Home  »  Company  »  Orchid Pharma  »  Quotes  »  Auditor Report
Enter the first few characters of Company and click 'Go'

Auditor Report of Orchid Pharma Ltd.

Mar 31, 2015

1. We have audited the accompanying financial statements of Orchid Chemicals and Pharmaceuticals Limited ("the Company"), which comprise the Balance Sheet as at March 31,2015, and the Statement of Profit and Loss and Cash Flow Statement for the 18 months then ended, and a summary of significant accounting policies and other explanatory information.

Management's Responsibility for the Financial Statements

2. 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 Standards referred to in subsection (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.

Auditor's Responsibility

3. 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 ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

4. 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 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, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control. 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.

5. 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

I. The Company has given advances amounting to Rs.679.50 Crores to various parties and are outstanding as on March 31, 2015. The Company has not received any materials/ capital goods against these advances. As per information and explanation given, the Company is not able to take delivery of materials due to financial constraints. We are not able to express any opinion on the recoverability of these amounts.

II. The Company has investments of Rs.123.07 Crores and loans of Rs.32.37 Crores in two subsidiaries carrying on research and development activities. These subsidiaries have not been spending any money on the research during the current period as no financial support is given by the parent Company and the parent Company has not allocated any funds for the future development. No information is also available with the Company regarding the value of molecules available with the Subsidiary. In view of the above, it is necessary to impair the value of this investment.

III. The Company has an exposure of Rs.36.11 Crores towards receivables from one of its marketing subsidiary whose net worth is negative. Provision has not been made for same.

IV. Bank loans amounting to Rs.81.26 Crores are subject to confirmation and bank balances amounting to Rs. 1.76 Crores are subject to confirmation.

Qualified Opinion

6. In our opinion and to the best of our information and according to the explanations given to us except for the effects of the matter 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 Profit and Loss Statement, of the loss for the 18 months ended on that date; and

c) in the case of the Cash Flow Statement, of the cash flows for the 18 months ended on that date.

Emphasis of Matter

The Company has paid remuneration to the Managing Director and the Whole time Director in excess of minimum remuneration prescribed under schedule XIII of the Companies Act, 1956 amounting in total to Rs.979.13 Lakhs for the financial years 20112012 to 2014-2015 and the same is subject to the approval of the general meeting and Central Government.

Our opinion is not qualified in respect of this matter.

Report on Other Legal and Regulatory Requirements

7. 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.

8. 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 purpose 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) Except for the effects of the matter described in the Basis for Qualified Opinion paragraph, in our opinion, the Balance Sheet, Statement of Profit and Loss and 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 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 clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

Other Matters

The Ministry of Corporate Affairs had on April 01, 2014, vide its General Circular No 07/2014, Dissemination of Information with regards to the Provisions of the Companies Act, 2013 as Notified Till date vis a vis Corresponding Provisions of the Companies Act, 1956, identified such sections of the Companies Act, 1956 that would cease/ continue to have effect from April 01,2014.

Accordingly, in terms of the aforesaid Circular, our reporting in respect of section 227(3) of the Companies Act, 1956 and clauses (iii),(v)(a) and (b), (vi), (viii), (xiv), (xviii) of the Companies (Auditor's Report) Order, 2003 (dealing with sections 49, 58A, 58AA, 209(1) (d) and 301 of the Companies Act, 1956) is only for the period beginning from October 1,2013 till March 31,2014 since as per the aforementioned MCA Circular these sections have ceased to have effect from April 01,2014.

Annexure to the Independent Auditor's Report

(referred to in paragraph 7 under 'report on Other Legal and Regulatory Requirements' section of our report of even date)

i) In respect of its fixed assets:

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

(b) As explained to us, fixed assets have been physically verified by the management at reasonable intervals; no material discrepancies were noticed on such verification.

(c) The Company has disposed one of the undertakings during the period (Refer Note 45 to the financial statements). The disposal has not affected the going concern.

(d) The process relating to identifying scrap assets must be strengthened.

ii) In respect of inventory:

(a) As explained to us, the inventories other than materials lying with third parties (which have been substantially confirmed) were physically verified during the year by the management at reasonable intervals.

(b) In our opinion and according to the information and explanations given to us, the procedures of physical verification of inventories followed by the management were reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) In our opinion and according to the information and explanations to us, the Company has maintained proper records of its inventories and no material discrepancies were noticed on physical verification.

iii) The Company has taken an unsecured interest free advance of Rs.65.72 crore from one of the parties referred to in Section 301 of the Companies Act, 1956 and the terms and condition are not prejudicial to the interest of the Company.

iv) In our opinion and according to the information and explanations given to us, internal control systems relating to receipt of goods, purchase of inventories/ capital goods and payments need to be strengthened to commensurate with the size and nature of its business.

v) a) In our opinion and according to the information and explanations provided by the management, the contracts or arrangements referred to in section 301 of the Companies Act, 1956 have been entered in the register required to be maintained under that section. b) The transactions made in pursuance of such contracts or arrangements have been at prices which are reasonable having regard to the prevailing market prices / Joint Venture agreements at the relevant time.

vi) In our opinion and according to information and explanations given to us, the Company has not accepted any deposits from the public to which the directives issued by the Reserve Bank of India and the provision of section 58A and 58AA or any other relevant provision of the Act and the rules framed there under are applicable.

vii) In our opinion the Company's internal audit system has to be strengthened to commensurate with the size of the Company and the nature of its business. The coverage carried out by the independent Chartered Accountant firm approved by the Company need to be enlarged to make it commensurate with the size of the Company.

viii) We have reviewed the cost records maintained by the Company as prescribed by the Central Government under Section 209(1) (d) of the Companies Act, 1956 and are of the opinion that prima facie the prescribed cost records have been made and maintained. We have, however, not made a detailed examination of the cost records with a view to determine

whether they are accurate or complete.

ix) According to information and explanations given to us and according to the books and records as produced and examined by us, in our opinion:

(a) the Company has not been, during the period covered by the accounts, regular in depositing undisputed statutory dues including Provident fund, Investor Education and Protection Fund, Employees'State Insurance, Income-tax, Sales-tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, cess and other material statutory dues as applicable with the appropriate authorities. There has been continuous delay in payment of the dues.

(b) As at March 31, 2015, the following are the particulars of dues on account of Income tax, Sales tax, Wealth tax, Service tax, Customs duty and Excise duty that have not been deposited on account of disputes.

Name of the Statute Nature of dues Period for which amount relates

Central Excise Act, 1944 Excise Duty 2004-2013

2008-2014

2004-2009

2007-2014

2005-2007

2009-2014

2007-2014

Finance Act 1994 Service Tax 2005-2011

2008-2011

Name of the Statute Amount in Lakhs Forum where the Forum where the dispute is pending

Central Excise Act, 1944 217.48 CESTAT

5.70 Commissioner (Appeals)

567.70 Commissioner

144.81 Addl Commissioner

20.93 Joint Commissioner

74.60 Deputy Commissioner

13.41 Asst. Commissioner

Finance Act 1994 77.50 CESTAT

7.76 Asst. Commissioner

x) The Company has accumulated loss of more than 50% of the net worth at the end of the financial period. The Company has not incurred cash loss during the period but has incurred cash loss during the immediately preceding financial period.

xi) In view of the CDR package implemented as mentioned in Note No.46, continuous defaults made in payment of interest and principal prior to CDR package has not been reported.

xii) According to the information and explanations given to us, 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 and according to the information and explanation given to us, the nature of activities of the Company does not attract any special statute applicable to chit fund and nidhi/mutual benefit fund/societies.

xiv) In our opinion and according to the information and explanations given to us, the Company is not a dealer or trader in securities. The Company has not dealt/ traded any shares, securities, debentures and other investments during the period ended March 31,2015.

xv) According to the information and explanations given to us, the Company has not given any guarantees for loan taken by others from a bank or financial institution.

xvi) According to the information and explanations given to us and on the examination of cash flow statement, generally the term loans have been applied for the purposes for which they were obtained.

xvii) According to the Cash Flow Statement and other records examined by us and the information and explanations given to us on overall basis, the funds raised on short term basis, have not been used for long term purposes.

xviii) According to the information and explanations given to us, the Company has made preferential allotment of shares to parties covered in the register maintained under Section 301 of the Companies Act, 1956 and these shares have been issued at a price as per SEBI guidelines and hence not prejudicial to interest of the Company.

xix) According to the information and explanations given to us, during the period covered by our audit report, the Company has not issued any debentures

xx) According to the information and explanations given to us, the Company has not made any public issue during the year and accordingly paragraph 4(xx) of the said Order relating to end use of money raised is not applicable.

xxi) To the best of our knowledge and according to the information and explanations given to us, no fraud by the Company and no significant fraud on the Company has been noticed or reported during the period.

For SNB ASSOCIATES Chartered Accountants Firm Registration No. 015682N

T. K Shanmugam Place: Chennai Partner Date: May 28, 2015 Membership No. 016195




Sep 30, 2013

Report on the Financial Statements

1. We have audited the accompanying financial statements of Orchid Chemicals and Pharmaceuticals Limited ("the Company"), which comprise the Balance Sheet as at September 30, 2013, and the Statement of Profit and Loss and Cash Flow Statement for the 18 months then ended, and a summary of significant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements

2. 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 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.

Auditor''s Responsibility

3. 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 ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

4. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financia statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of materia 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.

5. 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

I. The Company has given advances amounting to Rs 524.69 crores to various parties and are outstanding as on September 30, 2013. The Company has not received any materials/ capital goods during the current period of 18 months against these advances. As per information and explanation given, the Company is not able to take delivery of materials due to financial constraints. We are not able to express any opinion on the recoverability of these amounts.

II. The Company has investments of Rs 94.82 crores and loans of Rs 34.25 crores in a wholly owned subsidiary Bexel Pharmaceuticals Inc. The subsidiary has not been spending any money on the research on the molecule during the current period as no financial support is given by the parent Company and the parent Company has not allocated any funds for the future development. In view of the above, it is necessary to impair the value of this investment as no information is available with the Company regarding the value that can be recovered from the sale of rights over the molecule possessed by the Subsidiary.

III. The Company has gone for Debt Restructuring process and in view of the same, the Company has not received confirmation of balance relating to Loans and other funded and non-funded dues from various banks as on September 30, 2013. Books have been closed on the basis of the information provided by various banks to the Corporate Debt Restructuring Empowered Group. Moreover, interest has been accounted for to the extent debited by the banks/ information provided by the banks. No provisions have been made in respect of dues to banks where such debit/ information have not been made/ provided by the banks.

Qualified Opinion

6. In our opinion and to the best of our information and according to the explanations given to us except for the effects of the matter 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 September 30, 2013;

b) in the case of the Profit and Loss Statement, of the loss for the 18 months ended on that date; and

c) in the case of the Cash Flow Statement, of the cash flows for the 18 months ended on that date.

Emphasis of Matter

1. IDBI Bank Limited has given notice to the Company to convert the term loan amounting to Rs 30.19 crores into shares at paras per the terms of the Loan agreement. The same has been disputed by the Company and the matter is pending before the Honourable High Court of Madras.

2. The Company has paid remuneration to the Managing Director and the Whole time Director in excess of minimum remuneration prescribed under schedule XIII of the companies act amounting to Rs 737.59 lakhs and the same is subject to the approval of Central Government. The Central Government approval for such excess remuneration pertaining to financial year 2011-12 is still awaited.

Our opinion is not qualified on these matters.

Report on Other Legal and Regulatory Requirements

7. 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.

8. 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 purpose 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 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.

c) Except for the effects of the matter described in the Basis for Qualified Opinion paragraph, in our opinion, the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement comply with the accounting standards referred to in sub-section (3C) of section 211 of the Act;

d) On the basis of written representations received from the directors as on September 30, 2013, and taken on record by the Board of Directors, none of the directors is disqualified as on September 30, 2013, from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

1. In respect of its fixed assets:

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

(b) As explained to us, fixed assets have been physically verified by the management at reasonable intervals; no material discrepancies were noticed on such verification.

(c) During the year, in our opinion and according to the information and explanations given to us, a substantial part of fixed assets has not been disposed off by the Company.

(d) The process relating to identifying scrap assets must be strengthened.

2. In respect of inventory:

(a) As explained to us, the inventories other than materials lying with third parties (which have been substantially been confirmed) were physically verified during the year by the management at reasonable intervals.

(b) In our opinion and according to the information and explanations given to us, the procedures of physical verification of inventories followed by the management were reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) In our opinion and according to the information and explanations to us, the Company has maintained proper records of its inventories and no material discrepancies were noticed on physical verification.

3. The Company has neither granted nor taken any loans, secured/ unsecured, to/from Companies/ firms or other parties referred to in Section 301 of the Companies Act, 1956.

4. In our opinion and according to the information and explanations given to us, there are adequate internal control systems commensurate with the size of the Company and the nature of its business, for the purchase of inventories, fixed assets, payment for expenses and for sale of goods and services. In respect of purchase of capital goods, large purchases have been made through single source. Except for above, we have not observed any major weakness in such internal controls systems.

5. a) In our opinion and according to the information and explanations provided by the management, the contracts or arrangements referred to in section 301 of the Companies Act, 1956 have been entered in the register required to be maintained under that section.

b) The transactions made in pursuance of such contracts or arrangements have been at prices which are reasonable having regard to the prevailing market prices/Joint Venture agreements at the relevant time.

6. In our opinion and according to information and explanations given to us, the Company has not accepted any deposits from the public to which the directives issued by the Reserve Bank of India and the provision of section 58A and 58AA or any other relevant provision of the Act and the rules framed there under are applicable.

7. In our opinion the Company''s internal audit system has to be strengthened to commensurate with the size of the Company and the nature of its business. The coverage carried out by the independent Chartered Accountant firm approved by the Company need to be enlarged to make it commensurate with the size of the Company.

8. We have reviewed the cost records maintained by the Company as prescribed by the Central Government under Section 209(1) (d) of the Companies Act, 1956 and are of the opinion that prima facie the prescribed cost records have been made and maintained. We have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

9. According to information and explanations given to us and according to the books and records as produced and examined by us, in our opinion:

(a) The Company has not been, during the period covered by the accounts, regular in depositing undisputed statutory dues including Provident fund, Investor Education and Protection Fund, Employees'' State Insurance, Income-tax, Sales-tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and other material statutory dues as applicable with the appropriate authorities. There has been continuous delay in payment of the dues. According to the information and explanations given to us, except for dividend distribution tax amounting to Rs 3.87 cores, there were no outstanding statutory dues as on September 30, 2013 for a period of more than six months from the date they became payable.

(b) As at September 30, 2013, the following are the particulars of dues on account of Income tax, Sales tax, Wealth tax, Service tax, Customs duty and Excise duty that have not been deposited on account of disputes.

Name of the Statute Nature of dues Period for which amount relates

2004-2008

2009-2011

2004-2011

2007-2009

Central Excise Act, 1944 Excise Duty 2009-2013

2005-2007

2007-2011

2004-2013

2008-2011

Finance Act 1994 Service Tax 2005-2006

2006-2011

2006-2007

2007-2008

Income Tax Act, 1961 Income Tax 2009-2010

2010-2011

Name Amount in lakhs Forum where the dispute is pending 4.70 CESTAT

7.23 Commissioner (Appeals)

128.22 Commissioner

Central Excise Act, 1944 4.35 Asst. Commissioner

62.03 Deputy Commissioner

20.93 Joint Commissioner

122.75 Addl Commissioner

591.96 Commissioner Chennai II

7.76 Asst. commissioner

Finance Act 1994 70.05 Commissioner

65.57 CESTAT

293.13 High Court of Madras

Income Tax Act, 1961 1276.98 High Court of Madras

20.72 High Court of Madras

2464.16 High Court of Madras

10. The Company has accumulated loss of more than 50% of the net worth at the end of the financial year and the Company has incurred cash loss during the current period of 18 months. The Company has not incurred cash loss during the previous financial year.

11. According to the information and explanations given to us, the Company has defaulted in repayment of dues to all the financial institutions and banks during the period ending September 30, 2013. The Company does not have any borrowings by way of debentures.

12. According to the information and explanations given to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

13. In our opinion and according to the information explanation given to us, the nature of activities of the Company does not attract any special statute applicable to chit fund and nidhi /mutual benefit fund/societies.

14. In our opinion and according to the information and explanations given to us, the Company is not a dealer or trader in securities. The Company has not dealt/ traded any shares, securities, debentures and other investments during the period ended September 30, 2013.

15. According to the information and explanations given to us, the Company has not given any guarantees for loan taken by others from a bank or financial institution except a guarantee given on behalf of wholly owned subsidiary.

16. According to the information and explanations given to us and on the examination of cash flow statement, generally the term loans have been applied for the purposes for which they were obtained.

17. According to the Cash Flow Statement and other records examined by us and the information and explanations given to us on overall basis, the funds raised on short term basis, prima facie, aggregating to Rs 65,227.94 lakhs haven been used during the year on long term purposes.

18. According to the information and explanations given to us, the Company has not made any preferential allotment of shares to parties or companies covered in the register maintained under Section 301 of the Companies Act, 1956, during the period ended September 30, 2013.

19. According to the information and explanations given to us, during the period covered by our audit report, the Company has not issued any debentures and the creation of the securities does not arise.

20. According to the information and explanations given to us, the Company has not made any public issue during the year and accordingly paragraph 4(xx) of the said Order relating to end use of money raised is not applicable.

21. To the best of our knowledge and according to the information and explanations given to us, no fraud by the Company and no significant fraud on the Company has been noticed or reported during the financial year.

For SNB ASSOCIATES

Chartered Accountants

Firm Registration No. 015682N

T. K Shanmugam

Place: Chennai Partner

Date: November 29, 2013 Membership No. 01 6195


Mar 31, 2012

1. We have audited the attached Balance Sheet of Orchid Chemicals & Pharmaceuticals Limited (the Company) as at March 31, 2012 and also the Profit and Loss statement of the Company for the year ended on that date annexed thereto and the 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.

2. We conducted our audit in accordance with auditing standards Generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit provides a reasonable basis for our opinion.

3. 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, we annexe hereto 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:

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, Profit and Loss statement 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 Statement and Cash Flow Statement dealt with by this report comply with the accounting standards as referred to in sub-section (3C) of Section 211 of the Companies Act, 1956;

e. On the basis of written representations received from the directors, as on March 31, 2012, and taken on record by the Board of Directors, we report that none of the directors is disqualified as on March 31, 2012 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956;

5. The Company has paid remuneration to the Managing Director and the Whole time Director in excess of minimum remuneration prescribed under schedule XIII of the companies act amounting to Rs 196.31 lakhs and the same is subject to the approval of the General meeting and Central Government.

6 Subject to Note no 5 above, in our opinion and to the best of our information and according to the explanations given to us, the said accounts read with notes thereon, specifically note no 1 (0(4) 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 March 31,2012;

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

iii. In the case of 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

1. The Company has maintained proper records showing full particulars including quantitative details and situation of its fixed assets. According to the information and explanations given to us, the fixed assets have been physically verified by the Management at regular intervals. In our opinion, the frequency of such physical verification is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verification as compared to the available records. There was no substantial disposal of fixed assets during the year.

2. Physical verification of Inventory has been conducted by the Management at reasonable intervals. The procedures for physical verification of stocks followed by the Management are reasonable and adequate in relation to the size of the company and nature of its business. The company is maintaining proper records of inventory and no material discrepancies were noticed on physical verification.

3. a. The Company has not taken any loans, secured or unsecured from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956.

b. As informed to us, the company has not granted any loans secured or unsecured loans to companies, firms, or other parties for which entries are required to be made under Section 301 of the Companies Act, 1956.

4. In our opinion and according to the information and explanation 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 inventory and fixed assets and for the sale of goods and services. During the course of our audit, no continuing weakness has been noticed in the internal control system.

5. In our opinion and according to the information and explanation given to us, the particulars of contracts or arrangements referred to in Section 301 of the Companies Act, 1956 have been entered in the register required to be maintained under that section.

The transactions made in pursuance of such contracts or arrangements have been made at prices which are reasonable having regard to the prevailing market prices / Joint Venture agreements at the relevant time.

6. The company has not accepted any deposits from the public.

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

8. We have broadly reviewed the books of account maintained by the Company, pursuant to the rules made by the Central Government for the maintenance of the 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.

9. The company is Generally regular in depositing undisputed Statutory Dues including Provident fund, Investor Education and Protection Fund, Employees' State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom duty, Excise duty, Cess and any other statutory dues applicable to it with the appropriate authorities.

10. According to the information and explanations given to us, no undisputed amounts payable in respect of Sales Tax, Income Tax, Wealth Tax, Service Tax, Custom duty, Excise duty and Cess were outstanding at the year end for a period of more than 6 months from the date they became payable.

11. According to the records of the company, there are no disputed amounts that have not been deposited with appropriate authorities on account of Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom duty, Excise duty and Cess except the following:

Name of the Statute Nature of Period for which Amount dues amount relates Rs in lakhs

Central Excise Act,1944 Excise Duty 2004-2007 3.05

2007-2010 5.22

2004-2009 128.22

2007-2009 6.76

2009-2011 12.19

2005-2007 20.93

2007-2011 132.68

2004-2007 439.46

Finance Act, 1994 Service Tax 2007-2010 22.23

2005-2010 153.45

Income Tax Act,1961 Income Tax 2006-2007 293.13

2007-2008 1,276.98

2009-2010 20.72

2010-2011 2,464.16



Name of the Statute Forum where the dispute is pending

Central Excise Act,1944 CESTAT

Commissioner (Appeals)

Commissioner

Asst. Commissioner

Deputy Commissioner

Joint Commissioner

Addl. Commissioner

Commissioner Chennai III

Finance Act, 1994 Asst. Commissioner

Commissioner

Income Tax Act, 1961 High Court of Madras

High Court of Madras

High Court of Madras

High Court of Madras

12. The company has no accumulated losses at the end of the financial year and it has not incurred any cash losses in the current and in the immediately preceding financial year.

13. Based on our audit procedures and on the information and explanations given by the management, we are of the opinion that the company has not defaulted in repayments of dues to banks /financial institutions. The company does not have any borrowings by way of debentures.

14. The company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

15. In our opinion and according to the information and explanations given to us, the nature of activities of the company does not attract any Special statute applicable to chit fund and nidhi / mutual benefit fund/societies.

16. Based on our examination of records and the information and explanations given to us, the company has not dealt/traded in any shares, securities, debentures and other investments during the year.

17. According to the information and explanations given to us, the company has not given any guarantee for loans taken by others from banks or financial institutions except a guarantee given on behalf of wholly owned subsidiary

18. The term loans obtained by the company were applied only for the purposes for which the loans were obtained.

19. According to the Cash Flow Statement and other records examined by us and the information and explanations given to us on an overall basis, the funds raised on short-term basis, prima facie, aggregating to Rs 40,681.61 lakhs have been used during the year for long-term purposes.

20. The company has not made any preferential allotment of shares to parties or companies covered in the register maintained under Section 301 of the Companies Act, 1956, during the year.

21. The company did not have any outstanding debentures/ bonds during the year for which creation of securities is required.

22. The company has not raised any money through public issue during the year.

23. Based on 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 course of our audit.

For SNB Associates

Firm Registration No015682N

Chartered Accountants

(B Mahalingam)

Place: Chennai Partner

Date: May 14, 2012 Membership No 210408


Mar 31, 2011

1. We have audited the attached Balance Sheet of Orchid Chemicals & Pharmaceuticals Limited (the Company) as at March 31, 2011 and also the Profit and Loss Account of the Company for the year ended on that date annexed thereto and the 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.

2. We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (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, we annexe hereto 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:

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, 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 as referred to in sub-section (3C) of Section 211 of the Companies Act, 1956;

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

5. In our opinion and to the best of our information and according to the explanations given to us, the said accounts read with notes thereon, specifically Note No.1 (i) (4) regarding adoption of amended Accounting Standard (AS- 11) and the impact on the same on the profit for the year of the Company, 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 March 31, 2011;

ii. In the case of the Profit and Loss Account, of the profit for the year ended on that date; and

iii. In the case of 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:

1. The Company has maintained proper records showing full particulars including quantitative details and situation of its fixed assets. According to the information and explanations given to us, the fixed assets have been physically verified by the Management at regular intervals. In our opinion, the frequency of such physical verification is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verification as compared to the available records. There was no substantial disposal of fixed assets during the year.

2. Physical verification of Inventory has been conducted by the Management at reasonable intervals. The procedures for physical verification of stocks followed by the Management are reasonable and adequate in relation to the size of the Company and nature of its business. The Company is maintaining proper records of inventory and no material discrepancies were noticed on physical verification.

3. a. The Company has not taken any loans, secured or unsecured from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956.

b. As informed to us, the Company has not granted any loans secured or unsecured loans to companies, firms, or other parties for which entries are required to be made under Section 301 of the Companies Act, 1956.

4. In our opinion and according to the information and explanation 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 inventory and fixed assets and for the sale of goods and services. During the course of our audit, no major weakness has been noticed in the internal control system.

5. In our opinion and according to the information and explanation given to us, the particulars of contracts or arrangements referred to in Section 301 of the Companies Act, 1956 have been entered in the register required to be maintained under that section.

The transactions made in pursuance of such contracts or arrangements have been made at prices which are reasonable having regard to the prevailing market prices / Joint Venture agreements at the relevant time.

6. The Company has not accepted any deposits from the public.

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

8. We have broadly reviewed the books of account maintained by the Company, pursuant to the rules made by the Central Government for the maintenance of the 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.

9. The Company is generally regular in depositing undisputed Statutory Dues including Provident fund, Investor Education and Protection Fund, Employees' State Insurance, Income- Tax, Sales-Tax, Wealth-Tax, Service-Tax, Custom duty, Excise duty, Cess and any other statutory dues applicable to it with the appropriate authorities.

10. According to the information and explanations given to us, no undisputed amounts payable in respect of sales-tax, Income-Tax, Wealth Tax, Service Tax, Custom duty, Excise duty and Cess were outstanding at the year end for a period of more than six months from the date they became payable.

11. According to the records of the Company, there are no disputed amounts that have not been deposited with appropriate authorities on account of Income Tax, Sales-Tax, Wealth Tax, Service-Tax, Custom duty, Excise duty and Cess except the following:

Name of the Statute Nature of dues Period to which the Amount Forum where the dispute amount relates Rs in Lakhs is pending

Central Excise Act, 1944 Excise duty 1999-00 to 2001-02 149.07 Additional Commissioner of Central Excise, Chennai

2004-05 to 2006-07 3.06 Customs, Excise and Service Tax Appellate Tribunal, Chennai

2004-05 to 2006-07 439.48 Commissioner Chennai III

April 2005 to May 2010 136.28 Additional Commissioner of Central Excise, Chennai

Aug 2005 to July 2007 20.93 Joint Commissioner of Central Excise, Chennai

2007 to 2009 4.67 Commissioner of Central Excise (Appeals)

2007 to 2009 6.77 Assistant Commissioner of Central Excise, Chennai

Sep 2006 to Feb 2010 1,423.06 Commissioner of Central Excise, Chennai

Oct 2009 to July 2010 3.62 Deputy Commissioner of Central Excise, Chennai

Finance Act, 1994 Service tax 2005-06 to 2009-10 153.46 Commissioner of Central Excise, Chennai (Chapter V) April 2007 to Jan 2010 22.24 Assistant Commissioner of Central Excise, Chennai

Jan 2008 to Sep 2008 0.83 Commissioner of Central Excise (Appeals), Chennai

12. The Company has no accumulated losses at the end of the financial year and it has not incurred any cash losses in the current and in the immediately preceding financial year.

13. Based on our audit procedures and on the information and explanations given by the management, we are of the opinion that the Company has not defaulted in payment of dues to financial institutions and banks. The Company does not have any borrowings by way of debentures.

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

15. In our opinion and according to the information and explanations given to us, the nature of activities of the Company does not attract any special statute applicable to chit fund and nidhi / mutual benefit fund/societies.

16. Based on our examination of records and the information and explanations given to us, the Company has not dealt / traded in any shares, securities, debentures and other investments during the year.

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

18. The term loans obtained by the Company were applied only for the purposes for which the loans were obtained.

19. According to the Cash Flow Statement and other records examined by us and the information and explanations given to us on an over all basis, the funds raised on short-term basis, prima facie, have not been used during the year for long-term purposes.

20. The Company has not made any preferential allotment of shares to parties or companies covered in the register maintained under section 301 of the Companies Act, 1956, during the year.

21. The Company did not have any outstanding debentures / bonds during the year for which creation of securities is required.

22. The Company has not raised any money through public issue during the year. The end use of the money raised through Foreign Currency Convertible Bonds in the earlier years has been disclosed and verified.

23. Based on 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 course of our audit.

For SNB Associates

Chartered Accountants

Firm Registration No. 015682N

B. Mahalingam

Place: Chennai Partner

Date: May 18, 2011 Membership No. 210408

 
Subscribe now to get personal finance updates in your inbox!