Mar 31, 2022
Report on the audit of the Standalone financial statements Opinion
We have audited the standalone financial statements of Orchid Pharma Limited ("the Companyâ), which comprise the balance sheet as at March 31, 2022, and the statement of profit and loss (including other comprehensive income), the statement of changes in equity and the statement of cash flows for the year then ended, and notes to the standalone financial statements, including a summary of significant accounting policies and other explanatory information.
In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements, subject to our comments in the Basis for Opinion paragraph, give the information required by the Companies Act 2013 ("the Actâ) in the manner so required and give a true and fair view in conformity with the Indian Accounting Standards prescribed under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended, ("Ind ASâ) and other accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2022, and its loss, total comprehensive income, the changes in equity and its cash flows for the year ended as on that date.
We conducted our audit in accordance with the standards on auditing (SAs) specified under section 143 (10) of the Act. Our responsibilities under those standards are further described in the Auditor''s responsibilities for the audit of the standalone financial statements section of our report. We are independent of the Company in accordance with the code of ethics issued by the Institute of Chartered Accountants of India ("ICAIâ) together with the ethical requirements that are relevant to our audit of the standalone financial statements under the provisions of the Act and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ICAI''s code of ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the standalone financial statements of the current period. These matters were addressed in the context of our audit of the standalone financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
In our opinion and based on the information and explanations given to us, we have determined the matters described below to be the key audit matters to be communicated in our report:
Presentation and disclosure of additional information pursuant to the amendments to Schedule III to the Companies Act, 2013
With a view to facilitate enhanced disclosures and transparency in operations by companies in India, the Ministry of Corporate Affairs (MCA) has issued a batch of amendments to the Schedule III to the Companies Act, 2013 relating to presentation and disclosures in the financial statements. The Company has evaluated the requirements and made the relevant disclosures, including restatement of the disclosures made in the comparative period.
⢠We assessed the Company''s process to identify, assess, and respond to risks of material misstatement in the disclosure requirements pursuant to the aforesaid amendments to Schedule III to the Companies Act, 2013.
⢠As part of the evaluation of whether sufficient appropriate audit evidence has been obtained, we have evaluated the appropriateness of our initial risk assessments and revised previous risk assessments in for certain financial statement areas like claims and final settlement of financial and operating creditors, carrying amount of property, plant and equipment, capital work in progress, intangible assets comprising of, including related disclosure requirements under the Act and respective Indian Accounting Standards.
⢠We have designed, performed additional procedures, including verification of the source and completeness of data used by the management for making proper disclosures as required by the Act.
⢠We have considered the basis of management judgment
in making the disclosures taking into consideration the date of the financial statements, the facts and circumstances pertaining to the entity, and the conditions that existed at, or arose after, that date. We have considered all subsequent events and transactions to substantiate our conclusions on the appropriateness of management''s disclosures in accordance with the requirements of the amendments.
⢠We have audited the management''s estimates required in the standalone financial statements, including but not limited to estimates related to expected credit loss, fair value of various assets taken over and liabilities assumed, inventory obsolescence, impairment of non-financial assets etc. by checking the reasonableness of underlying assumptions in making those key estimates.
⢠We have carried out a detailed analysis of data and performed additional analytical procedures for validating the management''s disclosures.
Without qualifying our opinion, we draw attention to the
following matters
(a) Note 44 to the financial statements relating to relating to the fact that the Company has taken certain lands on lease for its operations in respect of which the lease agreement expired before the date of commencement of the Corporate Insolvency Resolution Process. We were informed that as part of the right to review the existing agreements, the Company has made a detailed assessment of the market rent for the property and the market value of the property for outright purchase. We were also informed that since the present rent as per erstwhile lease agreements is significantly high considering the market value of the property itself, the Company is in talks with the lessor for renewal of the lease with lower rent or for outright purchase of the property as part of the implementation of the resolution plan. However, no finality is reached on this matter as of date.
Pending completion of the negotiation and the uncertainties involved, the Company disputed the portion of the lease rent, considered to be excessive than the market rate as assessed by an independent valuer, amounting to INR 2,051.33 Lakhs upto March 31, 2022 in respect of the aforesaid lease. The same has been treated as contingent liabilities in the standalone financial statements of the Company.
Based on legal opinion obtained, the management is of
the opinion that no liability will arise on completion of the negotiation; and
(b) Note 2 to the financial statements relating to "Estimation of uncertainties relating to the global health pandemic from COVID-19â which describes the uncertainties and the impact of Covid-19 pandemic on the Company''s operations and results as assessed by the management.
Information other than the standalone financial statements and auditors'' report thereon
The Company''s board of directors is responsible for the preparation of the other information. The other information comprises the information included in the Management Discussion and Analysis, Board''s Report including Annexures to Board''s Report, Business Responsibility Report, Corporate Governance and Shareholder''s Information, but does not include the standalone financial statements and our auditor''s report thereon.
Our opinion on the standalone financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the standalone financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the standalone financial statements or our knowledge obtained during the course of our audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Management''s responsibility for the standalone financial statements
The Company''s board of directors are responsible for the matters stated in section 134 (5) of the Act with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position, financial performance including other comprehensive income, cash flows and changes in equity of the Company in accordance with the Indian Accounting Standards (Ind AS) prescribed under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended from time to time, and other accounting principles generally accepted in India.
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 standalone financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
In preparing the standalone financial statements, management is responsible for assessing the Company''s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
The board of directors are also responsible for overseeing the Company''s financial reporting process.
Auditor''s responsibilities for the audit of the standalone financial statements
Our objectives are to obtain reasonable assurance about whether the standalone financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor''s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these standalone financial statements.
As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
⢠Identify and assess the risks of material misstatement of the standalone financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
⢠Obtain an understanding of internal controls relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3) (i) of the Companies Act, 2013, we are also responsible for expressing our opinion on whether the company has adequate internal financial controls system in place and the operating effectiveness of such controls
⢠Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
⢠Conclude on the appropriateness of management''s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company''s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor''s report to the related disclosures in the standalone financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor''s report. However, future events or conditions may cause the Company to cease to continue as a going concern.
⢠Evaluate the overall presentation, structure and content of the standalone financial statements, including the disclosures, and whether the standalone financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Materiality is the magnitude of misstatements in the standalone financial statements that, individually or in aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user of the standalone financial statements may be influenced. We consider quantitative materiality and qualitative factors in (i) planning the scope of our audit work and in evaluating the results of our work; and (ii) to evaluate the effect of any identified misstatements in the standalone financial statements.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the standalone financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor''s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
Report on other legal and regulatory requirements
1. As required by the Companies (Auditor''s Report) Order, 2020 ("the Orderâ), issued by the Central Government of India in terms of sub-section (11) of section 143 of the Companies Act, 2013, we give in Annexure "Aâ a statement on the matters specified in paragraphs 3 and 4 of the Order.
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 including other comprehensive income, statement of changes in equity and the statement of cash flow 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 Indian Accounting Standards specified under Section 133 of the Act;
(e) On the basis of the written representations received from the directors as on March 31, 2022 taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2022 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 Bâ. Our report
expresses an unmodified opinion on the adequacy and operating effectiveness of the Company''s internal financial controls over financial reporting;
(g) With respect to the other matters to be included in the Auditor''s Report in accordance with the requirements of section 197 (16) of the Act, as amended, in our opinion and to the best of our information and according to the explanations given to us, the remuneration paid by the Company to its directors during the year is in accordance with the provisions of section 197 of the Act; and
(h) 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:
a. The Company has disclosed the impact of pending litigations on its financial position in its standalone financial statements - Refer Note 44 to the standalone financial statements;
b. The Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long-term contracts including derivative contracts; and
c. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.
d. The management has represented that, to the best of its knowledge and belief, other than as disclosed in the notes to the accounts,
I. no funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the company to or in any other person(s) or entity(ies), including foreign entities ''Intermediaries'', with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, whether, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company ''Ultimate Beneficiaries'' or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries; and
ii. no funds have been received by the company from any person(s) or entity(ies), including
foreign entities ''Funding Parties'', with the understanding, whether recorded in writing or otherwise, that the company shall, whether, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party ''Ultimate Beneficiaries'' or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
iii. Based on audit procedures carried out by us, that we have considered reasonable and appropriate in the circumstances, nothing has come to our notice that has caused us believe that the representations under sub-clause (i) and (ii) contain any material misstatement.
e. The Company has not declared or paid any dividends during the year and accordingly reporting on the compliance with section 123 of the Companies Act, 2013 is not applicable for the year under consideration.
For CNGSN & ASSOCIATES LLP
Chartered Accountants
Firm''s Registration No. 004915S/ S200036
(CHINNSAMY GANESAN)
Partner
Membership No. 027501 UDIN: 22027501AIVWAR7832
Place: Chennai Date: May 12, 2022
Mar 31, 2018
Report on the Standalone Financial Statements
The Honâble National Company Law Tribunal (âNCLTâ), Chennai Bench, admitted the Corporate Insolvency Resolution Process (âCIRPâ) application filed by an operational creditor of Orchid Pharma Limited (âthe Companyâ) and appointed an Interim Resolution Professional (âIRPâ), in terms of the Insolvency and Bankruptcy Code, 2016 (âthe Codeâ) to manage the affairs of the Company vide CP.No. CP/ 540/ (IB)/ CB/ 2017, dated August 17, 2017. Subsequently, Mr. Ramkumar Sripatham Venkatasubramanian (IP Registration No. IBBI/ IPA-001/ IP-P00015/ 2016-17/ 10039) has been appointed as the Resolution Professional (âRPâ) of the Company, by an order of NCLT with effect from October 27, 2017.
In view of pendency of the CIRP, and in view of suspension of the powers of board of directors and as explained to us, the powers of adoption of the standalone financial statements for the year ended March 31, 2018 vest with the RP.
We have audited the accompanying standalone financial statements of Orchid Pharma Limited, (âthe Companyâ), which comprise of the Balance Sheet as at March 31, 2018, and the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Changes in Equity and the Statement of Cash Flows for the year then ended and a summary of the significant accounting policies and other explanatory information.
Managementâs Responsibility for the Financial Statements
The RP/ Companyâs management is responsible for the matters stated in Section 134 (5) of the Companies Act, 2013 (âthe Actâ) with respect to the preparation of these financial statements that give a true and fair view of the financial position, financial performance including other comprehensive income, cash flows and changes in equity of the Company in accordance with the Indian Accounting Standards (Ind AS) prescribed under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended, and other accounting principles generally accepted in India.
We were informed that the standalone financial statements have been approved by the RP based on representations, clarifications and explanations provided by the Managing Director, Chief Financial Officer and Key Management Personnel of the Company for the preparation and presentation of the standalone financial statements.
This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding 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.
Auditorsâ Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit.
In conducting our audit, we have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder and the Order issued under section 143 (11) of the Act.
We conducted our audit of the financial statements 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 auditorâs judgement, 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 Companyâs preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Companyâs directors, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence obtained by us is sufficient and appropriate to provide a basis for our qualified audit opinion on the financial statements.
Basis of qualified opinion
We draw attention to the following matters:
(a) Note 1 to the standalone financial statements, regarding application by an operational creditor, initiating the insolvency provisions under the Insolvency and Bankruptcy Code, 2016 (âthe Codeâ) and the consequential appointment of RP under the Code, and adequacy of disclosures concerning the Companyâs ability to meet its financial and contractual obligations including managementâs technical estimates in regard to realisation of value of inventories, overdue receivables (net of provisions) amounting to Rs.2,101.42 Lakhs, loans and advances given to various parties (net of provisions) amounting to Rs.69,466.63 Lakhs (which includes capital advances of Rs.52,193.10 and other advances of Rs.17,273.53 Lakhs), provision for impairment, if any, required for property, plant and equipment (PPE), PPE under development, internally generated intangible assets comprising of DBF/ ANDA, other non-monetary assets, investments, unamortised finance charges, claims made by/ advances given to employees, financial obligations including repayment of various loans, unpaid interest and the ability to fund various obligations pertaining to operations including unpaid/ overdue creditors, for ensuring/ commencing normal operations and further investments required towards ongoing research and development projects under progress (carrying amount of Rs.1,431 Lakhs). Certain bank balances, including borrowings are yet to be confirmed by the banks and hence, the possible impact, if any, is not presently ascertainable
The above matters, other than CIRP related, have been outstanding for more than 3 years and have also been qualified by the predecessor auditors in their audit report for earlier years.
(b) The net worth of the subsidiaries as on the reporting date is negative (refer note 55 to the financial statements). The possible erosion in the carrying value of investments in subsidiaries (net of provisions) aggregating to Rs.12,369.90 Lakhs and the recoverability loans/ advances given to the subsidiaries (net of provisions) aggregating to Rs. 5,229.36 Lakhs is not ascertainable and the possible provision required, if any, is not presently determinable.
The above matters have also been qualified by the predecessor auditors in their audit report for earlier years.
(c) Confirmation of balances are not available for majority of the receivables, loans and advances given, payables, claims received from the employees and bank loans as at March 31, 2018. In the absence of the confirmation of balances, the possible adjustment, if any, required in the financial statements is not presently determinable.
The above matters have also been qualified by the predecessor auditors in their audit report for earlier years.
(d) We have not been provided with sufficient, appropriate audit evidence in respect physical verification of fixed assets/ related reconciliation with the books of account, details/ valuation working for stock of stores, spares, chemicals and traded stock aggregating to Rs. 2,331 Lakhs, purchases of raw materials aggregating to Rs.3,993 Lakhs and reconciliation/ basis of restatement of foreign currency assets and liabilities. Accordingly, we are unable to comment on the possible impact, if any, arising out of the above matters.
Considering the aforesaid matters, the internal controls over financial reporting also needs to be further strengthened to make them commensurate with the size and nature of business of the Company.
(e) We have been informed by the RP that certain information including the minutes of the meetings of the Committee of Creditors, cases filed by RP against the key management personnel, suppliers, customers and other parties and the outcome of certain specific/ routine procedures carried out as part of the IBC process are confidential in nature and could not be shared with anyone, other than the Committee of Creditors and NCLT. Further, we have not been provided with sufficient, appropriate audit evidence in respect of avoidance applications filed under the IBC Code by the RP due to the confidentiality involved.
Further, we were informed that the RP has filed the resolution plan voted favourably by the Committee of Creditors with Honâble NCLT. However, the detailed resolution plan (including the salient features, consideration agreed, terms and conditions etc.) has not been made available for our review. In the opinion of the RP, the matter is highly sensitive, confidential and may have adverse impact of the successful implementation of the resolution plan.
Accordingly, we are unable to comment on the possible adjustments required in the carrying amount of assets and liabilities, possible presentation and disclosure impacts, if any, that may arise if we have been provided access to review of those information.
(f) The Companyâs net worth as on the reporting date is also negative. However, pending completion of the successful implementation of the resolution plan as part of CIRP, this standalone financial statements have been prepared and presented by the Company on a going concern basis.
The matters referred to (a), (b) and (e) above also essentially require the Company to resolve the situations specified therein within the framework specified through the CIRP. In the absence of any specific guidance or direction that can be assessed out of CIRP, material uncertainties exist that may cause significant doubt on the Companyâs ability to continue as a going concern. However, the appropriateness of preparation of standalone financial statements on a going concern basis is subject to resolution of the above matters through the CIRP or such other forum or manner as specified in note 2 to the standalone financial statements.
Qualified Opinion
In our opinion and to the best of our information and according to the explanations given to us and subject to matters described in the basis of qualified opinion paragraph, the aforesaid standalone financial statements for the year ended March 31, 2018 give the information required by the Act in the manner so required and give a true and fair view in conformity with Ind AS and other accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2018, and its loss, total comprehensive income, the changes in equity and its cash flows for the year ended as on that date.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditorâs Report) Order, 2016 (âthe Orderâ) issued by the Central Government in terms of Section 143 (11) of the Act, we give in Annexure âAâ a statement on the matters specified in paragraphs 3 and 4 of the Order.
2. As required by Section 143 (3) of the Act, based on our audit 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, subject to matters given in the basis of qualified opinion paragraph;
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 subject to matters given in the basis of qualified opinion paragraph;
c) the balance sheet, the statement of profit and loss including other comprehensive income, statement of changes in equity and the statement of cash flow dealt with by this report are in agreement with the books of account
d) in our opinion, the aforesaid financial statements comply with the Indian Accounting Standards prescribed under section 133 of the Act;
e) on the basis of the written representations received from the directors of the Company as on March 31, 2018 taken on record by the board of directors, none of the directors are disqualified as on March 31, 2018 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 âBâ. Our report expresses a modified opinion on the adequacy and operating effectiveness of the Companyâs internal financial controls over financial reporting; and
g) with respect to the other matters to be included in the auditorsâ report in accordance with rule 11 of the Companies (Audit and Auditors) Rules, 2014, as amended, in our opinion and to the best of our information and according to the explanations given to us:
i. The Company has disclosed, subject to matters given in the basis of qualified opinion paragraph, the impact of pending litigations on its financial position in its financial statements -refer note 46 to the standalone financial statements;
ii. The Company has made provisions, subject to matters given in the basis of qualified opinion paragraph, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long-term contracts including derivative contracts; and
iii. There has been no delay in transferring amounts, required to be transferred, to the investor education and protection fund by the Company.
iv. The reporting of disclosures relating to specified bank notes is not applicable to the Company for the year ended March 31, 2018.
Other matters Without qualifying our report, we draw attention to the following matters :
(a) Note 2 to the financial statements wihich states that the Company has adopted Ind AS for the financial year commencing from April 1, 2017 and accordingly, the Statement has been prepared by the Companyââs management in compliance with Ind AS;
(b) The financial statements of the Company for the year ended March 31, 2017 prepared in accordance with Companies (Accounting Standards) Rules, 2006, were audited by another firm of chartered accountants under the Companies Act, 2013 who have expressed a modified opinion on those financial statements vide their report dated May 26, 2017.
1. In respect of the Companyâs fixed assets:
(a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.
(b) The Company has a program of verification to cover all the items of fixed assets in a phased manner which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. However, no physical verification has been carried on by the management during the year. Accordingly, we are unable to comment on whether any material discrepancies were noticed on such verification and whether they are properly dealt with in the financial statements.
(c) According to the information and explanations given to us, the records examined by us, we report that, the title deeds, comprising all the immovable properties of land and buildings which are freehold, are held in the name of the Company as at the balance sheet date. In respect of immovable properties pledged as security for borrowings, the Company is in the process of obtaining confirmation of title deeds deposited with the lenders. Accordingly, we are not unable to express our comment on those items of immovable properties.
2. The inventory has been physically verified by the management during the year. In our opinion, the frequency of such verification is reasonable.
3. According to information and explanation given to us, the company has not granted any loan, secured or unsecured to companies, firms, limited liability partnerships or other parties covered in the register required under section 189 of the Companies Act, 2013. Accordingly, paragraph 3 (iii) of the order is not applicable.
4. In our opinion and according to the information and explanations given to us, the Company has complied with the provisions of Sections 185 and 186 of the Act in respect of grant of loans, making investments and providing guarantees and securities, as applicable.
5. In our opinion and according to the information and explanations given to us, the company has not accepted any deposits and accordingly paragraph 3 (v) of the order is not applicable.
6. In our opinion and according to the information and explanations given to us, pursuant to the rules made by the Central Government of India, the Company is required to maintain cost records as specified under Section 148(1) of the Act in respect of its products. We have broadly reviewed the same, and are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained.
7. According to the information and explanations given to us, in respect of statutory dues:
(a) The Company has not been regular in depositing undisputed statutory dues, including Provident Fund, Employeesâ State Insurance, Income Tax, Sales Tax, Service Tax, Goods and Service Tax, Value Added Tax, Customs Duty, Excise Duty, Cess and other material statutory dues applicable to it with the appropriate authorities. There has been continuous delay in payment of the statutory dues.
(b) There were no undisputed amounts payable in respect of Provident Fund, Employeesâ State Insurance, Income Tax, Sales Tax, Service Tax, Value Added Tax, Goods and Service Tax, Customs Duty, Excise Duty, Cess and other material statutory dues in arrears as at March 31, 2018 for a period of more than six months from the date they became payable.
(c) Details of dues of Income Tax, Sales Tax, Service Tax, Excise Duty, Value Added Tax and Goods and Service Tax which have not been deposited as at March 31, 2018 on account of dispute are given below:
Statute |
Nature of dues |
Amount (Rs. in Lakhs) |
Period to which the amount relates |
Forum where the dispute is pending |
Excise Duty |
Duty |
338.40 |
2005-06 to 2015-16 |
CESTAT/ Commissioner of Appeals |
Service Tax |
Tax |
85.26 |
2005-06 to 2011-12 |
CESTAT/ Commissioner of Appeals |
Sales Tax |
Sales Tax dues |
498.89 |
2008-09 to 2012-13 |
Appellate DCCT, Chennai |
According to the information and explanation given to us and records examined by us, the Company has defaulted in repayment of its dues to the banks, financial institutions and loans taken from government since December 2016. The total amount of principal and interest unpaid aggregate to Rs.79,048.24 Lakhs.
8. In our opinion and according to the information and explanations given to us, the company has no outstanding dues to any debenture holders during the year.
9. In our opinion and according to the information and explanations given to us, no term loans have been taken during the year under consideration. The Company has not raised any money by way of initial public offer or further public offer (including debt instruments) during the year. Accordingly, reporting of the end use of funds so raised is not applicable for the year.
10. We have not been provided with sufficient, appropriate audit evidence in respect of purchases of raw materials aggregating to Rs. 3,993 Lakhs during the year. We were informed that the RP, inter alia, has declared the purchases made as preferential transactions and filed Company Application in May 2018 before the Honâble National Company Law Tribunal (NCLT). We were further informed that the hearings are going on in NCLT, the next hearing is posted on September 5, 2018, the Orders are yet to be pronounced and the matter is subjudice.
Further, we have not been provided with sufficient, appropriate audit evidence in respect of avoidance applications filed under the IBC Code by the RP due to the confidentiality involved. The matter is also subjudice.
Since sufficient appropriate audit evidence as aforesaid is not provided to us, we are unable to comment on whether any material fraud by the Company or on the Company by its officers or employees has been noticed or reported during the year in respect of the above matters.
11. In our opinion and according to the information and explanations given to us, the Company has paid/ provided managerial remuneration in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Act.
12. The Company is not a Nidhi Company and hence reporting under clause 3 (xii) of the Order is not applicable to the Company.
13. According to the information and explanations given to us and based on our examination of the records of the company, transactions with the related parties are in compliance with section 177 and 188 of the Act. Where applicable, the details of such transactions have been disclosed in the financial statements as required by the applicable accounting standards.
14. According to the information and explanations given to us and based on our examination of the records of the company, the company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year. Accordingly, paragraph 3(xiv) of the order is not applicable.
15. According to the information and explanations given to us and based on our examination of the records of the company, the company has not entered into non-cash transactions with directors or persons connected with them. Accordingly, paragraph 3(xv) of the order is not applicable.
16. According to the information and explanations given to us and based on our examination of the records of the company, the company is not required to be registered under section 45-IA of the Reserve Bank of India Act 1934.
Report on the Internal Financial Controls Over Financial Reporting under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 (âthe Actâ)
We have audited the internal financial controls over financial reporting of Orchid Pharma Limited (âthe Companyâ) as of March 31, 2018, in conjuction with our audit of the financial statements of the Company for the year ended on that date.
Managementâs Responsibility for Internal Financial Controls
The RP/ the board of directors of the Company is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India. These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.
Auditorsâ Responsibility
Our responsibility is to express an opinion on the internal financial controls over financial reporting of the Company based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the âGuidance Noteâ) issued by the Institute of Chartered Accountants of India and the Standards on Auditing prescribed under Section 143 (10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditorâs judgement, including the assessment of the risks of material misstatement in the financial statements, whether due to fraud or error.
We believe that the audit evidence we have obtained, is sufficient and appropriate to provide a basis for our audit opinion on the Companyâs internal financial control system over financial reporting.
Meaning of Internal Financial Controls Over Financial Reporting
A companyâs internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A companyâs internal financial control over financial reporting includes those policies and procedures that
(1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;
(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorisations of management and directors of the company; and
(3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the companyâs assets that could have a material effect on the financial statements.
Limitations of Internal Financial Controls Over Financial Reporting
Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management of override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Basis of qualified opinion
We observed significant deficiencies in the internal financial controls relating to maintenance of sufficient, appropriate audit trail/ documentation in respect of (a) physical verification of fixed assets/ related reconciliation with the books of account, (b) details/ valuation working for stock of stores, spares, chemicals and traded stock aggregating to Rs. 2,331 Lakhs, (c) purchases of raw materials aggregating to Rs. 3,993 Lakhs; and (d) reconciliation/ basis of restatement of foreign currency assets and liabilities.
Qualified Opinion
In our opinion and according to the information and explanations given to us, the Company has to further strengthen in all material respects, the internal financial control system over financial reporting to make such internal financial controls over financial reporting to operate effectively as at March 31, 2018, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.
For CNGSN & Associates LLP
Chartered Accountants
Firm Registration No.004915S/ S200036
CHINNSAMY GANESAN
Place: Chennai Partner
Date: August 21, 2018 Membership No. 027501
Mar 31, 2016
To the Members of
M/s.Orchid Pharma Limited
(previously known as Orchid Chemicals and Pharmaceuticals Limited)
Report on the Standalone Financial Statements
1. We have audited the accompanying standalone financial statements of Orchid Pharma Limited (previously known as Orchid Chemicals and Pharmaceuticals Limited) (âthe Company"), which comprise the Balance Sheet as at 31st March, 2016, the Statement of Profit and Loss, the Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory in formation.
Management''s Responsibility for the Standalone Financial
Statements
2. The Company''s Board of Directors is responsible for the matters stated in Section 134 (5) of the Companies Act, 2013 (âthe Act") with respect to the preparation 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 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
3. Our responsibility is to express an opinion on these stand alone financial statements based on our audit.
4. 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.
5. 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.
6. 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. 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.
7. 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.
Basis of qualified opinion
I. The Company has given advances amounting to Rs.679 crores to various parties and are outstanding as on March 31, 2016. 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.36.11 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 company. In view of the above, it is necessary to impair the value of this investment.
III. The holdback amount receivable from party under the BTA agreement is subject to confirmation and reconciliation due to claims raised by the purchaser. The amount of such claims made by the purchaser, disputed by the Company and hence not provided for is approximately Rs.50 crores.
Opinion
8. In our opinion and to the best of our information and accord ing to the explanations given to us except for the effects of the matter described in the Basis of Qualified Opinion para graph, 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 account ing principles generally accepted in India, of the state of af fairs of the Company as at 31st March, 2016, and its Loss and its cash flows for the year ended on that date.
Report on Other Legal and Regulatory Requirements
9. As required by the Companies (Auditor''s Report) Order, 2016 (âthe Order") issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in Annexure âA" a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.
10. 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) Except for the effects of the matter described in the Basis for Qualified Opinion Paragraph, 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) In respect of matter having adverse effect on functioning of Company refer Basis of Qualified Opinion
(f) On the basis of the written representations received from the directors as on 31st March, 2016 taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2016 from being appointed as a director in terms of Section 164 (2) of the Act;
(g) 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 âAnnexure B" and
(h) 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 28 to the financial statements;
ii. The Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long-term contracts including derivative contracts;
iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.
Annexure âAâ to Auditorsâ Report
Referred to in paragraph 9 of our report of even date
i). a) The company has maintained proper records, showing full particulars including quantitative details and situation of fixed assets.
b) Fixed assets have been physically verified by the Management during the year based on a phased programme of verifying all the assets over three years, which in our opinion is reasonable having regard to the size of the company and the nature of its Fixed Assets. The discrepancies noticed on such verification were not material and have been properly dealt with in the books of account.
c) According to the information and explanations given to us and on the basis of our examination of the records of the Company, the title deeds of immovable properties are held in the name of the Company.
ii) The Management has conducted physical verification of in ventory at reasonable intervals and no material discrepancies were noticed on physical verification.
iii) According to the information and explanations given to us, the Company has not granted any loans, secured or unsecured to companies, firms or other parties covered by clause (76) of Section 2 of the Companies Act, 2013. Accordingly, sub-clauses (a), (b) and (c) of clause (iii) of paragraph 3 of the Order are not applicable.
iv) In our opinion and according to the information and explanations given to us, the Company has complied with the pro visions of section 185 and 186 of the Act, with respect to the loans and investments made. The Company has not provided any guarantees / security.
v) The Company has not accepted any deposits from the public.
vi) We have reviewed the cost records maintained by the Company as prescribed by the Central Government under Section 148 (1) of the Companies Act, 2013 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 deter mine whether they are accurate or complete.
vii) a. According to the information and explanations given to us and on the basis of our examination of the books of account, the Company has not been regular in depositing undisputed statutory dues including Provident Fund, Employees'' State Insurance, Income Tax, Sales Tax, Service tax, Duty of Customs, Duty of Excise, Value Added Tax, Cess and other statutory dues during the year with the appropriate authorities. There has been continuous delay in payment of the dues.
b. As at the Balance Sheet date, the following are the details of disputed Income Tax, Excise Duty, Customs Duty, Service tax, Sales Tax and Cess that have not been deposited with the concerned authorities;
Nature of Dues |
Amount (Rs. in Lakhs) |
Forum where dispute is pending |
Excise Duty |
||
For the year financial year 2004-05 to 2012-13 |
661.44 |
CESTAT |
For the financial year 2008-09 to 2014-15 |
29.24 |
Commissioner (Appeals) |
Service Tax |
||
For the year financial year 2005-06 to 2010-11 |
77.50 |
CESTAT |
Sales tax |
||
For the year 200809 - 2012-13 |
121.62 |
Appellate Deputy Commissioner of Commercial taxes, Chennai |
viii) According to the information and explanations given to us, the company has defaulted in certain repayments of Principal amount to banks and Financial Institution.
Bank |
Amount of default as at the balance sheet (Rs. In lakhs) |
Period of defaults |
ING Vysya Bank |
4,000.00 |
1395 days |
Deutsche Bank |
2,499.95 |
1364 days |
Central Bank of India |
14.28 |
92 days |
IFCI Limited |
57.97 |
1 day |
Allahabad Bank |
97.59 |
1 day |
Andhra Bank |
111.04 |
1 day |
Axis Bank Limited - ECB |
233.09 |
1 day |
Bank of Baroda |
4.79 |
1 day |
Bank of India |
74.74 |
1 day |
Canara Bank |
25.37 |
1 day |
Central Bank of India |
14.28 |
1 day |
City Union Bank |
15.23 |
1 day |
Edelweiss - (Federal) |
35.14 |
1 day |
EXIM Bank |
21.50 |
1 day |
ICICI Bank |
4.45 |
1 day |
IDBI Bank |
66.51 |
1 day |
Indian Bank |
16.12 |
1 day |
Indian Overseas Bank |
29.40 |
1 day |
Punjab National Bank |
87.75 |
1 day |
State Bank of Hyderabad |
49.92 |
1 day |
State Bank of India |
115.96 |
1 day |
State Bank of Mysore |
15.56 |
1 day |
State Bank of Travancore |
7.64 |
1 day |
Union Bank of India |
71.16 |
1 day |
ix) The Company did not raise any money by way of initial public offer or further public offer (including debt instruments) and term loans during the year. Accordingly, paragraph 3 (ix) of the Order is not applicable.
x) According to the information and explanations given to us, no material fraud by the Company or on the Company by its officers or employees has been noticed or reported during the course of our audit.
xi) According to the information and explanations give to us and based on our examination of the records of the Company, the Company has paid/provided for managerial remuneration during the financial year in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Companies Act. In respect of the excess Managerial remuneration paid in the previous years, the company has been advised to file fresh application under the new Companies Act, 2013. Pending outcome of the application, excess remuneration amounting to Rs.1193.51 lakhs recoverable from Managing director/ Whole time director has not been recovered. However, an amount equal to excess remuneration has been held back out of the unsecured loan given by the promoter group to the Company.
xii) In our opinion and according to the information and explanations given to us, the Company is not a Nidhi company. Accordingly, paragraph 3(xii) of the Order is not applicable.
xiii) According to the information and explanations given to us and based on our examination of the records of the Company, transactions with the related parties are in compliance with sections 177 and 188 of the Act where applicable and details of such transactions have been disclosed in the financial statements as required by the applicable accounting standards.
xiv) According to the information and explanations give to us and based on our examination of the records of the Company, the Company has made preferential allotment of shares to parties covered in the register maintained under Section 42 of the Companies Act, 2013 and these shares have been issued at a price as per SEBI guidelines and hence not prejudicial to interest of the Company.
xv) Based on the representation received by the Company and declaration given by the Directors, the Company has not entered into non-cash transactions with directors or per sons connected with them.
xvi) The Company is not required to be registered under section 45-IA of the Reserve Bank of India Act 1934.
Annexure âBâ to Auditorsâ Report
Referred to in paragraph 9 of our report of even date
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 (âthe Actâ)
1. We have audited the internal financial controls over financial reporting of Orchid Pharma Limited (âthe Company") as of 31 March 2016 in conjunction with our audit of the stand alone financial statements of the Company for the year ended on that date.
Management''s Responsibility for Internal Financial Controls
2. The Company''s management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India (''ICAI''). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to company''s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.
Auditors'' Responsibility
3. Our responsibility is to express an opinion on the Company''s internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls over Financial Reporting (the âGuidance Note") and the Standards on Auditing, issued by ICAI and deemed to be prescribed under section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls, both applicable to an audit of Internal Financial Controls and, both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.
4. Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. 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.
5. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company''s internal financial controls system over financial reporting.
Meaning of Internal Financial Controls over Financial
Reporting
6. A company''s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company''s internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company''s assets that could have a material effect on the financial statements.
Inherent Limitations of Internal Financial Controls Over
Financial Reporting
7. Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Opinion
8. In our opinion, the Company has, in all material respects, an adequate internal financial controls system over financial re porting and such internal financial controls over financial re porting were operating effectively as at March 31, 2016, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.
For SNB ASSOCIATES
Chartered Accountants
Firm Registration No: 015682N
P. Bharath Kumar
Place: Chennai Partner
Date: May 27, 2016 Membership No.222579
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
Mar 31, 2010
1. We have audited the attached Balance Sheet of Orchid Chemicals &
Pharmaceuticals Limited (the Company) as at 31st March, 2010 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
CompanyÃs 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 (AuditorÃs 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 31st March 2010, and taken on record by the Board of
Directors, we report that none of the directors is disqualified as on
31st March 2010 from being appointed as a director in terms of clause
(g) of sub- section (1) of Section 274 of the Companies Act, 1956;
5. a. The Company has made an application to Central
Government for approval of the remuneration amounting to Rs 304.74
lakhs paid to the Managing Director and whole time Director as the
minimum remuneration payable in case of inadequacy of profit and the
approval of the same is still awaited.
b. Debtors are subject to confirmation. Refer Note No.30 of Schedule
ÃQÃ.
6. Subject to Para 5(a) & (b) 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 (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 31st March 2010;
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 Auditorsà 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. The Company has
disposed of a division during the year. However this does not
constitute substantial disposal of fixed assets and hence do not affect
the Ãgoing concernÃ.
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,
Employeesà 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
amount relates Rs in Lakhs
Central Excise Act, 1944 Excise duty 1999-00 to 2001-02 149.06
2004-05 to Sep 2009 7.09
2004-05 to 2008-09 443.81
April 2008 to Dec 2009 4.65
Oct 2004 to Sep 2009 131.24
Aug 2005 to Dec 2009 53.03
Sep 2006 to Feb 2010 1327.02
Finance Act, 1994 Service tax June 1997 to
March 2001 42.26
(Chapter V) 2005-06 70.05
April 2007 to Jan 2010 22.23
Jan 2008 to Sep 2008 0.83
Income Tax Act, 1961 Income Tax AY 1997-98 53.82
AY 1997-98 & 98-99 68.88
AY 2005-06 45.12
Name of the Statute Forum where the dispute is pending
Central Excise Act, Customs, Excise and Service Tax
Appellate Tribunal, Chennai
Customs, Excise and Service Tax
Appellate Tribunal, Chennai
Commissioner of Central Excise, Chennai
Assistant Commissioner of Central Excise, Chennai
Commissioner of Central Excise, Chennai
Joint Commissioner of Central Excise, Chennai
Commissioner of Central Excise, Aurangabad
Finance Act, 1994 Assistant Commissioner of Central Excise, Chennai
(Chapter V) Commissioner of Central Excise, Chennai
Assistant Commissioner of Central Excise, Chennai
Commissioner of Central Excise (Appeals), Chennai
Income Tax Act, 1961 Income Tax Appellate Tribunal - Chennai
Commissioner of Income Tax, Chennai
Commissioner of Income Tax, 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, the Company has defaulted in
certain repayments of Principal and Interest to banks as per details
given in Note No. 29 of Schedule ÃQÃ. 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 27, 2010 Membership No.210408