable that an outflow of resources

will be required to settle obligation.

b) A possible obligation, when the probability of outflow of resources is remote

Contingent assets are neither recognized nor disclosed. Provisions, contingent liabilities and contingent

assets are reviewed on each balance sheet date.

II. Notes to Accounts

1. Entities included in consolidation

Particulars Country of Proportion of Interest Proportion of Interest

Incorporation as on March 31, 2011 as on March 31, 2010

(%) (%)

Subsidiaries

DEL Automation Private Limited India 100.00 100.00

2. The deferred tax asset/(liability) has been calculated as under:

(In Rupees)

Particulars Opening Additions / Closing

Balance (Set-Off) Balance

Depreciation 279,666 35,294 314,960

Unpaid liability under section 43B 120,322 25,634 145,956

of Income Tax Act 1961

Amount Disallowed u/s 40(a) 93,358 (34,648) 58,710

Short Term Capital Loss - - -

Total( Deferred Tax Asset) 493,346 26,280 519,626

3. Earnings per share computed in accordance with Accounting Standard 20 as under

Particulars For the year ended For the year ended

March 31 March 2011 March 31 March 2010

Rs. Rs.

Net Profit after tax for the year

excluding extraordinary items (A) (5,063,378) 1,819,565

Weighted average number of shares (B) 2,37,600 2,37,600

Basic / Diluted EPS (A/B) (21.31) 7.66

DigitalElectronics

54

4. Contingent liability

(i) Contracts remaining to be executed on capital account and not provided for Nil (Previous Year

Nil).

5. Segmental Reporting

The Group has only one business segment namely fabrication (manufacturing) of Thermometers &

Thermal Imagers equipment, as a result segment wise income and expenditure and statement of

Assets and Liabilities is not applicable.

The Group does not have any reportable geographical segment.

6. Related Party Disclosure

I. List of Related Parties

Parties other than where control exists with whom the Company/subsidiaries have entered into

transactions during the year.

(i) Associates

SoftDEL Systems Pvt. Ltd.

UniDEL Advisors Pvt. Ltd.

Shasa Systems Pvt. Ltd.

(ii) Enterprise over which key management personnel is able to exercise significant influence

Spring Consultants

Kimasu Investments

Sumaki Investments

Ruby Enterprise

Diamond Enterprise

Emerald Enterprise

Saphire Enterprise

(iii) Key Management Personnel

Mr. Kishore R. Dalal

Mr. Sunil K. Dalal

Mrs. Mamta S. Dalal

DigitalElectronics

55

II. Transactions with related parties

Enterprise over which key

management personnel Key

is able to exercise Management

Nature of Transaction Associates significant influence Personnel Total

Income

1 OFCD Interest received

SoftDEL Systems Pvt. Ltd 1,60,914 - 160,914

(184,121) (184,121)

Expenses

1 Reimbursement of Expenses

SoftDEL Systems Ltd 553,986 553,986

(158,613) (158,613)

2 Compensation for use of Car -

Sunil K Dalal 2,100,000 2,100,000

(2,100,000) (2,100,000)

Outstanding Receivables

1 UniDEL Advisors Pvt Ltd 379,397 379,397

- -

Outstanding Payables

1 SoftDEL Systems Pvt Ltd 600,599 600,599

(158,951) (158,951)

2 Spring Consultants 288,923 288,923

(288,923) (288,923)

7. Sundry debtors, deposits and loans and advances, creditors, other liabilities are subject to confirmation,

reconciliation and verification. Loans and advances include Rs. 59,875/-(previous year Rs. 59,875) for

advance custom duty and Rs. 17,137/- (previous year Rs. 17,137/-) for Advance Excise Duty of subsidiary

DEL Automation Private Limited for which no details or confirmation are available.

8. Vehicles include a car owned by a subsidiary company Del Automation Pvt Ltd, of which the Company is

not in possession. The same is in possession of an ex-employee of the said company and the matter is

under dispute.

9. Previous year's figures have been regrouped / restated to conform to the current year's classification.

For MZS & ASSOCIATES For and on behalf of board of directors

CHARTERED ACCOUNTANTS

Abuali Darukhanawala Sunil Dalal Mamta Dalal V. H. Shanbhag

Partner Director Director Director

M No: 108053

Mumbai :

Date : 30 May 2011

DigitalElectronics

56

Fin

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DigitalElectronics

57

: NOTE :

DigitalElectronics

58

: NOTE :

DigitalElectronics

59

DIGITAL ELECTRONICS LTD

Registered Office : 86, Jolly Maker Chambers – II, 225, Nariman Point, Mumbai 400021

ATTENDANCE SLIP

38th Annual General Meeting, Friday, September 30th, 2011

I hereby record my presence at the 38thAnnual General Meeting of the Company (including adjournment thereof) at

86, Jolly Maker Chambers – II, 225, Nariman Point, Mumbai 400021, on Friday, September 30th2011 at 11 a.m.

*Folio No. : *DP ID :

Client ID : Email ID :

No. of shares held :

Full name of the Shareholder/Proxy (in block letters)

Signature

Note: Shareholders attending the Meeting in person or by Proxy are requested to complete the attendance slip and

hand over at the entrance of the hall.

*applicable for investor holding shares in electronics form.

Tear Here

DIGITAL ELECTRONICS LTD

Registered Office : 86, Jolly Maker Chambers – II, 225, Nariman Point, Mumbai 400021

PROXY FORM

Folio No. : *DP ID :

*Client ID :

I/We of

In the district of being a member(s) of the

Above named Company, hereby appoint of

In the district of or failing him of

In the district of as my/our proxy to

vote for me/us on my/our behalf at the 38thAnnual General Meeting of the Company (including adjournment

thereof) to be held at 86, Jolly Maker Chambers no. II Nariman Point, Mumbai 400021, on Friday, September 30th

2011 at 11 a.m. and at any adjournment thereof.

Signed this day of 2011

Note : 1. The Proxy need not be a member

2. The Proxy Form duly completed should be deposited at the Registered Office of the Company at

Mumbai not later than 48 hours before the time of the meeting.

*applicable for investor holding shares in electronics form.

Affix Rs.

1/

Revenue

Stamp

Signature(s) of th

Shareholder(s)


86 - JOLLY MAKER CHAMBER NO.II,

EIGHTH FLOOR, NARIMAN POINT,

MUMBAI - 400 021

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