Polar Pharma India Ltd Auditor Reports

POLAR PHARMA INDIA LIMITED ANNUAL REPORT 2011-2012 AUDITORS REPORT To The Members of Polar Pharma India Limited. 1. We have audited the attached Balance Sheet of POLAR PHARMA INDIA LIMITED as at 31st March 2012, and the related Profits Loss Account and the Cash Flow Statement for the year ended on that date both annexed thereto, which we have been signed under reference to the 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. 2. 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. 3. As required by the Companies (Auditors Report) Order, 2003, as amended by the Companies (Auditors 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 give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order. 4. Attention is drawn to the following notes on Schedule 3 to the accounts; i) Note 3.1 regarding non-disclosure of dues to Micro, Small and Medium Enterprises as required under MSMED Act, 2006. The consequential impact thereof on the results for the period is not ascertainable ii) Note 3.2 regarding non-availability of confirmation of balances from Sundry Debtors, Sundry Creditors and Advances. Adjustment, if any, which may arise on receipt of confirmations with their consequential impact on the years loss and year-end net assets is not ascertainable. iii) Non-provision of interest and liquidity damages due to default in re- payment of loans to IIBI (since assigned to Phoenix ARC Pvt. Ltd. - Trustees of Phoenix ARF Scheme 9) and the resulting impact on the years loss and year end net assets is not ascertainable. 5. Further to our comments in the Annexure referred to in paragraph 3 above, we report that: 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 such books; iii) The Balance Sheet, the Profit & Loss Account and the Cash Flow Statement dealt with by this report are in agreement with the books of account; iv) In our opinion, the Balance Sheet, the Profit & Loss Account and the Cash Flow Statement dealt with by this report are in compliance with the Accounting Standards referred to in the subsection (3C) of Section 211 of the Companies Act, 1956; v) On the basis of written representations received from the directors as on 31st March, 2012 and taken on record by the Board of Directors, none of the directors is disqualified as on 31st March 2012 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Act; vi) In our opinion and to the best of our information and according to the explanations given to us, the said financial statement together with significant Accounting Policy and the notes there on, attached thereto give the information required by the Act in the manner so required and subject to our observations in paragraph 4 above regarding consequential effect on the years loss and year-end net assets of the Notes on Accounts referred to in paragraphs 4 above being not ascertainable, 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 at 31st March, 2012; (b) in the case of Profit & Loss Account, of the loss of the Company for the year ended on that date; (c) in the case of the Cash Flow Statement, of the cash flows for the year ended on that date. For L.B. Jha & Co. Chartered Accountants (Registration No. 301088E) 8, Netaji Subhas Road J. Sil Kolkata - 700 001 Partner Dated: 6th August, 2012 Membership No. 12723 ANNEXURE TO THE AUDITORS REPORT OF POLAR PHARMA INDIA LIMITED. (Referred to in Paragraph 3 of our report of even date) 1. a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets. b) The Companys fixed assets are physically verified by the management in regular intervals as per a programme of verification which, in our opinion, is reasonable having regard to the size of the company and the nature of its assets. According to the information and explanations given to us, no material discrepancies were noticed on such verification. c) The fixed assets disposed off during the year, in our opinion do not constitute a substantial part of the fixed assets of the company and such disposal has not affected the going concern status of the company. 2. a) The inventors have been physically verified during the year by the management. b) On the basis of information received, in our opinion, 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) Based on our examination of the records of inventory, we are of the opinion that the Company has maintained proper records of inventory. No major discrepancies were noticed on physical verification of the inventories. 3. a) The Company has not granted any loans, secured and unsecured, during the year to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. b) The Company has not taken any loans, secured and unsecured, during the year from companies, firms or other parties covered in the register maintained under section 301 of the Act. 4. In our opinion and according to the information and explanations given to us, internal control system is adequate 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. During the course of our audit, no major weakness has been noticed in the internal controls. 5. In our opinion and according to the information and explanations given to us, there were no contracts or arrangements referred to in Section 301 of the Act during the year under review to be to be entered in the Register required to be maintained under that section. 6. In our opinion and according to the information and explanations given to us, the Company has not taken any fresh deposits from the public as contained in the provisions of Section 58A and Section 58AA of the Act, and the Companies (Acceptance of Deposits) Rules, 1975 or any other relevant provisions of the Act. Internal audit of the company is being conducted by a firm of Chartered Accountants. In our opinion, the scope of the audit needs to be strengthened. 7. We have been informed that the Central Government has not prescribed the maintenance of cost records under Section 209(1 )(d) of the Act. 9. a) According to the information and explanations given to us and the records of the company examined by us, in our opinion, the company is generally regular in depositing undisputed statutory dues, including Investor Education and Protection Fund, Sales tax, Customs duty, Service Tax, Excise Duty, Cess and any other statutory dues with the Appropriate Authorities except Provident Fund, Employees State Insurance contributions and Tax deducted at Source. Further, an amount of Rs 183.79 lacs on account of Provident Fund, Employees State Insurance contributions, Gratuity and Tax deducted at Source are due for more than six months as at the last date of the year. b) According to the information and explanations given to us and the records of the Company examined by us, there were no dues of Income Tax, Customs Duty, Wealth Tax, Excise Duty, Cess which have not been deposited on account of any dispute except the following: Name of Statute Forum where the dispute is pending Amount of claim (Rs) Odisha Sales Tax Act Appellate Tribunal, Cuttack 65,63,141/- Provident Fund Act Regional Provident Fund 24,62,089/ Commissioner-Odisha 10. In our opinion, the accumulated losses of the Company have exceeded its net worth. Further, the Company has incurred cash losses during the financial year under review and in the immediately preceding financial year. 11. According to the information and explanations given to us, and on the basis of our examination of the records and documents, the Company has not repaid principal amounting to Rs. 720/- lacs to Industrial Investment Bank of India (Since assigned to Phoenix ARC Pvt Ltd - Trustee of Phoenix ARF Scheme 9) and an amount of Rs.2,400.16 lacs has again become payable to Stress Assets Stabilization Fund (SASF) on revocation of the negotiated settlement. 12. According to the information and explanations given to us and the records of the Company examined by us, the company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities. 13. According to the information and explanations given to us and the records of the Company examined by us, the provisions of any special statute applicable to chit fund / nidhi mutual benefit fund/societies are not applicable to the company. 14. According to the information and explanations given to us and the records of the Company examined by us, the Company is not dealing or trading in shares, securities, debentures and other investments, in the normal course of business. 15. According to the information and explanations given to us and the records of the Company examined by us, the company has not given any guarantee for loans taken by others from Financial Institution or Bank, which is prejudicial to the interest of the company. 16. According to the information and explanations given to us and on an overall examination of accounts and records, we report that company has not availed any term loan during the year. 17. According to the information and explanations given to us and on overall examination of the Balance Sheet of the Company, we report that no funds raised on short terms basis have been used for long-term investment. 18. The Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Act during the year. 19. The company has not issued any Debentures during the year. 20. The Company has not raised any money by public issue during the year. 21. During the course of our examination the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, and according to information and explanation given to us, We have neither come across any instance of fraud on or by the company, noticed or reported during the year, nor we have been informed of such case by the management. For L.B. Jha & Co. Chartered Accountants (Registration No. 301088E) 8, Netaji Subhas Road J. Sil Kolkata - 700 001 Partner Dated: 6th August, 2012 Membership No. 12723