pharmed chemicals ltd Auditors report

PHARMED CHEMICALS LIMITED AUDITORS REPORT TO THE MEMBERS OF PHARMED CHEMICALS LIMITED We have audited the attached Balance Sheet of PHARMED CHEMICALS LIMITED, Bangalore, as at 30th September 1997, and the Profit & Loss account for the period from 1st October 1996 to 30th September 1997 and report that; 1. As required by the Manufacturing and Other Companies (Auditors Report) Order, 1988, issued by the Company Law Board in terms of Section 227 (4A) of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said order. 2. Further to our comments in the Annexure referred ton paragraph (1) above:- a) We have obtained all the information and explanation which to the best of our knowledge and belief were necessary for the purposes of our audit. b) In our opinion, proper books of accounts as required by law have been kept by the Company so far as it appears from the examination of the books. Place: Bangalore Date : 27.6.98 c) The Balance Sheet and the Profit & Loss account dealt with by this report are in agreement with the books of account. d) And subject to the Note No. 1 (b) regarding preparation of the accounts as applicable to a going concern and Note No. 1 (i) regarding non-provision of certain liabilities, in our opinion and to the best of our information and according to the explanations given to us, the accounts read together with the notes thereon 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 the Balance Sheet of the State of affairs of the Company as at 30th September 1997: and ii) in the case of Profit & Loss account of the Loss of the Company for the period ended 30th September 1997. For GNANOBA & BHAT, CHARTERED ACCOUNTANTS. Sd/- V. BALAJI BHAT Partner ANNEXURE TO AUDITORS REPORT REFERRED TO IN PARAGRAPH 1 OF OUR REPORT OF EVEN DATE. a. The Company has maintained proper records showing full particulars including quantitative details and situation of Fixed Assets. As informed to us, all the fixed assets have been physically verified by the management at reasonable intervals and no material discrepancies have been noticed on such verification. b. None of the Fixed Assets have been revalued during the period. c. The stocks of finished goods, stores, spare parts and raw materials have been physically verified at regular intervals by the management. In our opinion, the frequency of the verification is reasonable. d. In our opinion, the procedure of physical verification of stocks followed by the Management is reasonable and adequate in relation to the size of the Company and the nature of its business. e. The discrepancies noticed between physical stocks and book stocks at the end of the period have been properly dealt with in the accounts. Besides these minor discrepancies, no material discrepancies have been observed on physical verification of stocks as compared to book records. f. In our opinion. the valuation of stocks is fair and proper in accordance with the normally accepted accounting principles and is on the same basis as in the preceding year except otherwise stated. g. The Company had taken loans from companies in which the Directors are interested, the terms and conditions of which, in our opinion, are not prima facie prejudicial to the interests of the Company. Subject thereto, the Company has not taken any loans, secured or unsecured from firms or other parties listed in the register maintained under Section 301 of the Companies Act, 1956. As informed to us, there are no Companies under the same management as defined under sub-section (1B) of Section 370 of the Companies Act, 1956. h. The Company has not granted any loans to Companies, Firms or other parties listed in the register maintained under section 301 of the Companies Act, 1956. As informed to us, there are no Companies under the same Management as defined under subsection (lB) of section 370 of the Companies Act, 1956. i. The Company has not given any loans or advances in the nature of loans to any party during the period under report. j. In our opinion, the internal control procedures need to be strengthened so as to be commensurate with the size of the Company and the nature of its business. k. According to the information and explanations given to us, the registers maintained under Section 301 of the Companies Act, 1956, and on the basis of selective checking of the transactions of the purchases and sale of goods and materials made in pursuance to contracts or arrangements required to be entered in the register maintained under Section 301 of the Companies Act, 1956, aggregating to Rs. 50,000/- or more in respect of each party, such transactions have been prima facie made at prices which are reasonable having regard to the prevailing market prices of such goods and materials. l. As explained to us, the Company has a regular procedure for the determination of unserviceable or damaged stores, raw materials and finished goods. m. The Company has not accepted any "deposits from the public during the period. n. As explained to us, the Companys operations do not generate any significant scrap or by-products and hence no records have been maintained for the same. o. The Company did not have an internal audit system during the period under report. p. According to the records produced and information and explanations given to us, cost records and accounts as prescribed by the Central Government under Section 209 (1) (d) of the Companies Act, 1956, have been prima facie maintained by the Company to the extent applicable but no examination of such records and accounts has been carried out by us. q. As explained to us, the Company does not come under the purview of the Employees Provident Fund and Family Pension Act, 1952. As regards the dues under the Employees State Insurance Act, 1947, the Company has been generally regular in depositing the same with the appropriate authorities subject to a sum of Rs. 30,592/ - in arrears as at 30th September 1997 remaining unpaid. r. There were no undisputed amounts payable in respect of Income Tax, Wealth Tax, Sales tax, Customs Duty and Excise Duty outstanding as on the last day of financial year for a period more than six months from the date they become payable. s. As evidenced by the records maintained by the Company, no personal expenses have been charged to the revenue account. t. In view of the complete erosion of net worth, the Company in our opinion, is a Sick Industrial Company within the meaning of Clause (O) of sub-section (1) of section 3 of the Sick Industrial Companies (Special Provisions) Act, 1985 and a reference has been made by the Board of Directors to the Board of Industrial and Financial Reconstruction, which is in the process of admission. u. In respect of the trading activities of the Company, as explained to us, there were no damaged goods as at the year end. For GNANOBA & BHAT, CHARTERED ACCOUNTANTS, Sd/- V. BALAJI BHAT Partner Place: Bangalore Date : 27.6.98