Chemcel Biotech Ltd Auditor Reports

CHEMCEL BIO-TECH LIMITED ANNUAL REPORT 2010-2011 AUDITORS REPORT To The Members of CHEMCEL BIO-TECH LIMITED 1. We have audited the attached Balance sheet of CHEMCEL BIOTECH LIMITED as at 31st March, 2011 and related Profit and Loss account of the Company for the year ended on that date annexed thereto. 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. 2. We conducted our audit in accordance with accounting 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 mis-statements. 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 the management as well as evaluating the over all financial statements presentation. We believe that our audit provides a reasonable basis for our opinion. 3. 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 enclose in the Annexure, a statement on the matters specified in the paragraphs 4 and 5 of the said Order. 4. Further to our comments in the annexure referred to above, we report that: - 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. - In our opinion, proper books of accounts as required by law have been kept by the Company so far as appears from our examination of those books. - The Profit and Loss account and Balance sheet dealt with by this report are in agreement with the books of accounts of the Company. - In our opinion, the Profit & Loss account and Balance sheet comply with the accounting standards specified by the Institute of Chartered Accountants of India referred to in Section 211(3C) of the Companies Act, 1956. - On the basis of written representations received from the Directors as on 31.03.2011, and taken on record by the Board of directors, we report that none of the directors is disqualified as on 31.03.2011 from being appointed as Directors under Section 274(1) (g) of the Companies Act, 1956. 5. 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 in conformity with the accounting principles generally accepted in India. a. In the case of Balance sheet, of the state of affairs of the Company as on 31st March, 2011. b. In the case of Profit & Loss account, of the Profit for the period ended on that date. c. In the case of Cash Flow Statement for the year ended on 31st March, 2011. Date : 30.05.2011 T. NEHRU Place : Vijayawada Chartered Accountant C P No. 15207. ANNEXURE TO THE AUDIT REPORT (Chemcel Biotech Ltd.) (Referred to in paragraph (3) of report of even date) The Auditors report on the account of a Company to which this order applies shall include a statement on the following matters, namely:- I. a) The Company is maintaining proper records showing full particulars, including quantitative details and situation of fixed assets; b) All fixed assets have been physically verified by the management at reasonable intervals; there is no material discrepancies noticed on such verification. c) The Company has not disposed off any substantial part of fixed assets during this year. II. a) The physical verification of inventory has been conducted at reasonable intervals by the management; b) The procedures of physical verification followed by the Management are reasonable and adequate in relation to the size of the company and the nature of its business. There are no inadequacies in such procedures. c) The company is maintaining proper records of inventory and as informed to us, there is no material discrepancies noticed on physical verification. III. a) The Company has not granted any loans, secured or unsecured to parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly, Clause (iii)(b) to iii(d) of paragraph 4 of the Order are not applicable to the Company for the current year. b) The Company has taken interest free loan of Rs. 1,64,63,000/- from Sri K.T. Vijay Kumar, the Managing Director of the Company, covered in the register maintained under section 301 of the Companies Act 1956. c) The rate of interest and other terms and conditions on which the loans have been taken by the Company are not prima facie, prejudicial to the interest of the company. IV. The company has an adequate internal control procedure commensurate with the size of the company and the nature of its business, for the purchase of inventory of fixed assets and for the size of goods. There is no accounting failure to correct major weaknesses in internal control. V a) In our opinion and according to explanation and information given to us, the particulars of contracts or arrangements referred to in Section 301 of the Companies Act, 1956 have been so entered in the Register required to be maintained under this Section. b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements have been made at prices which are reasonable having regard to prevailing market prices at the relevant time. VI. The Company has not accepted deposits from the public, as per the provisions of Sections 58A and 58AA of the Act and the rules framed there under. VII. In our Opinion, the company has an internal audit system commensurate with its size and nature of its business. VIII. According to information and explanations given to us the Central Government has not prescribed the maintenance of the cost records by the company under clause (d) of sub section (I) of 209 of Companies Act, 1956. IX. a) The company defaulted in depositing undisputed statutory dues of an amount of Rs.1,31,00,745/- b) The Company is disputing the sales tax liability for an amount of Rs. 8,37,576/- and income tax liability of Rs. 46,90,183/-. Since the appeals are pending no provision has been made. X. The company is a profit making company. XI. The company has not defaulted in repayment of dues to a financial institution or bank. The company has not issued any debentures. XII. The company has not granted loans and advances on the basis of security by way of Pledge of shares. XIII. The Company is not a Chit Fund / Nidhi / Mutual Benefit fund / society. XIV According to the information and explanations given to us the Company is not dealing or trading in shares, Securities, Debentures and other Investments. XV. The company has given guarantee for loans taken by others from Andhra Bank and the terms and conditions whereof are not prejudicial to the interest of the Company; XVI. In our opinion the Term Loans availed by the Company during the year were, prime facie, applied for the purpose for which they were obtained. XVII. The funds raised on short-term basis have been used for short-term investment and vice versa; XVIII The Company has not made bonus allotment and right allotment to the party Covered in the Register maintained under section 301 of the Act. XIX. The company has not issued any debentures. XX. The company has made preferential allotment of 20,00,000 shares of Rs. 10/- each fully paid and preferential issue of 40,00,000 of share warrants of Rs. 10/- each paid @ 2.50 Ps. Per warrant. XXI In our Opinion and according to the information given to us, no fraud on or by the Company has been noticed or reported during the year. Date : 30.05.2011 T. NEHRU Place : Vijayawada Chartered Accountant C P No. 15207.