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Auditor Report of Morepen Laboratories Ltd.

Mar 31, 2015

We have audited the accompanying standalone financial statements of Morepen Laboratories Limited ('the Company'), which comprise the balance sheet as at 31 March, 2015, the statement of profit and loss and the cash flow statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management's Responsibility for the Standalone Financial Statements

The Company's Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation and presentation of these standalone 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 also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting 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 controls, 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 standalone 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 there under.

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 the 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 a 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 the accounting policies used and the reasonableness of the accounting estimates made by the Company's 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 on the standalone financial statements.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone 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, of the state of affairs of the Company as at 31 March, 2015 and its profit and its cash flows for the year 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 Act, we give in the Annexure a statement on the matters specified in the paragraph 3 and 4 of the Order, to the extent applicable.

2. As required by Section 143 (3) of the Act, we 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 it appears from our examination of those books;

(c) the balance sheet, the statement of profit and loss and the cash flow statement dealt with by this Report are in agreement with the books of account;

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

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

(f) with respect to the adequacy of the internal financial controls over financial reporting of the company and the operating effectiveness of such controls, refer to our separate report in annexure A; and

(g) with respect to the other matters to be included in the Auditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in

our opinion and to the best of our information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations on its financial position in its financial statements Refer Note 18 to the financial statements;

ii. The Company did not have any long term contracts including derivative contracts for which there were any material foreseeable losses;

iii. No amount was required to be transferred to the Investor Education and Protection Fund by the Company.

The Annexure referred to in our Independent Auditors' Report to the members of the Company on the standalone financial statements for the year ended 31 March 2015, we report that:

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

(b) As explained to us, most of the fixed assets have been physically verified by the management during the year and no material discrepancies were noticed on such verification. In our opinion, the frequency of physical verification is reasonable having regard to the size of the Company and the nature of its assets.

(ii) (a) As explained to us, the inventory has been physically verified at reasonable intervals by the management.

(b) 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) The company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material and have been properly dealt with in the books of accounts.

(iii) According to the information and explanations furnished to us, the company has not granted any loan secured or unsecured to companies, firms or other parties covered in the register maintained under Section 189 of the Act hence provisions of this clause are not applicable.

(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 purchases of inventory and fixed assets and for the sale of goods and service. Further during the course of audit, we have not come across any instance of major weakness in internal control.

(v) With approval of scheme of Arrangement and Compromise u/s 391 of the Companies Act, 1956 for the fixed deposit holders by Hon'ble High Court of Himachal Pradesh at Shimla and issue of equity shares thereafter to the fixed deposit holders, in our opinion there is no default by the company of any of the provisions of the Act.

(vi) The Central Government under section (1) of section 148 of the Act has prescribed maintenance of cost records for the company and company has maintained such accounts and records.

(vii) (a) As per records of the company, the company, in general, is regular in depositing undisputed statutory dues including provident fund, employees' state insurance, income tax, sales-tax, wealth-tax, service tax, duty of custom, duty of excise, value added tax, cess and other statutory dues with the appropriate authorities and no such dues are outstanding for a period exceeding six months from the date they became payable.

(b) There is no amount in respect of Income-tax, Sales-tax, Wealth tax, Service-tax, Customs duty, cess outstanding as at 31st March, 2015 due to any dispute. According to the information provided to us, the following duties of excise have not been deposited by the company on account of disputes:

Sl. Name of the statute Nature of dues Amount No. (in Rs)

1. Central Excise Act, 1944 Excise duty, Penalty, 18,99,630 Fine and Interest

2. Central Excise Act, 1944 Excise duty, Penalty, 487,74,545 Fine and Interest

3. Central Excise Act, 1944 Excise duty, Penalty, 54,58,206 Fine and Interest

4. Central Excise Act, 1944 Excise duty, Penalty, 56,40,498 Fine and Interest

5. Central Excise Act, 1944 Excise duty, Penalty, 70,601 Fine and Interest

6. Central Excise Act, 1944 Excise duty, Penalty, 11,18,405 Fine and Interest

7. Central Excise Act, 1944 Excise duty, Penalty, 1,34,313 Fine and Interest

8. Central Excise Act, 1944 Excise duty, Penalty, 1,67,824 Fine and Interest

9. Central Excise Act, 1944 Excise duty, Penalty, 43,03,960 Fine and Interest

10. Central Excise Act, 1944 Excise duty 3,13,091

11. Central Excise Act, 1944 Excise duty 2,42,477

12. Central Excise Act, 1944 Excise duty 3,19,412

13. Central Excise Act, 1944 Excise duty 67,952

14. Central Excise Act, 1944 Excise duty 3,80,702

15. Central Excise Act, 1944 Excise duty 2,24,842

16. Central Excise Act, 1944 Excise duty 2,29,040

17. Central Excise Act, 1944 Excise duty 3,53,219

Sl. Name of the statute Period to which Forum where No. the amount relates dispute is pending

1. Central Excise Act, 1944 April 2003 to CESTAT-Ahmedabad July 2003

2. Central Excise Act, 1944 August 2001 to CESTAT - Delhi April 2004

3. Central Excise Act, 1944 June 2004 to CESTAT-Chandigarh July 2008

4. Central Excise Act, 1944 June 2004 to CESTAT-Chandigarh March 2009

5. Central Excise Act, 1944 December 2008 to CESTAT-Chandigarh March 2009

6. Central Excise Act, 1944 April 2009 to CESTAT-Chandigarh March 2010

7. Central Excise Act, 1944 April 2009 to CESTAT-Chandigarh March 2010

8. Central Excise Act, 1944 April 2010 to CESTAT-Chandigarh September 2010

9. Central Excise Act, 1944 February/06 CESTAT -Delhi

10. Central Excise Act, 1944 April 2010 to Commissioner of December 2010 Appeal-Chandigarh

11. Central Excise Act, 1944 January 2011 to A.C. -Shimla October 2011

12. Central Excise Act, 1944 April 2007 to A.C. -Shimla December 2008

13. Central Excise Act, 1944 November 2011 to A.C. -Shimla March 2012

14. Central Excise Act, 1944 January 2012 to D.C.-Baddi September 2012

15. Central Excise Act, 1944 March 2012 to ACCE-Shimla September 2012

16. Central Excise Act, 1944 October 2012 to ACCE-Shimla June 2013

17. Central Excise Act, 1944 July 2013 to ACCE-Shimla June 2014

(c) As per records of the company, no amount was required to be transferred to the Investor Education and Protection Fund by the Company.

(viii) The accumulated losses of the company at the end of the financial year are not more than fifty percent of its net worth. The company has not incurred cash losses during the financial year covered by our audit and in the immediately preceding financial year.

(ix) Based on our audit procedures and on the information and explanations given by the management the company has defaulted in repayment of dues to financial institutions amounting to Rs. 358 lacs and interest Rs. 158 lacs both for a period less than three months. (Refer Note no. 4(I)(e) of notes on financial statements).

(x) In our opinion and according to the information and the explanations given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions.

(xi) According to the information and explanations given to us and on the basis of our verification of books of accounts of the company, we are of the opinion that the term loans have been applied for the purpose for which they were raised.

(xii) Based upon the audit procedures performed and information and explanations given by the management, we report that no fraud on or by the company has been noticed or reported during the year.

For M Kamal Mahajan And Co. Chartered Accountants Firm's Regn. No: 006855N

M K Mahajan New Delhi Partner 15th May, 2015 Membership number: 017418




Mar 31, 2014

We have audited the accompanying financial statements of Morepen Laboratories Limited ("the company"), which comprise the Balance Sheet as at 31st March, 2014, the Statement of Profit and Loss and Cash Flow Statement for the year then ended and a summary of significant accounting policies and other explanatory information.

Management Responsibility for the Financial Statements

Management is responsible for 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 Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 ("the Act") read with the General Circular No. 15/2013 dated 13th September, 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013. This responsibility includes the design, implementation and maintenance of internal controls 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.

Our Responsibility

Our responsibility is to express an opinion on these financial statements based on our examination. We conducted our examination in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with the ethical requirements and plan and perform the examination to obtain reasonable assurance about whether the financial statements are free of 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 auditors'' 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, we considered the internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

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

Matters of Emphasis

Without qualifying our opinion, we draw attention to the Note no. 35(e) to the financial statement regarding remuneration paid to directors without taking approval of Central Government.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid 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 31st March, 2014;

b) in the case of the Statement of Profit and Loss, of the loss of the Company for the year ended on that date; and

c) in the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

Report on other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2003 ("the Order") issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order, to the extent applicable to the Company.

2. As required by section 227(3) of the Act, 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 purposes of our examination.

b. In our opinion proper books of account as required by law have been kept by the Company so far as appears from our examinati on of those books.

c. The Balance Sheet, the Statement of Profit and Loss 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, the Statement of Profit and Loss and the Cash Flow Statement comply with the Accounting Standards referred to in sub-section (3C) of section 211 of the Act read with the General Circular No. 15/2013 dated 13th September, 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013.

e. On the basis of written representations received from the directors and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 31st March, 2014 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Act.

Annexure to Independent Auditors'' Report of Morepen Laboratories Limited

Referred to under the heading of "Report on other Legal and Regulatory Requirements" of our report of even date.

(i) a) The company has generally maintained proper records showing full particulars including quantitative details and situation of fixed assets except for items like pipe, meter instruments and other similar items.

b) As explained to us, most of the fixed assets have been physically verified by the management during the year and we have been informed that no material discrepancy was noticed on such verification. In our opinion, the frequency of physical verification is reasonable having regard to the size of the company and nature of its business.

c) During the year, the company has not disposed off substantial part of the fixed assets.

(ii) a) As explained to us, the inventory has been physically verified at reasonable intervals by the management.

b) 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) The company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material and have been properly dealt with in the books of accounts.

(iii) a) According to the information and explanations furnished to us, the company has not granted secured or unsecured loans to companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956.

b) According to the information and explanations furnished to us, during the year, the company has not taken any fresh loan from companies, firms or other parties covered in the register maintained under Section 301 of the Act. During the year, the company has repaid fully the existing outstanding loan taken from one company amounting to Rs. 1074 lacs along with interest due. In our opinion, the rate of interest and other terms of the loan are prima facie not prejudicial to the interest of the company. (Refer Note no. 4(II) of notes on financial statements).

(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 purchases of inventory and fixed assets and for the sale of goods and service. Further during the course of audit, we have not come across any instance of major weakness in internal control.

(v) a) Based on the audit procedures applied by us and according to the explanations provided by the management, we are of the opinion that the transactions that need to be entered in the register maintained under section 301 of the act have been so entered.

b) In our opinion and according to the information and explanations given to us, the transactions which have been entered into pursuant to contract that have been entered in the register maintained under Section 301 of the act have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

(vi) With approval of scheme of Arrangement and Compromise u/s 391 of the Companies Act, 1956 for the fixed deposit holders by Hon''ble High Court of Himachal Pradesh at Shimla and issue of equity shares thereafter to the fixed deposit holders, in our opinion there is no default by the company u/s 58A of the Companies Act, 1956.

(vii) In our opinion and according to the information and explanations given to us, the company has an internal audit system commensurate with the size and nature of its business.

(viii) We have broadly reviewed the books of accounts maintained by the company pursuant to rules made by the Central Government under section 209(1)(d) of the Companies Act, 1956 for maintenance of Cost records and are of the opinion that, prima facie, the prescribed accounts and records have been maintained. We have not, however, made a detailed examination of the records with a view to determine whether they are accurate or complete.

(ix) According to the records of the company, the company, in general, is regular in depositing with appropriate authorities undisputed statutory dues including Provident Fund, Employees'' State Insurance, Income Tax, Sales-tax, Wealth-tax, Service tax, Custom duty, Excise-duty, Cess and other statutory dues applicable to it and as on 31.3.2014, there are no statutory dues outstanding for a period exceeding six months. There is no amount in respect of Income-tax, Sales-tax, Wealth tax, Service-tax Customs duty, cess outstanding as at 31st March, 2014 due to any dispute. According to the information provided to us, an amount of Rs. 744 Lacs is disputed by the company in respect of excise duty matters under the Central Excise Act, 1944 pertaining to years from 2006-07 to 2013-14 and the matter is pending with Customs and Central Excise Appellate Tribunals- Rs. 578 Lacs and Commissioners of Central Excise- Rs. 166 Lacs.

(x) The accumulated losses of the company at the end of the financial year are not more than fifty percent of its net worth. The company has not incurred cash losses during the financial year covered by our audit and in the immediately preceding financial year.

(xi) Based on our audit procedures and on the information and explanations given by the management the company has defaulted in repayment of dues to financial institutions amounting to Rs. 157 lacs and interest Rs. 182 lacs both for a period less than three months. (Refer Note no. 4(I)(e) of notes on financial statements)

(xii) Based on our examination of documents and records, we are of the opinion that the company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) The company is not a chit fund/nidhi/mutual benefit fund/societies.

(xiv) The company is not dealing or trading in shares, securities, debentures and other investments.

(xv) In our opinion, and according to the information and explanations given to us and on the basis of our verification of books of accounts of the company and based on our examination of the records, we are of the opinion that the company has not given any guarantee for loans taken by others from bank or financial institutions.

(xvi) According to the information and explanations given to us and on the basis of our verification of books of accounts of the company, we are of the opinion that the term loans have been applied for the purpose for which they were raised.

(xvii) According to the information and explanations given to us and on the basis of our verification of books of accounts of the company, we are of the opinion that funds raised for short term basis were not used for long term investment.

(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 act.

(xix) The company has no debentures as on 31.3.2014 and hence this clause is not applicable to the company.

(xx) During the year covered by our audit report, the company has not raised any money by way of public issue hence provisions of this clause are not applicable to it.

(xxi) Based upon the audit procedures performed and information and explanations given by the management, we report that no fraud on or by the company has been noticed or reported during the year.

For M Kamal Mahajan And Co. Chartered Accountants Firm Regn. No. 006855N (M K Mahajan)

Place : New Delhi (Partner) Date : 21st May, 2014 Membership No. 017418


Mar 31, 2013

Report on the Financial Statements

We have audited the accompanying financial statements of Morepen Laboratories Limited ("the company"), which comprise the Balance Sheet as at 31st March,2013, the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements

Management is responsible for 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 Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act,1956 ("the Act"). This responsibility includes the design, implementation and maintenance of internal control 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.

Auditors'' Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with the ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors'' 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 control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

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

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial statements, subject to Note no. 37(e) of notes on financial statement regarding remuneration paid to directors of Rs. 304 lacs (including Rs. 50 lacs for the current year) without taking approval of Central Government, 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 31st March,2013;

b) in the case of the Statement of Profit and Loss, of the loss for the year ended on that date; and

c) in the case of the Cash Flow Statement, of the cash flows of the year ended on that date.

Report on other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2003 ("the Order") issued by the Central Government of

India in terms of sub-section (4A) of section 227 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

2. As required by section 227(3) of the Act, 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 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, the Statement of Profit and Loss 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, the Statement of Profit and Loss and the Cash Flow Statement comply with the Accounting Standards referred to in sub-section (3C) of section 211 of the Act.

e. On the basis of written representations received from the directors, as on 31st March,2013, and taken on record by the Board of Directors, none of the directors is disqualified as on 31st March,2013 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Act.

Annexure to Independent Auditors'' Report of Morepen Laboratories Limited

Referred to in Paragraph 1 under the heading of "Report on other Legal and Regulatory Requirements" of our report of even date.

(i) a) The company has generally maintained proper records showing full particulars including quantitative details and situation of fixed assets except for items like pipe, meter instruments and other similar items.

b) As explained to us, most of the fixed assets have been physically verified by the management during the year and we have been informed that no material discrepancy was noticed on such verification. In our opinion, the frequency of physical verification is reasonable having regard to the size of the company and nature of its business.

c) During the year, the company has not disposed off substantial part of the fixed assets.

(ii) a) As explained to us, the inventory has been physically verified at reasonable intervals by the management.

b) 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) The company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material and have been properly dealt with in the books of account.

(iii) a) According to the information and explanations furnished to us, the company has not granted secured or unsecured loans to companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956.

b) According to the information and explanations furnished to us, during the year, the company has not taken any fresh loan from companies, firms or other parities covered in the register maintained under Section 301 of the Act. However, the company has partly paid loan amount of Rs. 430 lacs of the existing loan taken from one company. Balance outstanding loan from the company is Rs. 1074 lacs. In our opinion, the rate of interest and other terms of the loan are prima facie not prejudicial to the interest of the company. However, interest payment of Rs. 279 lacs is overdue for a period less than a year. (Refer Note no. 4(II) of notes on financial statements).

(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 purchases of inventory and fixed assets and for the sale of goods and service. Further during the course of audit, we have not come across any instance of major weakness in internal control.

(v) a) Based on the audit procedures applied by us and according to the explanations provided by the management, we are of the opinion that the transactions that need to be entered in the register maintained under section 301 of the act have been so entered.

b) In our opinion and according to the information and explanations given to us, the transactions which have been entered into pursuant to contract that have been entered in the register maintained under Section 301 of the act have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

(vi) With approval of scheme of Arrangement and Compromise u/s 391 of the Companies Act, 1956 for the fixed deposit holders by Hon''ble High Court of Himachal Pradesh at Shimla and issue of equity shares thereafter to the fixed deposit holders, in our opinion there is no default u/s 58A of the Companies Act, 1956.

(vii) In our opinion and according to the information and explanations given to us, the company has an internal audit system commensurate with the size and nature of its business.

(viii) We have broadly reviewed the books of accounts maintained by the company pursuant to rules made by the Central Government under section 209(1)(d) of the Companies Act, 1956 for maintenance of Cost records and are of the opinion that, prima facie, the prescribed accounts and records have been maintained. We have not, however, made a detailed examination of the records with a view to determine whether they are accurate or complete;

(ix) According to the records of the company, the company, in general, is regular in depositing with appropriate authorities undisputed statutory dues including Provident Fund, Employees'' State Insurance, Income Tax, Sales- tax, Wealth-tax, Service tax, Custom duty, Excise-duty, Cess and other statutory dues applicable to it and as on 31.3.2013, there are no statutory dues outstanding for a period exceeding six months. There is no amount payable in respect of Income-tax, Sales-tax, Wealth tax, Service-tax, Customs duty, cess outstanding as at 31st March, 2013 due to any dispute. According to the information provided to us, an amount of Rs. 1119 Lacs is disputed by the company in respect of excise duty matters under the Central Excise Act, 1944 pertaining to years from 2006-07 to 2012-13 and the matter is pending with Customs and Central Excise Appellate Tribunals- Rs. 469 Lacs and Commissioners of Central Excise- Rs. 650 Lacs.

(x) The accumulated losses of the company at the end of the financial year are not more than fifty percent of its net worth. The company has not incurred cash losses during the financial year covered by our audit and in the immediately preceding financial year.

(xi) Based on our audit procedures and on the information and explanations given by the management the company has defaulted in repayment of dues to financial institutions amounting to Rs. 261 lacs for a period less than three months. (Refer Note no. 4(I)(e) of notes on financial statements)

(xii) Based on our examination of documents and records, we are of the opinion that the company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) The company is not a chit fund/nidhi/mutual benefit fund/societies.

(xiv) The company is not dealing or trading in shares, securities, debentures and other investments.

(xv) In our opinion, and according to the information and explanations given to us and on the basis of our verification of books of accounts of the company and based on our examination of the records, we are of the opinion that the company has not given any guarantee for loans taken by others from bank or financial institutions.

(xvi) According to the information and explanations given to us and on the basis of our verification of books of accounts of the company, we are of the opinion that the term loans have been applied for the purpose for which they were raised.

(xvii) According to the information and explanations given to us and on the basis of our verification of books of accounts of the company, we are of the opinion that funds raised from short term basis were not used for long term investment.

(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 act.

(xix) The company has no debentures as on 31.3.2013 and hence this clause is not applicable to the company.

(xx) During the year covered by our audit report, the company has not raised any money by way of public issue hence provisions of this clause are not applicable to it.

(xxi) Based upon the audit procedures performed and information and explanations given by the management, we report that no fraud on or by the company has been noticed or reported during the year.

For M Kamal Mahajan And Co.

Chartered Accountants

Firm Regn. No. 006855N

(M K Mahajan)

Place :New Delhi (Partner)

Date :13th May, 2013 Membership No.F-17418


Mar 31, 2012

We have audited the attached balance sheet of Morepen Laboratories Limited, as at 31st March, 2012 and the statement of profit and loss for the year ended on that date annexed thereto, and its cash flow statement for the year ended on that date. 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 the 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 sub- section (4A) of Section 227 of the Companies Act, 1956, ("the act"), we enclose 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 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, the 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 balance sheet, the statement of profit and loss and cash flow statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of section 211 of the act;

e. On the basis of 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 act;

In our opinion and to the best of our information and according to the explanations given to us, the said accounts, read together with notes thereon, 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 31st March, 2012;

b) in the case of the statement of profit and loss, of the loss of the company for the year ended on that date; and

c) in the case of the cash flow statement, of the cash flows of the company for the year ended on that date.

Annexure to Auditors' Report of Morepen Laboratories Limited

Referred to in our report of even date

(i) a) The company has generally maintained proper records showing full particulars including quantitative details and situation of fixed assets except for items like pipe, meter instruments and other similar items.

b) As explained to us, most of the fixed assets have been physically verified by the management during the year and we have been informed that no material discrepancy was noticed on such verification. In our opinion, the frequency of physical verification is reasonable having regard to the size of the company and nature of its business.

c) During the year, the company has not disposed off substantial part of the fixed assets.

(ii) a) As explained to us, the inventory has been physically verified at reasonable intervals by the management.

b) 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) The company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material and have been properly dealt with in the books of account.

(iii) a) According to the information and explanations furnished to us, the company has not granted secured or unsecured loans to companies, firms or other parties whose particulars are recorded in the register maintained under Section 301 of the Companies Act, 1956.

b) According to the information and explanations furnished to us, during the year, the company has taken an unsecured loan of Rs. 71 Lacs (year end balance Rs. 1504 Lacs) from a company covered in the register maintained under Section 301 of the act. In our opinion, the term and condition of the loan are not prima facie prejudicial to the interest of the company.(Refer Note 4(II) of the financial statements).

(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 purchases of inventory and fixed assets and for the sale of goods and service. Further during the course of audit, we have not come across any instance of major weakness in internal control.

(v) a) Based on the audit procedures applied by us and according to the explanations provided by the management, we are of the opinion that the transactions that need to be entered in the register maintained under section 301 of the act have been so entered.

b) In our opinion and according to the information and explanations given to us, the transactions which have been entered into pursuant to contract that have been entered in the register maintained under Section 301 of the act have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

(vi) With approval of scheme of Arrangement and Compromise u/s 391 of the Companies Act, 1956 for the fixed deposit holders by Hon'ble High Court of Himachal Pradesh at Shimla and issue of equity shares thereafter to the fixed deposit holders, in our opinion there is no default u/s 58A of the Companies Act, 1956.

(vii) In our opinion and according to the information and explanations given to us, the company has an internal audit system commensurate with the size and nature of its business.

(viii) We have broadly reviewed the books of accounts maintained by the company pursuant to rules made by the Central Government under section 209(1)(d) of the Companies Act, 1956 for maintenance of Cost records and are of the opinion that, prima facie, the prescribed accounts and records have been maintained. We have not, however, made a detailed examination of the records with a view to determine whether they are accurate or complete;

(ix) According to the records of the company, the company, in general, is regular in depositing with appropriate authorities undisputed statutory dues including Provident Fund, Employees' State Insurance, Income Tax, Sales- tax, Wealth-tax, Service tax, Custom duty, Excise-duty, Cess and other statutory dues applicable to it and as on 31.3.2012, there are no statutory dues outstanding for a period exceeding six months. There is no amounts payable in respect of Income-tax, Sales-tax, Wealth tax, Service-tax Customs duty, cess were outstanding as at 31st March,2012 due to any dispute. According to the information provided to us, an amount of Rs. 453 Lacs is disputed by the company in respect of excise duty matters under the Central Excise Act, 1944 pertaining to years from 2006-07 to 2011-12 and the matter is pending with Customs and Central Excise Appellate Tribunals- Rs. 357 Lacs and Commissioners of Central Excise- Rs. 96 Lacs.

(x) The accumulated losses of the company at the end of the financial year are not more than fifty percent of its net worth. The company has not incurred cash losses during the financial year covered by our audit and in the immediately preceding financial year.

(xi) Based on our audit procedures and on the information and explanations given by the management, the company is negotiating settlement as per the approved CDR scheme with two debenture holders with whom the company is in default in repayment amounting to Rs. 565 Lacs.

(xii) Based on our examination of documents and records, we are of the opinion that the company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) The company is not a chit fund/nidhi/mutual benefit fund/societies.

(xiv) The company is not dealing or trading in shares, securities, debentures and other investments.

(xv) In our opinion, and according to the information and explanations given to us and on the basis of our verification of books of accounts of the company and based on our examination of the records, we are of the opinion that the company has not given any guarantee for loans taken by others from bank or financial institutions.

(xvi) According to the information and explanations given to us and on the basis of our verification of books of accounts of the company, we are of the opinion that the term loans have been applied for the purpose for which they were raised.

(xvii) According to the information and explanations given to us and on the basis of our verification of books of accounts of the company, we are of the opinion that funds raised from short term basis were not used for long term investment.

(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 act.

(xix) Necessary charge has been created in respect of debentures issued by the company.

(xx) During the year covered by our audit report, the company has not raised any money by way of public issue hence provisions of this clause are not applicable to it.

(xxi) Based upon the audit procedures performed and information and explanations given by the management, we report that no fraud on or by the company has been noticed or reported during the year.

For M Kamal Mahajan And Co.

Chartered Accountants

Firm Regn. No. 006855N

(M K Mahajan)

Place : New Delhi (Partner)

Date : 14th May, 2012 Membership No.F-17418


Mar 31, 2011

1) We have audited the attached balance sheet of Blue Coast Hotels Limited as at 31st March 2011 and the profit and loss account and also the cash flow statement for the period 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.

2) We conducted our audit in accordance with the 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 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 (Auditor's Report) Order, 2003 as amended by the Companies (Auditor's 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, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4) Further to our comments in the Annexure referred to 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 those books;

iii. The balance sheet, profit and loss account and cash flow statement dealt with by this report are in agreement with the books of accounts;

iv. In our opinion, the balance sheet, profit and loss account and cash flow statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956;

v. On the basis of written representations received from the directors as on 31 st March, 2011 and taken on record by the board of directors, we report that none of the directors is disqualified as on 31 March, 2011 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956;

vi. 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 the balance sheet, of the state of affairs of the company as at 31 st March, 2011;

(b) in the case of profit and loss account, of the loss for the year ended on that date; and

(c) in the case of the cash flow statement, of the cash flows for the year ended on that date.

Annexure to Auditors' Report Referred to in paragraph (3) of our report of even date to the members of Blue Coast Hotels Limited on the Financial Statements for the year ended 31 st March, 2011

(i) (a) The company is maintaining proper records showing full particulars including quantitative details and situation of fixed assets.

(b) As explained to us, all the fixed assets have been physically verified by the management during the year. As explained to us by the company, no material discrepancies were noticed on such verification.

(c) During the period, the company has not disposed off substantial part of the fixed assets.

(ii) (a) As explained to us, the inventory has been physically verified by the management during the year. 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) On the basis of our examination of the records of inventory, we are of the opinion that the company is maintaining proper records of inventory. As explained to us, the discrepancies noticed on verification between the physical stocks and the book records were not material and have been properly dealt with in the books of accounts.

(iii) As per records of the company and as per information and explanations furnished to us, we are of the opinions that during the year, the company has neither granted nor taken any loans, secured or unsecured to/from companies, firms and other parties covered in the register maintained under Section 301 of the Companies Act, 1956 except grant of interest free temporary loan/advance of Rs. 0.01 lacs and Rs. 58.61 lacs to Blue Coast Hospitality Limited and Golden Joy Hotel Private Limited (both subsidiary companies).

(iv) In our opinion and according to the information and explanations given to us, there are adequate internal control system 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, no major weakness has been noticed in the internal controls systems.

(v) (a) Based on the audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that the particulars of contracts or arrangements referred to in section 301 of the act, wherever applicable, have been entered in the register required to be maintained under that 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) In our opinion and according to the information and explanations given to us, the company has not accepted deposits from public and hence provisions of section 58Aand58AA of the Companies Act, 1956 are not applicable.

(vii) In our opinion and according to the information and explanations given to us, the company has an internal audit system commensurate with the size of the company and nature of its business.

(viii) As explained to us, the Central Government has not prescribed any cost records under Section 209 (1) (d) of the Companies Act, 1956 for the company.

(ix) (a) According to the records of the company, the company in general, is regular in depositing with appropriate authorities undisputed statutory dues including Provident Fund, Employees' State Insurance, Income Tax, Sales-tax, Wealth-tax, Service tax, Custom duty, Excise duty, Cess and other statutory dues applicable to it except undisputed amount in respect of TDS which is outstanding in the books of accounts as on 31.03.2011, for a period of six months from the date the amount became payable amounting to Rs. 18.22 lacs. However, the company has deposited the same after 31.3.2011.

(b) According to the information and explanations given to us and on the basis of our verification of books of accounts of the company, no amounts payable in respect of Income-tax, Sales-tax, Wealth tax, Service-tax Custom duty, Excise duty, Cess were outstanding, as at 31 st March, 2011 due to any dispute.

(x) The company has no accumulated losses as on 31st March, 2011 .The company has not incurred cash losses during the year covered by our audit and in the immediately preceding financial year.

(xi) Based on our audit procedures and on the information and explanations give by the management, we are of the opinion that the company has not defaulted in repayment of dues to financial institutions and banks,

(xii) Based on our examination of documents and records, we are of the opinion that the company has not granted loans and 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/nidhi/mutual benefit fund/societies and hence provisions of clause (xiii) are not applicable to it.

(xiv) In our opinion, the company is not dealing or trading in shares, securities, debentures and other investments hence provisions of this clause are not applicable to it.

(xv) Based on our examination of the records of the company and as explained to us, we are of the opinion that the company has not given any guarantee for loans taken by others from bank or financial institutions.

(xvi) Based on our examination of the records, we are of the opinion that the term loans have been applied for the purpose for which they were raised.

(xvii) Based on our examination of the records, we are of the opinion that funds raised from short term basis were not used for long term investment.

(xvii i) 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 Act.

(xix) During the year, the company has allotted 10000, 12% Non Convertible Debenture of Rs. 100000/- each to an Indian company for which the company has created the necessary security/charge. (Refer Note no. 2.1 of II of schedule XVI).

(xx) During the year covered by our audit, the company has not raised any money by way of public issue.

(xxi) Based upon the audit procedures performed and information and explanations given by the management, we report that no fraud on or by the company has been noticed or reported during the year.

For M Kamal Mahajan And Co.

(Firm Regn.No.06855N)

Chartered Accountants

(S.K. Maheshwari)

Place: New Delhi (Partner)

Date : 30th May, 2011 M. No. 504238


Mar 31, 2010

We have audited the attached balance sheet of Morepen Laboratories Limited, as at 31st March, 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 the 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 sub- section (4A) of Section 227 of the Companies Act, 1956, ("the act"), we enclose 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 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 ourexamination of those books ;

c. The balance sheet, profit and loss account and 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 cash flow statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of section 211 of the act;

e. On the basis of written representations received from the directors, as on 31 st 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 act;

In our opinion and to the best of our information and according to the explanations given to us, the said accounts, read together with other notes thereon, 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 31st March, 2010;

b) in the case of the profit and loss account, of the loss for the year ended on that date; and

c) i n the case of the cash flow statement, of the cash flow for the year ended on that date.

Annexure to Audit Report Referred to in our report of even date

(i) a) The company has generally maintained proper records showing full particulars including quantitative details and situation of fixed assets except for items like pipe, meter instruments and other similar items.

b) As explained to us, most of the fixed assets have been physically verified by the management during the year and we have been informed that no material discrepancy was noticed on such verification. In our opinion, the frequency of physical verification is reasonable having regard to the size of the company and nature of its business.

c) During the year, the company has not disposed off substantial part of the fixed assets.

(ii) a) As explained to us, the inventory has been physically verified at reasonable intervals by the management.

b) 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) 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) The company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. During the year, the company has taken interest free unsecured loan of Rs. 1024.09 Lacs from a party covered in the Register maintained under Section 301 of the Companies Act, 1956.

(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 purchases of inventory and fixed assets and for the sale of goods and service. In our opinion, no continuing failure to correct major weakness in internal control system has been noticed.

(v) a) Based on the audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that the particulars of contracts or arrangements referred to in section 301 of the Act have been entered in the register required to be maintained underthat section.

b) In our opinion and according to the information and explanations given to us, the transactions entered in the registers maintained under Section 301 have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

(vi) With approval of scheme of Arrangement and Compromise u/s 391 of the Companies Act, 1956 for the fixed deposit holders by Honble High Court of Himachal Pradesh at Shimla and issue of equity shares thereafter to the fixed deposit holders, in our opinion there is no default u/s 58A of the Companies Act, 1956.

(vii) In our opinion and according to the information and explanations given to us, the company has an internal audit system commensurate with the size and nature of its business.

(viii) We have broadly reviewed the books of accounts maintained by the company pursuant to rules made by the Central Government under section 209(1 )(d) of the Companies Act, 1956 for maintenance of Cost records and are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the records with a view to determine whether they are accurate or complete;

(ix) According to the records of the company, the company, in general, is regular in depositing with appropriate authorities undisputed statutory dues including Provident Fund, Employees State Insurance, Income Tax, Sales- tax, Wealth-tax, Service tax, Custom duty, Excise-duty, Cess and other statutory dues applicable to it and as on 31.3.2010, there are no statutory dues outstanding for a period exceeding six months. There is no amounts payable in respect of Income-tax, Sales-tax, Wealth tax, Service-tax Customs duty, cess were outstanding as at 31 st March,2010 due to any dispute.

(x) The accumulated losses of the company at the end of the financial year are not more than fifty percent of its net worth. The company has not incurred cash losses during the financial year covered by our audit and in the immediately precedingfinancial year.

(xi) Based on our audit procedures and on the information and explanations given by the management, the company is negotiating settlement as per the approved CDR scheme with two debenture holders with whom the company is in default in repayment amounting to Rs. 565.00 lacs.

(xii) Based on our examination of documents and records, we are of the opinion that the company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) The company is not a chit fund/nidhi/mutual benefit fund/societies.

(xiv) The company is not dealing or trading in shares, securities, debentures and other investments.

(xv) In our opinion, and according to the information and explanations given to us and on the basis of our verification of books of accounts of the company and based on our examination of the records, we are of the opinion that the company has not given any guarantee for loans taken by others from bank or financial institutions.

(xvi) According to the information and explanations given to us and on the basis of our verification of books of accounts of the company, we are of the opinion that the term loans have been applied for the purpose for which they were raised.

(xvii) According to the information and explanations given to us and on the basis of our verification of books of accounts of the company, we are of the opinion that funds raised from short term basis were not used for long term investment.

(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 Act.

(xix) Necessary charge has been created in respect of debentures issued by the company.

(xx) During the year covered by our audit report, the company has not raised any money by way of public issue hence provisions of this clause are not applicable to it.

(xxi) Based upon the audit procedures performed and information and explanations given by the management, we report that no fraud on or by the company has been noticed or reported during the year.

For M Kamal Mahajan And Co. Chartered Accountants

(M K Mahajan)

(Partner)

Membership No.F-17418

Firm Regn.No.006855N

Place : New Delhi

Date : 13th May, 2010



 
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