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Auditor Report of Krebs Biochemicals & Industries Ltd.

Mar 31, 2015

We have audited the accompanying financial statements of M/s. Krebs Biochemicals & Industries Ltd, which comprise the Balance Sheet as at March 31, 2015, the Statement of Profit and Loss and Cash Flow Statement for the period from 1st October, 2014 to 31st March, 2015 and a summary of significant accounting policies and other explanatory information.

Management's Responsibility for the Financial Statements

The management and Board of Directors of the company are responsible for the matters stated in section 134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility includes maintenance of adequate accounting records in accordance with the provision of the Act for safeguarding of the assets of the Company and for preventing and detecting the frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial control, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder. We conducted our audit in accordance with the Standards on Auditing specified under section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company's preparation of the financial statements, that give true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on whether the company has in place an adequate internal financial controls system over financial reporting and the operating effectiveness of such controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by Company's management and Board of Directors, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Basis for Qualified Opinion

(1) Reference is invited to Note 15 of the financial statements, The Company's Non Current Assets consist of Long Term Trade Receivables of Rs.2,169.80 lacs. We are unable to ascertain whether such balances as at balance sheet date are fully recoverable. Accordingly, we are unable to ascertain the impact, if any, that may arise in case any of these receivables are subsequently determined to be doubtful of recovery. Had the Company provided provision for the same, the loss of the period would have been higher by the said amount.

Qualified Opinion

In our opinion and to the best of our information and according to the explanations given to us, except for the possible effects of the matters described in the Basis for Qualified Opinion paragraph, the financial statements give the information required by the Act 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 the Balance Sheet, of the state of affairs of the Company as at March 31, 2015;

b) In the case of the Statement of Profit and Loss, of the loss for the period from 1st October, 2014 to 31st March, 2015; and

c) In the case of the Cash Flow Statement, of the cash flows for the six months period ended on that date.

Report on Other Legal and Regulatory Requirements :

1. As required by the Companies (Auditor's Report) Order, 2015 ("the Order") issued by the Central Government of India in terms of sub-section (11) of section 143 of the Companies Act 2013, we give in the Annexure a statement on the matters specified in paragraphs 3 and 4 of the Order to the extent applicable.

2 As required by section 143(3) of the Act, we further report that:

a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit;

b) 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;

c) The Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement dealt with by this Report are in agreement with the books of account;

d) In our opinion, the aforesaid financial statements comply with the applicable accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014;

e) On the basis of written representations received from the directors as on March 31, 2015, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2015, from being appointed as a director in terms of Section 164(2) of the Act;

f) In our opinion and to the best of our information and according to the explanations given to us, we report as under with respect to other matters to be included in the Auditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014:

(i) The Company has pending litigations which would impact its financial position.

(ii) The Company did not have any long-term contracts including derivative contracts; as such the question of commenting on any material foreseeable losses thereon does not arise.

(iii) There have been no occasions in case of the company during the year under report to transfer any sums to the Investor Education and Protection Fund.

ANNEXURE TO AUDITORS' REPORT

REFERRED TO IN PARAGRAPH (8) IN OUR REPORT OF EVEN DATE FOR THE PERIOD ENDED 31.03.2015.

On the basis of such checks as we considered appropriate and according to the information and explanations given to us during the course of our audit, we report that:

(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed asset;

(b) The company has a regular programme of physical verification of its fixed assets by which fixed assets are verified in a phased manner. In accordance with this programme, certain fixed assets were verified during the period and no material discrepancies were noticed on such verification. In our opinion, this periodicity of physical verification is reasonable having regards to the size of the company and the nature of its assets;

(ii) (a) The inventories have not been physically verified by the management during the period due to closure of plants.

(b) Since the inventories have not been physically verified by the management during period, the point relating to reasonableness of physical verification procedures is not applicable to the company.

(c) The company has maintained proper records of inventories and the discrepancies noticed on physical verification of inventories as compared to book records were not material.

(iii) In our opinion, the Company has neither granted nor taken any loans to/from companies, firms or other parties covered in the register maintained under section 189 of the companies Act, 2013.

(iv) In our opinion and according to the information and explanations given to us, there is adequate internal control system commensurate with the size of the company and the nature of its business, for the purchase of fixed assets and for the sale of services. Further, on the basis of our examination of the books and records of the company and according to the information and explanations given to us, no major weakness has been noticed or reported.

(v) In our opinion and according to the information and explanation given to us, the company has not accepted any deposits from the public covered under section 73 to 76 of the Companies Act, 2013.

(vi) In our opinion and according to the information and explanation given to us, the Central Government has not prescribed the maintenance of cost records under sub-section (1) of Section 148 of the Companies Act, 2013.

(vii) (a) According to the information and explanations given to us and on the basis of our examination of the records of the company, amounts deducted/accrued in the books of account in respect of undisputed statutory dues including Provident Fund, Income Tax, Sales Tax, Wealth Tax, Service Tax, Duty of Customs, Valueadded tax, cess and other material statutory dues have been regularly deposited during the year by the company with the appropriate authorities.

According to the information and explanations given to us, there are no undisputed amounts payable in respect of Provident Fund, Income Tax, Wealth tax, Service Tax, Sales Tax, Duty of Customs, Excise Duty, Value added tax and Other material statutory as at March 31, 2015 for a period of more than six months from the date they became payable except ESI for Rs. 75,587/-.

(b) According to the information and explanations given to us, the following are disputed dues relating to Wealth tax, Duty of Customs and Cess which have not been deposited with the appropriate authorities on account of any dispute.

Name of the Nature of the Amount Statue Dispute (Rs)

Central Excise Excise Duty 95,27,999 Act, 1944

The A.P.VAT Act, VAT 1,00,28,066 2005

The Central CST 1,12,18,250 Sales Tax Act

Income Tax Income tax 3,15,52,734 Act, 1961

Name of the Period to Forum where the dispute Statute which the is pending and amount amounts deposited relate (F.Y)

Central Excise FY 2008-09 Central Excise and Service Tax Act,1944 Appellate Tribunal, Bangalore.

The A.P.VAT Act, From FY ADC, Punjagutta Division, 2005 2009-10 to Hyderabad FY 2011-12

The Cental Sales Tax Act FY 2010- ADC, Punjagutta Division, 11and F Hyderabad Y2011-12

Income Tax Act,1961 From FY AP High Court 2003-04 to FY 2005-06

(c) According to the information and explanations given to us the amounts which were required to be transferred to the Investor Education and Protection Fund in accordance with the relevant provisions of the Companies Act, 2013and rules there under have been transferred to such fund within time.

(viii)The Company's accumulated losses during at the end of the financial year are more than fifty per cent of its net worth. Also it has incurred cash loss during the 6 months period covered by our audit and has incurred cash loss in the immediately preceding accounting period.

(ix) In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of its dues to banks and financial institution including interest and principal as on 31st March 2015.

(x) According to the information and explanations given to us, the company has not given any guarantee for loans taken by others from banks, and financial institutions

(xi) In our opinion, the term loans have been applied for the purpose for which they were raised.

(xii) According to the information and explanations given to us, no material fraud on or by the company has been noticed or reported during the course of our audit.

For PAVULURI & Co.

Chartered Accountants

Firm Reg. No:012194S

Sd/-

(CA N. RAJESH)

PARTNER M.No : 223169 Place : Hyderabad Date : 23/05/2015


Mar 31, 2012

We have audited the attached Balance Sheet of KREBS BIOCHEMICALS & INDUSTRIES LIMITED as at 31.03.2012 and also the Statement of Profit and Loss and the Cash Flow statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company's 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' (Auditor's Report) Order, 2003, issued by the Central Government of India, in terms of Section 227(4A) of the Companies Act'1956, we enclose in the Annexure a statement on the matters specified in paragraph 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 accounts as required by law have been kept by the company so for as it appears from our examination of those books.

c) The Balance Sheet, statement of Profit & Loss account and the Cash Flow statement dealt with by this report are in agreement with the books of account.

d) In our opinion, the Balance Sheet, Statement of Profit and Loss and the Cash Flow statement dealt with by this report comply with the mandatory Accounting Standards referred to in Sub-Section 3(C) of Section 211 of the Companies Act'1956.

e) On the basis of the written representations received from the directors, as on 31st March '2012 and taken on record by the Board of Directors, we report that 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 Companies Act'1956.

f) In our opinion and to the best of our information and according to the explanations given to us, the said accounts read in conjunction with the schedule annexed therewith and 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,

i) In the case of the Balance Sheet, of the state of affairs of the Company as at 31st March'2012;

ii) In the case of the Statement of Profit and Loss, of the Loss of the Company for the year ended on that date; and

iii) In the case of the cash flow statement, of the cash flows for the year ended on that date.

KREBS BIOCHEMICALS & INDUSTRIES 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) All the assets have not been physically verified by the management during the year but there is a regular programme of verification which, in our opinion, is reasonable having regard to the size of the company and the nature of its business. No material discrepancies were noticed on such physical verification.

2. (a) The inventories have been physically verified by the management during the year at reasonable intervals.

(b) The procedures of physical verification of the 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 has maintained proper records of inventories and discrepancies noticed on physical verification of inventories as compared to book records were not material.

3. In our opinion, the Company has neither granted nor taken any loans to/from companies, firms or other parties covered in the Register, maintained under Section 301 of the Companies Act, 1956. Therefore, the provisions of clause 4(iii) (b), (c) & (d) of the Companies (Auditor's Report) order, 2003 are not applicable to the company.

4. In our opinion, there are adequate internal control procedures commensurate with the size of the company and the nature of its business with regard to purchase of inventories, fixed assets and for the sale of goods.

5. (a) In our opinion and according to the information and explanation given to us, there are no transactions made in pursuance of contracts or arrangements that need to be entered into the register maintained under section 301 of the Companies Act, 1956.

(b) In our opinion and according to the information and explanation given to us, there are no transactions of purchase and sale of goods, materials and services made in pursuance of contracts or arrangements entered in the register maintained under Section 301 of the Companies Act, 1956 aggregating during the year to Rs.5,00,000/- or more in respect of each party.

6. In our opinion and according to the information and explanation given to us, the company has not accepted any deposits as defined under section 58A of the Companies Act'1956.

7. In our opinion, the Company has an adequate internal audit system commensurate with its size and nature of its business.

8. We have broadly reviewed the Books of Account maintained by the Company as prescribed 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 have not carried out a detailed examination of the accounts and records.

9. (a) According to the books and records of the company, the company is not regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees' State Insurance, Income Tax, Corporate dividend Tax and other Statutory dues with appropriate authorities. According to the information and explanations given to us, there are undisputed amounts payable in respect of such statutory dues which have remained outstanding as at 31st March, 2012 for a period exceeding six months from the date they became payable.

Disputed Service Tax, Income Tax & Sales Tax not deposited, has been disclosed in note no : 32 as 'Contingent Liabilities not provided for'.

Nature of the Amount Deposit Forum where dispute Name of the Statute Dues (Rs.) Amount (Rs) is pending

Service Tax Central Excise and Service The Central Excise 3,33,650 Tax Appellate Tribunal, Act 1944 Nil Bangalore

AP VAT Act Sales Tax 7,84,419 Nil ADC Guntur

Income Tax Act Income Tax 3,15,52,734 Nil AP High Court

10. The company has incurred cash loss during the financial year covered by our audit and has incurred cash loss in the immediately preceding financial year.

11. In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of its dues to banks and financial institutions.

12. The Company has not granted any loans or advances on the basis of security by way of pledge of shares, debentures or other securities.

13. 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 (Auditor's Report) order, 2003 are not applicable to the company.

14. In our opinion, the Company is not dealing or trading in shares, securities, debentures or other investments and hence, the requirements of clause 4(xiv) of the Companies (Auditor's Report) order, 2003 are not applicable to the Company.

15. According to the information and explanations given to us, the company has not given any guarantee for loans taken by others from banks and financial institutions.

16. In our opinion, the term loans have been applied for the purpose for which they were raised.

17. In our opinion and according to the information and explanations given to us and on an overall examination of the balance sheet of the company, we report that no funds raised on short-term basis have been used for long-term investments. No long-term funds have been used to finance short-term assets except permanent working capital.

18. According to the information and explanation given to us, during the year the company has made a preferential allotment of 4,64,286 shares with a face value of Rs.10 and with a premium of Rs.18 per share to Mr. Avinash Ravi who is a director of the company.

19. No debentures have been issued by the company and hence, the question of creating securities in respect there of does not arise.

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

21. On the basis of our examination and according to the information and explanations given to us, no fraud, on or by the Company, has been noticed or reported during the year.

For PAVULURI & Co.

Charted Accountants

Firm's Reg. No. : 012194S

Sd/-

(CA P.A.RAMAIAH)

Place : Hyderabad PARTNER

Date : 17.05.2012 M.No.203300


Mar 31, 2010

We have audited the attached Balance Sheet of KREBS BIOCHEMICALS & INDUSTRIES LIMITED as at 31.03.2010 and also the Profit and Loss Account and the Cash Flow statement 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.

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 of India, in terms of Section 227(4A) of the Companies Act1956, we enclose in the Annexure a statement on the matters specified in paragraph 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 accounts as required by law have been kept by the company so for as it appears from our examination of those books.

c) The Balance Sheet, Profit & Loss account and the Cash Flow statement dealt with by this report are in agreement with the books of account.

d) In our opinion, the Balance Sheet, Profit and Loss account and the Cash Flow statement dealt with by this report comply with the mandatory Accounting Standards referred to in Sub-Section 3(C) of Section 211 of the Companies Act1956.

e) On the basis of the written representations received from the directors, as on 31st March 2010 and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 31st March 2010 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act1956.

f) In our opinion and to the best of our information and according to the explanations given to us, the said accounts read in conjunction with the, 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,

i) In the case of the Balance Sheet, of the state of affairs of the Company as at 31st March2010;

ii) In the case of the Profit and Loss Account, of the Loss of the Company for the year ended on that date; and iii) In the case of the cash flow statement, of the cash flows for the year ended on that date.

ANNEXURE TO AUDITORS REPORT KREBS BIOCHEMICALS & INDUSTRIES 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) All the assets have not been physically verified by the management during the year but there is a regular programme of verification which, in our opinion, is reasonable having regard to the size of the company and the nature of its business. No material discrepancies were noticed on such physical verification.

(c) According to the information and explanations furnished to us, the Company has disposed of Plant and Machinery of Food Division during the year.

2. (a) The inventories have been physically verified by the management during the year at reasonable intervals.

(b) The procedures of physical verification of the 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 has maintained proper, records of inventories and discrepancies noticedon physical verification of inventories as compared to book records were not material.

3. (a) The Company has taken loan from two parties covered in the Register, maintained under Section 301 of the Companies Act, 1956; The Maximum amount involved during the year was Rs.20,00,000/- and the year -end balance of loan taken from such parties was Rs.20,00,000/- The company has not granted any loans to companies, firms or other parties covered under section 301 of the Companies Act, 1956.

(b) In our opinion, the rate of interest and other terms and conditions in respect of unsecured loans given by the company to its employees and others, are in our opinion, prima facie not prejudicial to the interest of the Company;

(c) In respect of such loans given by the Company, where stipulations have been made, they have generally repaid the principal amounts as stipulated and have been regular in payment of interest, where applicable;

(d) In respect of such loans given by the Company, there are no overdue amounts more than Rs.1,00,000/-.

4. In our opinion, there are adequate internal control procedures commensurate with the . size of the Company and the nature of its business with regard to purchase of inventories, fixed assets and for the sale of goods.

5. (a) According to the information and explanation given to us we are of the opinion, that the transactions made in pursuance of contracts or arrangements, 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 the information and explanation given to us, the transaction of purchase of goods made in pursuance of contracts or arrangements entered in the register maintained under Section 301 of the Companies Act, 1956 aggregating during the year to Rs.5,00,000/- or more in respect of one party has been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

6. In our opinion and according to the information and explanation given to us, the Company has not accepted any deposits as defined under section 58A of the Companies Act 1956.

7. In our opinion, the Company has an adequate internal audit system commensurate with its size and nature of its business.

8. We have broadly reviewed the Books of Account maintained by the Company as prescribed 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 have not carried out a detailed examination of the accounts and records.

9. (a) According to the books and records of the company, the company is not regular

in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees State Insurance, Income Tax, Corporate dividend Tax and other Statutory dues with appropriate authorities. According to the information and explanations given to us, there are undisputed amounts payable in respect of such statutory dues which have remained outstanding as at 31st March, 2010 for a period exceeding six months from the date they became payable.

(b) Disputed Service Tax, Income Tax & Sales Tax not deposited, has been disclosed in point No.5 of Schedule 18(B) as Contingent Liabilities not provided for.

Name of the Nature of the Amount Deposit Forum where dispute Statute Dues (Rs.) Amount(Rs) is pending

The Central Excise Service Tax 3,33,650 Nil Central Excise and Act1944 Service Tax Appellate Tribunal, Bangalore

APVATAct Sales Tax 7,84,419 Nil ADC Guntur

Income Tax Act Income Tax 3,15,52,734 Nil AP High Court

10. In our opinion, the accumulated losses of the company are more than fifty percent of its net worth. The company has incurred cash loss during the financial year covered by our audit and has incurred cash loss in the immediately preceding financial year.

11. In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of its dues to banks and financial institutions.

12. The Company has not granted any loans or advances on the basis of security by way of pledge of shares, debentures or other securities.

13. 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, 2003 are not applicable to the company.

14. In our opinion, the Company is not dealing or trading in shares, securities, debentures or other investments and hence, the requirements of clause 4(xiv) of the Companies (Auditors Report) order, 2003 are not applicable to the Company.

15. According to the information and explanations given to us, the company has not given any guarantee for loans taken by others from banks, and financial institutions.

16. In our opinion, the term loans have been applied for the purpose for which they were raised.

17. In our opinion and according to the information and explanations given to us and on an overall examination of the balance sheet of thecompany, we report that no funds raised on short-term basis have been used for long-term investments. No long-term funds have been used to finance short-term assets except permanent working capital.

18. According to the information and explanation given to us, the company has not made preferential allotment of shares to parties covered in the register maintained under Section 301 of the Act.

19. No debentures have been issued by the company and hence, the question of creating securities in respect there of does not arise.

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

21. On the basis of our examination and according to the information and explanations given to us, no fraud, on or by the Company, has been noticed or reported during the year.

For PAVULURI & Co.

Chartered Accountants

Firms Reg. No.: 012194S

Sd/-

(CA P.A.RAMAIAH)

Place: Hyderabad PARTNER

Date: 24.05.2010 M.No.203300





 
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