Ankur Drugs & Pharma Ltd Auditor Reports

ANKUR DRUGS AND PHARMA LIMITED ANNUAL REPORT 2011-2012 AUDITORS REPORT To The Members of ANKUR DRUGS AND PHARMA LIMITED, Mumbai We have audited the attached Balance Sheet of Ankur Drugs and Pharma Limited as at 31st March, 2012 and both the Statement of Profit and Loss Account and the Cash Flow Statement for the year ended on that date, which we have signed under reference to this Report. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit. We 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 of material misstatement. An audit includes examining, on a test basis, evidence 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 a reasonable basis for our opinion. As required by the Companies [Auditors Report] Order, 2003 issued by the Central Government in terms of sub section [4A] of section 227 of the Companies Act, 1956, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said order. Further to our comments in the Annexure referred to above, we report that: a. We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purpose of our audit; b. In our opinion, proper books of account as required by the law have been kept by the company, so far as appears from our examination of such books. c. The Balance Sheet and Statement of Profit & Loss Account dealt with by this report are in agreement with the books of account. d. In our opinion, the Balance Sheet and Statement of Profit & Loss Account dealt with by this report comply with the accounting standards referred to in sub-section [3C] of section 211 of the Companies Act, 1956; e. The provisions of accrued gratuity liability [amount not ascertainable in the absence of Actuarial Valuation report] has not been made. f. Provision has not been made in respect of interest amounting to Rs.9,52,77,286/- on some of the unsecured loans resulting in understatement of the loss and liability by an equivalent amount. Had the company provided for the same, the loss for the year would have been Rs. 3,17,02,15,848/- g. Based on representations made by all the directors of the company and the information and explanation as made available, directors of the company do not prima facie have any disqualification as referred to in clause [g] of sub-section [1] of section 274 of the Companies Act, 1956; h. Subject to Clause [e] & [f] above, in our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view: i. In the case of Balance Sheet, of the state of affairs of the company as at 31st March, 2012; ii. In the case of Statement of Profit and Loss, of the Loss for the year ended on that date and iii In the case of Cash Flow Statement, of the cash flows for the year ended on that date. For M. G. Vashi & Co. Chartered Accountants Firm Registration No 128577W CA. M.G. Vashi Proprietor ICAI M. No. 030217 Place: Mumbai Date : November 10, 2012 ANNEXURE TO THE AUDITORS REPORT i. a. The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets. b. There is a regular programme of verification of fixed assets which, in our opinion, is reasonable having regards to the size of the company and the nature of its assets. A part of the fixed assets of the company were verified during the year pursuant to the verification programme and no material discrepancies were noticed on such verification. c. During the year, the company has not disposed off a substantial part of fixed assets and we are of the opinion that the going concern status of the company is not affected on this account. ii. a. The inventory, except goods-in-transit and stock lying with third parties have been physically verified during the year by the management. In our opinion, the frequency of verification is reasonable. b. The procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the company and the nature of its business. c. The company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material. iii. a. The company has not granted any loans, secured or unsecured to any companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956 and consequently clause 4[iii][a],[b],[c] and [d] of the Statement on the Companies [Auditors Report] Order, 2004 are not applicable to the company. b. During the year, the Company has taken interest-free unsecured loan from six parties covered in the register maintained u/s.301 of the Companies Act, 1956. The maximum balance involved during the year was Rs.1,09,89,45,912/- and the year end balance of loan taken from such parties was Rs. 2,90,89,253/-. As these loans were interest free and no terms for repayment of loans were stipulated, clause 4[iii][g] of the Statement on the Companies [Auditors Report] Order, 2004 are not applicable to the company. c. In our opinion and according to explanation given to us, terms and conditions on which such loans have been taken from companies, firms or other parties listed in the register maintained under section 301 of the Companies Act, 1956 are not prima facie prejudicial to the interest of the Company. iv. In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the company and the nature of its business with regard to purchases of inventory, fixed assets and with regard to the sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal controls. v. a. According to the information and explanations given to us, we are of the opinion that the transactions that need to be entered into the register maintained under section 301 of the Companies Act, 1956 have been so entered. b. In our opinion and according to information and explanations given to us, the transactions made in pursuance of contracts or arrangements exceeding Rupees five lakhs have been entered during the year at prices which are reasonable having regard to prevailing market prices at the relevant time. vi. In our opinion and according to the information and explanations given to us, the Company has accepted the deposit from the public to which the directives issued by the Reserve bank of India, provisions of sections 58A and 58AA of the Companies Act, 1956 and the Companies [Acceptance of Deposits] Rules, 1975 are applicable. However, the Company has not complied with the provisions of Section 58A of the Companies Act, 1956 and the Companies [Acceptance of Deposits] Rules, 1975 in relation to the following issues: a. The company has defaulted in repayment of public deposits and also on payment of interest on the public deposits. b. The company has accepted new public deposits after making default in repayment of earlier deposits. c. The company has not repaid these new deposits within 30 days of acceptance of such deposits. d. The company has not filed annual return of deposits for the year ended on 31.03.2012 with the Registrar of Companies and Reserve Bank of India, which were required to be filed on or before 30.06.2012. e. The fixed deposit receipts with scheduled bank as are required to be kept as liquid assets in respect of public deposit maturing on or before 31.03.2012 are not free of charge/lien. f. As on the Balance Sheet date, proceedings for violation of provisions of Section 58A and Companies [Acceptance of Deposit] Rules, 1975 were pending before the Company Law Board consequent to the complaints filed by the depositors. An order was passed on 09.04.2012 by the Company Law Board for repayment of deposits to the extent of Rs.32,87,000/- by 30.04.2012. vii. In our opinion, the company has an internal audit system commensurate with the size and nature of its business. viii. We have broadly reviewed the books of account maintained by the Company pursuant to the Rules made by the Central Government for maintenance of cost records under section 209[1][d] of the Companies Act, 1956 and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. However, we are not required to carry out and have not carried out a detailed examination of the records with a view to determine whether they are accurate or complete. ix. a. The company is not regular in depositing with appropriate authorities undisputed statutory dues including provident fund, investor education and protection fund, employees state insurance fund, income tax, sales tax, wealth tax, custom duty, excise duty, cess and other material statutory dues wherever applicable to it. Name of the Nature of dues Financial Amount Payment made Statute Year upto date of Audit Report 1. Companies Unclaimed Dividend 2010-11 237,458 2,37,458 Act, 1956 2. Professional Profession Tax 2011-12 17,450 - Tax Act, 1975 Payable 3. Income Tax Tax Deducted at 2009-10 4,001,632 - Act, 1961 Source Tax Deducted at 2010-11 13,365,634 - Source Tax Deducted at 2011-12 6,868,027 - Source Income Tax 2002-03 158,731 - Income Tax 2003-04 903,962 - Income Tax 2005-06 5,777,316 - Income Tax 2009-10 43,057,967 4,500,000 Dividend Distribution Tax 2008-09 7,271,248 - Dividend Distribution Tax 2009-10 7,227,892 - 4. Central Central Sales Tax 2011-12 1,571 - Sales Tax Act, 1956 5. Finance Service Tax 2009-10 651,990 - Act, 1994 2011-12 130,365 - 6. E.P.F.& Provident Fund 2011-12 1,065,664 190,620 M.P.F. Act, 1952 b. According to the information and explanations given to us, no disputed amounts payable in respect of income tax, wealth tax, sales tax, custom duty, excise duty and cess were in arrears, as at 31st March, 2012 for period of more than six months from the date they became due. x. The Company has accumulated losses which are more than 50% of its net worth. The company has also incurred cash loss during the current financial year, but has not incurred cash loss in the immediately preceding financial year. xi. On the basis of our examination and according to the information and explanation given to us, we are of the opinion that during the year the company has defaulted in repayment of dues to the banks and financial institution. The amount defaulted is Rs.7,03,476,343 [Principal: Rs.38,75,30,629 and Interest: Rs.31,59,45,714]. The company has not obtained any borrowings by way of debentures. xii. The company has not granted any loans and/or advances on the basis of security by way of pledge of shares, debentures and other securities. xiii. In our opinion, the company is not a chit fund or a nidhi/mutual benefit fund/society. Therefore, the provisions of clause 4[xiii] of the Companies [Auditors Report] Order, 2004 are not applicable to the company. xiv. In our opinion, the company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provision of clause 4 [xiv] of the Companies [Auditor Report] Order, 2004 is not applicable to the company. xv. The company has given guarantee for loan taken by a party from bank. The terms and conditions thereof are not prima-facie prejudicial to the interest of the company. xvi. According to the information and explanation given to us, the company has not borrowed any funds by way of term loans during the year. Hence, the question of the application of funds therein does not arise. xvii. In our opinion and on the basis of our examination and according to the information and explanation given to us and on an overall examination of the balance sheet of the company, we report that during the year the company has not utilised short term funds for long-term purposes. xviii. During the year the company has not made any preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Companies Act, 1956. xix. During the year the company did not issue any debentures. xx. According to information and explanation given to us the company has not raised money by public issue, therefore, requirement for commenting on the end use of money raised by public issue does not arise. xxi. According to the information and explanations given to us, no fraud on or by the company has been noticed or reported during the course of our audit. For M. G. Vashi & Co. Chartered Accountants Firm Registration No 128577W CA. M.G. Vashi Proprietor ICAI M. No. 030217 Place: Mumbai Date : November 10, 2012