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Auditor Report of Shilpa Medicare Ltd.

Mar 31, 2016

We have audited the accompanying standalone financial statements of Shilpa Medicare Limited ("the Company"), which comprise the balance sheet as at March 31, 2016, the statement of profit and loss and cash flow statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management''s Responsibility for the Standalone Financial Statements

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

Auditor''s Responsibility

Our responsibility is to express an opinion on these standalone financial statements based on our audit. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made there under.

We conducted our audit in accordance with the Standards on Auditing, issued by the Institute of Chartered Accountants of India, as specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor''s 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 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 accounting policies used and the reasonableness of the accounting estimates made by the Company''s Directors, as well as evaluating the overall presentation of the financial statements.

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

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India of the state of affairs of the Company as at March 31, 2016, its profit and its cash flows for the year ended on that date.

Emphasis of Matter

We draw attention to Note 49 to the Standalone financial statements. The Company has filed a lawsuit for recovering its amount paid as capital advance to its vendor for supply of Capital Assets, along with punitive damages. The Preliminary hearings of the case are in progress. As the ultimate outcome of the case cannot be determined presently, hence no provision for the outstanding balance receivable from the party has been made in the financial statements. Our opinion is not qualified in respect of this matter.

Report on Other Legal and Regulatory Requirements

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

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

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

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

e. On the basis of the written representations received from the directors as on March 31, 2016 taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2016 from being appointed as a director in terms of Section 164 (2) of the Act; and

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-B"; and

g. With respect to the other matters to be included in the Auditor''s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations on its financial position in its financial statements.

ii. There has been no delay in transferring amounts to the Investor Education and Protection Fund by the Company.

Annexure-A - referred to in paragraph 1 of Report on Other Legal and Regulatory Requirements section of our report of even date.

The Annexure referred to in our report to the members of Shilpa Medicare Limited (''the Company'') for the year ended March 31, 2016. We report that:

1) In respect of Fixed Assets

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

b) As explained to us, having regards to the size of the Company and the nature of its assets Fixed Assets have been physically verified wherever feasible by the management and no material discrepancy with respect to book records was noticed on such verification.

c) In our opinion and according to the information and explanations given to us, all the title deeds of immovable properties are held in the name of the Company.

2) In respect of Inventories

a) According to the information and explanations given to us, the Inventories in its possession has been physically verified by the management. In our opinion the frequency of the verification is reasonable. The Stocks lying with third parties have been confirmed by them as at year end. No material discrepancies were noticed on physical verification of inventories.

3) According to the information and explanation given to us, the Company has granted unsecured loans amounting to Rs. 265.64 lakhs (Including Interest net of TDS) to 4 parties covered in the register maintained under section 189 of the Act.

a. The terms and conditions of such loans granted are not prejudicial to the interest of the Company.

b. The schedule of repayment of principal and payment of interest has been stipulated in the agreement and re-payment or receipts of principles amount and interest have being made as per stipulators.

c. As there were no amounts over due for more than 90 days position of Clause 3(iii)(c) 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 section 185 and 186 of the Act, with respect to the loans and investments made.

5) According to the information and explanations given to us, the Company has not accepted any deposits from the public within the meaning of section 73 and 76 or any other relevant provisions of the Act and the rules framed there under.

6) We have broadly reviewed the books of accounts and records maintained by the Company pursuant to the rules made by the Central Government of India for the maintenance of cost records prescribed under sub-section (1) of section 148 of the Act in respect of the production and processing activities of the Company and are of the opinion that prima-facie cost records and accounts prescribed have been generally maintained. However, we have not made a detailed examination of the records with a view to determining whether they are accurate or complete.

7) In respect of Statutory dues

a) The Company is generally regular in depositing with appropriate authorities undisputed statutory dues including provident fund, employees'' state insurance, income-tax, sales-tax, wealth-tax, service tax, customs duty, excise duty, value added tax, cess and other material statutory dues applicable to it.

b) According to the information and explanations given to us there are no dues of income-tax, sales-tax, wealth-tax, service tax, customs duty, excise duty, value added tax and cess which have not been deposited on account of any dispute,

8) According to the information and explanations given to us by the management, we are of the opinion that the Company has not defaulted in the repayment of dues to banks, government and financial institutions. The Company did not have any debentures outstanding as at the year end.

9) Based on the information and explanations given to us by the management of the Company, the Company has not raised any money by way of public offer. No term loans were taken during the year by the Company.

10) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and as per the information and explanations given by the management, we report that no material fraud by the Company or on the Company by its officers or employees, has been noticed or reported during the year.

11) According to the information and explanations given to us and based on our examination of the records of the Company, the Company has paid/provided for managerial remuneration in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the act.

12) 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.

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 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.

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.

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 him. Accordingly, paragraph 3(xv) of the Order is not applicable.

16) The Company is not required to be registered under section 45-IA of the Reserve Bank of India Act, 1934.

For Bohara Bhandari Bung And Associates LLP

Chartered Accountants

ICAI Firm Registration Number: 008127S/S200013



per CA Pankaj Kumar Bohara

Partner

Membership Number: 215471

Place/Camp : Hyderabad

Date : 30th May, 2016


Mar 31, 2014

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

Management''s Responsibility for the Financial Statements

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance of the Company in accordance with the Accounting Standards notified under the Companies Act, 1956 ("theAct") read with the General Circular 15/2013 dated 13th September, 2013 of the Ministry of Corporate Affairs in respect of Sec.133 of the Companies Act, 2013 and in accordance with the accounting principles generally accepted in India. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors'' Responsibility

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

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal 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.

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

Opinion

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

i. in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2014;

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

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

Emphasis of Matter

We draw attention to Note 50 to the Standalone financial statements. The Company has filed a lawsuit for recovering its amount paid as capital advance to its vendor for supply of Capital Assets, along with punitive damages. The Preliminary hearings of the case are in progress. As the ultimate outcome of the case cannot be determined presently, hence no provision for the outstanding balance receivable from the party has been made in the financial statements. Our opinion is not qualified in respect of this matter.

Report on Other Legal and Regulatory Requirements

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.

As required by Section 227(3) of the Act, we report that:

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

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

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

d. In our opinion, the Balance Sheet, Statement of Profit and Loss and the Cash flow statement comply with the Accounting Standards notified under the Act read with the General Circular 15/2013 dated 13th September, 2013 of the Ministry of Corporate Affairs in respect of Sec.133 of the Companies Act, 2013;

e. On the basis of the written representations received from the directors as on 31st March, 2014 taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2013 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Act.

ANNEXURE REFERRED TO IN OUR REPORT OF EVEN DATE

On the basis of such checks as we considered appropriate and in terms of information and explanation given to us, we further state that:

1. In respect of Fixed Assets:

a) The Company has maintained proper records, showing full particulars including Quantitative details and situation of Fixed Assets.

b) As explained to us, Fixed Assets have been physically verified wherever feasible by the Management and no material discrepancy with respect to book records was noticed on such verification.

c) During the year the company has not disposed off a substantial part of the Fixed Assets.

2. In respect of Inventories:

a) The Inventory in its possession has been physically verified by the management. In our opinion the frequency of the verification is reasonable. The Stocks lying with third parties have been verified with reference to Statements of Accounts or Subsequent return of goods.

b) The procedure as explained to us and followed by the Management for physical verification of Inven- tories is reasonable and adequate in relation to the size of the company and the nature of its business.

c) According to the information and explanations given to us, no material discrepancies were noticed on physical verification as compared to book records.

3. In respect of the loans, secured or unsecured, granted or taken by the company to/from companies, firm or other parties covered in the register maintained under section 301 of the Companies Act, 1956:

a) The Company has not taken any secured / unsecured loan from any company or parties covered in the register maintained under section 301 of the Act.

During the year the Company has given unsecured loans of Rs.1,459.46Lakhs (Incl.Interest) to 03 subsidiaries and Rs.16.76 (Incl.Interest)Lakhs was given to 01 associate company during the year. Rs.84.48 Lakhs was repaid by 02 subsidiaries and Rs.2.50 Lakhs was repaid by 01 associates during the year. The total outstanding balance receivable from 02 of the Subsidiaries as on 31.03.2014 is Rs.2,380.48 Lakhs and Rs.185.00 Lakhs from 01 of its Associate Company respectively, covered in the register maintained under section 301 of the Act.

b) The rates of interest and the terms and conditions of the above said transactions where ever applicable, are prima-facie not prejudicial to the interest of the company.

c) The payment of Principal amount and interest thereon, where ever applicable are regular. There were no overdue amounts of the aforesaid transactions.

4. In our opinion and according to the information and explanations given to us, there is an 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 also for the sale of goods. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control systems,

5. In respect of contracts or arrangements referred to in Section 301 of the Companies Act,1956:

a) According to information and explanations given to us, the transactions made in pursuance of contracts or arrangements that needs to be entered in the Register maintained under sections 301 of the Companies Act, 1956, have been so entered.

b) According to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements entered in the register maintained under Sec.301 of the Companies Act, 1956 have been made at prices which are reasonable having regard to the prevailing market prices 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.

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

8. On the basis of records produced, we are of the opinion that prima-facie cost records and accounts prescribed by the central government under section 209(1) d of the Companies Act, 1956 in respect of the products of the company under the rules under said section are generally maintained / are under preparation. However, we have not made a detailed examination of the records with a view to determining whether they are accurate or complete.

9. In respect of statutory dues:

a) According to the records of the company, undisputed statutory dues including Provident Fund, Investors Education Fund, Income-tax, Sales-tax, Wealth-tax, Service tax, Customs duty, Excise duty, Cess and any other statutory dues has generally been regularly deposited with the appropriate authorities. According, to the information and explanations given to us, no undisputed amount payable in respect of the aforesaid dues were outstanding as at 31st March, 2014 for a period of more than Six months from the date they became payable.

b) Details of dues under Income-tax Act and Workmen compensation Act which have not been deposited as on 31st March, 2014 on account of disputes are given below:

Forum where Period to which. Statute Nature of dues the dispute is the amount pending relates

Income-tax Act Income-tax Commissioner AY: 2010-11 & of Income tax A.Y.2011-12 (Appeals)

Workmen Accident Claim Commissioner FY: 2007-08 & Compensation Act of Workmen 2008-09 Compensation &Labour Office

Amount involved Statute (Rs in Lakhs)

Income-tax Act *1,372.51

Workmen 7.00 Compensation Act



10. The company does not have accumulated losses at the end of the financial year. The Company has not incurred cash losses during the financial year covered by the audit and in the immediately preceding financial year.

11. Based on our audit procedures and according to the information and explanation given to us, the company has not defaulted in repayment of dues to financial institutions or banks.

12. According to the information and explanation given to us and based on the information available, no loans and advances have been granted by the Company on the basis of Security by way of pledge of shares, debentures and other Securities.

13. In our opinion the company is not a chit fund or a nidhi fund/mutual Benefit fund/society. Therefore, provisions of clause4 (xiii) of the Companies (Auditor''s Report) Order, 2003 is not applicable to the company.

14. The Company did not either deal or trade in shares, securities, debentures and other Investment and hence clause 4(xiv) is not applicable

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

16. In our opinion and according to information and explanation given to us, on an overall examination of the Balance Sheet of the Company,we are of the opinion that the term loans are being applied for the purpose for which they were raised.

17. According to the information and explanations given to us and on an overall examination of the Balance Sheet of the Company, we are of the opinion that there are no funds raised on short-term basis that have been used for long-term investment and vice versa.

18. During the year, the company has not made any preferential Allotment of shares to parties and Companies covered in the Register maintained under Section.301 of the Companies Act, 1956.

19. The Company has not raised funds by way of issue of Debentures. Hence, Clause 4(xix) of Companies (Auditor''s Report) Order, 2003 is not applicable to the company.

20. The Company has not raised any funds through Public Issue during the year and hence Clause 4(xx) of Companies (Auditor''s Report) Order, 2003 is not applicable to the company.

21. Based upon the Audit procedures performed and information and Explanations given to us, we report that no material fraud on or by the Company has been noticed or reported during the course of our Audit.

For Bohara Bhandari Bung And Associates Chartered Accountants (Firm Regn No:008127S)

CA. Pankajkumar Bohara Partner M.No.215471

Place :Hyderabd Dated: 29th May, 2014


Mar 31, 2013

Report on the Financial Statements

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

Management''s Responsibility for the Financial Statements

The Company''s 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.

Auditors'' Responsibility

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

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers the internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the Management, as well as evaluating the overall presentation of the financial statements.

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

Opinion

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

i. in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2013;

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

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

Emphasis of Matter

We draw attention to Note 48 to the Standalone financial statements. The Company has filed a lawsuit for recovering its amount paid as capital advance to its vendor for supply of Capital Assets, along with punitive damages. The Preliminary hearings of the case are in progress. As the ultimate outcome of the case cannot be determined presently, hence no provision for the outstanding balance receivable from the party has been made in the financial statements. Our opinion is not qualified in respect of this matter.

Report on Other Legal and Regulatory Requirements

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.

As required by Section 227(3) of the Act, we report that:

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.

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.

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

In our opinion, the Balance Sheet, Statement of Profit and Loss, and the Cash Flow Statement comply with the Accounting Standards referred to in sub-section (3C) of section 211 of the Act.

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

Annexure Referred to in our Report of even date

On the basis of such checks as we considered appropriate and in terms of information and explanation given to us, we further state that:

1. In respect of Fixed Assets:

a) The Company has maintained proper records, showing full particulars including Quantitative details and situation of Fixed Assets.

b) As explained to us, Fixed Assets have been physically verified wherever feasible by the Management and no material discrepancy with respect to book records was noticed on such verification.

c) During the year the company has not disposed off a substantial part of the Fixed Assets.

2. In respect of Inventories:

a) The Inventory in its possession has been physically verified by the management. In our opinion the frequency of the verification is reasonable. The Stocks lying with third parties have been verified with reference to Statements of Ac- counts or Subsequent return of goods.

b) The procedure as explained to us and followed by the Management for physical verification of Inventories is reasonable and adequate in relation to the size of the company and the nature of its business.

c) According to the information and explanations given to us, no material discrepancies were noticed on physical verifica- tion as compared to book records.

3. In respect of the loans, secured or unsecured, granted or taken by the company to/from companies, firm or other parties covered in the register maintained under section 301 of the Companies Act, 1956:

a) The Company has not taken any secured / unsecured loan from any company or parties covered in the register main- tained under section 301 of the Act. However, it had outstanding opening balance of unsecured Loan receivable (Dr) amounting Rs. 351.27 Lakhs to two of its subsidiaries and Rs.152.44 Lakhs (Dr) to one of its Associates respectively. During the year Rs.713.29 Lakhs (Incl. Interest) was given to its three subsidiaries and Rs.18.30 (Incl.Interest) Lakhs was given to one of its associate Company during the year. Of which Rs.59.05 Lakhs was repaid by two of its subsidiaries during the year. The total outstanding balance receivable from three of the Subsidiaries as on 31.03.2013 is Rs.1005.50 Lakhs and Rs.170.74 Lakhs from its Associate Company respectively, covered in the register maintained under section 301 of the Act.

b) The rates of interest and the terms and conditions of the above said transactions where ever applicable, are prima-facie not prejudicial to the interest of the company.

c) The payment of Principal amount and interest thereon, where ever applicable are regular. There were no overdue amounts of the aforesaid transactions.

4. In our opinion and according to the information and explanations given to us, there is an 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 also for the sale of goods. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control systems,

5. In respect of contracts or arrangements referred to in Section 301 of the Companies Act,1956:

a) According to information and explanations given to us, the transactions made in pursuance of contracts or arrange- ments that needs to be entered in the Register maintained under sections 301 of the Companies Act, 1956, have been so entered.

b) According to the information and explanations given to us, the transactions made in pursuance of contracts or arrange- ments entered in the register maintained under Sec.301 of the Companies Act, 1956 have been made at prices which are reasonable having regard to the prevailing market prices 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.

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

8. On the basis of records produced, we are of the opinion that prima-facie cost records and accounts prescribed by the central government under section 209(1) d of the Companies Act, 1956 in respect of the products of the company under the rules under said section are generally maintained / are under preparation. However, we have not made a detailed examination of the records with a view to determining whether they are accurate or complete.

9. In respect of statutory dues:

a) According to the records of the company, undisputed statutory dues including Provident Fund, Investors Education Fund, Income-tax, Sales-tax, Wealth-tax, Service tax, Customs duty, Excise duty, Cess and any other statutory dues has generally been regularly deposited with the appropriate authorities. According, to the information and explanations given to us, no undisputed amount payable in respect of the aforesaid dues were outstanding as at 31st March, 2013 for a period of more than Six months from the date they became payable.

b) Details of dues under Income-tax Act and Workmen compensation Act which have not been deposited as on 31st March, 2013 on account of disputes are given below:

Nature of Forum where the dispute is Statute dues pending

Income-tax Act Income-tax Commissioner of Income tax (Appeals)

Workmen Accident Claim Commissioner of Workmen Compensation Act Compensation & Labour Office

Statute Period to which Amount involved the amount relates (Rs in Lakhs)

Income Tax Act AY: 2004-05 to *469.74 A.Y.2010-11

Workmen Compensation Act FY: 2007-08 & 7.00 2008-09

*Out of the said periods, cases have been disposed off in favour of the Company for the period starting from AY: 2004-05 to AY: 2007-08. However, the appeal effect is yet to be given by the department.

10. The company does not have accumulated losses at the end of the financial year. The Company has not incurred cash losses during the financial year covered by the audit and in the immediately preceding financial year.

11. Based on our audit procedures and according to the information and explanation given to us, the company has not defaulted in repayment of dues to financial institutions or banks.

12. According to the information and explanation given to us and based on the information available, no loans and advances have been granted by the Company on the basis of Security by way of pledge of shares, debentures and other Securities.

13. In our opinion the company is not a chit fund or a nidhi fund/mutual Benefit fund/society. Therefore, provisions of clause4 (xiii) of the Companies (Auditor''s Report) Order, 2003 is not applicable to the company.

14. The Company did not either deal or trade in shares, securities, debentures and other Investment and hence clause 4(xiv) is not applicable

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

16. In our opinion and according to information and explanation given to us, on an overall examination of the Balance Sheet of the Company, we are of the opinion that the term loans are being applied for the purpose for which they were raised.

17. According to the information and explanations given to us and on an overall examination of the Balance Sheet of the Com- pany, we are of the opinion that there are no funds raised on short-term basis that have been used for long-term investment and vice versa.

18. During the year, the company has not made any preferential Allotment of shares to parties and Companies covered in the Register maintained under Section.301 of the Companies Act, 1956.

19. The Company has not raised funds by way of issue of Debentures. Hence, Clause 4(xix) of Companies (Auditor''s Report) Order, 2003 is not applicable to the company.

20. The Company has not raised any funds through Public Issue during the year and hence Clause 4(xx) of Companies (Auditor''s Report) Order, 2003 is not applicable to the company.

21. Based upon the Audit procedures performed and information and Explanations given to us, we report that no material fraud on or by the Company has been noticed or reported during the course of our Audit.

For Bohara Bhandari Bung And Associates

Chartered Accountants

(Firm Regn No: 008127S)

CA. Pankajkumar Bohara

Place : Raichur Partner

Dated: 29th May, 2013 M.No.215471


Mar 31, 2012

We have audited the attached Balance Sheet of Shilpa Medicare Limited ("the Company") as at 31st March, 2012, the Statement of Profit and Loss and the Cash Flow Statement for the year ended on that date, annexed thereto. These financial statements are the responsibility of the Company''s Management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

As required by the Companies (Auditor''s Report) Order, 2003 (as amended) ("the order") issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 & 5 of the said Order.

Further to our comments in the Annexure referred to above, we report that :

1. 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;

2. 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;

3. 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;

4. In our opinion, the Balance Sheet, Statement of Profit and Loss and Cash flow statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of Section 211 of the Companies Act,1956;

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

6. In our opinion and to the best of our information and according to the explanations given to us, the said accounts read together with the Significant Accounting Policies and other notes thereon, give the information required by the Companies Act,1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India :

(a) in the case of the Balance Sheet, of the state of Affairs of the Company as at 31st March, 2012;

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

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

ANNEXURE REFERRED TO IN OUR REPORT OF EVEN DATE

On the basis of such checks as we considered appropriate and in terms of information and explanation given to us, we further state that:

1. In respect of Fixed Assets:

a) The Company has maintained proper records, showing full particulars including Quantitative details and situation of Fixed Assets.

b) As explained to us, Fixed Assets have been physically verified wherever feasible by the Management and no material discrepancy with respect to book records was noticed on such verification.

c) During the year the Company has not disposed off a substantial part of the Fixed Assets.

2. In respect of Inventories:

a) The Inventory in its possession has been physically verified by the management. In our opinion the frequency of the verification is reasonable. The Stocks lying with third parties have been verified with reference to Statements of Accounts or Subsequent return of goods.

b) The procedure as explained to us and followed by the Management for physical verification of Inventories is reasonable and adequate in relation to the size of the Company and the nature of its business.

c) According to the information and explanations given to us, no material discrepancies were noticed on physical verification as compared to book records.

3. In respect of the loans, secured or unsecured, granted or taken by the Company to/from companies, firm or other parties covered in the register maintained under section 301 of the Companies Act, 1956:

a) The Company has not taken any secured / unsecured loan from any Company covered in the register maintained under section 301 of the Act. However, it had outstanding opening balance of unsecured Loan (Dr) amounting Rs. 938.58 Lakhs to two of its subsidiaries and Rs.79.60 Lakhs (Dr) to one of its Associates respectively. Rs.4,842.85 Lakhs (Incl. Interest) was given to its four subsidiaries and Rs.72.84 Lakhs was given to one of its associate Company during the year. Of which Rs.36.02 Lakhs was repaid by three of its subsidiaries during the year. The total outstanding balance receivable from the Subsidiaries as on 31.03.2012 is Rs.5,729.17 Lakhs and Rs. 152.44 Lakhs from its Associate companies respectively, covered in the register maintained under section 301 of the Act.

b) The rates of interest and the terms and conditions of the above said transactions wherever applicable, are prima-facie not prejudicial to the interest of the company.

c) The payment of Principal amount and interest thereon, where ever applicable are regular.

d) There were no overdue amounts of the aforesaid transactions.

4. In our opinion and according to the information and explanations given to us, there is an 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 also for the sale of goods. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control systems.

5. In respect of contracts or arrangements referred to in Section 301 of the Companies Act, 1956:

a) According to information and explanations given to us, the transactions made in pursuance of contracts or arrangements that needs to be entered in the Register maintained under sections 301 of the Companies Act, 1956, have been so entered.

b) According to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements entered in the register maintained under sec.301 of the Companies Act, 1956 have been made at prices which are reasonable having regard to the prevailing market prices 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.

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

8. On the basis of records produced, we are of the opinion that prima-facie cost records and accounts prescribed by the central government under section 209(1) d of the Companies Act, 1956 in respect of the products of the company under the rules under said section are generally maintained / are under preparation. However, we have not made a detailed examination of the records with a view to determining whether they are accurate or complete.

9. In respect of statutory dues:

a) According to the records of the company, undisputed statutory dues including Provident Fund, Investors Education Fund, Income-tax, Sales-tax, Wealth-tax, Service tax, Customs duty, Excise Duty, Cess and any other statutory dues has generally been regularly deposited with the appropriate authorities. According to the information and explanations given to us, no undisputed amount payable in respect of the aforesaid dues were outstanding as at 31st March, 2012 for a period of more than Six months from the date they became payable.

b) Details of dues of Income-Tax and Karnataka Value Added Tax which have not been deposited as on 31st March, 2012 on account of disputes are given below;

Forum where the Statute Nature of Dues dispute is pending

Income-Tax Act Income-Tax Commissioner of Income tax (Appeals)

Karnataka Value VAT Karnataka Added Taxes Act,2003 Appellate Tribunal



Statue Period to which Amount the amount involved relates (Rs. in Lacs)

Income-Tax Act A Y : 2004-05 to 120.50 A Y : 2009-10

Karnataka Value Added Taxes Act,2003 FY : 2006-07 0.87

10. The company does not have accumulated losses at the end of the financial year. The Company has not incurred cash losses during the financial year covered by the audit and in the immediately preceding financial year.

11. Based on our audit procedures and according to the information and explanation given to us, the company has not defaulted in repayment of dues to financial institutions, banks or debenture holders.

12. According to the information and explanation given to us and based on the information available, no loans and advances have been granted by the Company on the basis of Security by way of pledge of shares, debentures and other Securities.

13. In our opinion the company is not a chit fund or a nidhi fund/mutual benefit fund/society. Therefore, provisions of clause4 (xiii) of the Companies (Auditor''s Report) Order, 2003 is not applicable to the company.

14. The Company did not either deal or trade in shares, securities, debentures and other Investment and hence clause 4(xiv) is not applicable

15. According to the information provided to us, the company has issued a letter of comfort amounting to Rs.6.83 Crores (Euro 10.00 Lakhs) and Corporate Guarantee of Rs.25.00 Crores for loans taken by its subsidiary Companies from banks or financial institutions.

16. In our opinion and according to information and explanation given to us, the term loans have been applied for the purpose for which they were raised.

17. According to the information and explanations given to us and on an overall examination of the Balance Sheet of the Company, we are of the opinion that there are no funds raised on short-term basis that have been used for long-term investment and vice versa.

18. During the year, the company has made preferential Allotment of 500,000 Equity shares to parties covered in the Register maintained under Section.301 of the Companies Act, 1956 on conversion of share warrants.

19. The Company has not raised funds by way of issue of Debentures. Hence, Clause 4(xix) of Companies (Auditor''s Report) Order, 2003 is not applicable to the company.

20. The Company has not raised any funds through Public Issue during the year and hence Clause 4(xx) of Companies (Auditor''s Report) Order, 2003 is not applicable to the company.

21. Based upon the Audit procedures performed and information and Explanations given to us, we report that no material fraud on or by the Company has been noticed or reported during the course of our Audit.

For Bohara Bhandari Bung And Associates

Chartered Accountants (Firm Regn No:008127S)

CA. Pankajkumar Bohara

Place / Camp: Hyderabad Partner

Dated : 10th August, 2012 M.No.215471


Mar 31, 2011

We have audited the attached Balance Sheet of Shilpa Medicare Limited ("the Company") as at 31st March, 2011, the Profit and Loss Account and the Cash Flow Statement for the year ended on that date, both annexed thereto. These financial statements are the responsibility of the Company's Management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

As required by the Companies (Auditor's Report) Order, 2003 (as amended) ("the order") issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 & 5 of the said Order to the extent applicable.

Further to our comments in the Annexure referred to above, we report that:

1. 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;

2. 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;

3. The Balance Sheet, Profit and Loss Account and Cash Flow Statement, dealt with by this report are in agreement with the books of account;

4. In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of Section 211 of the Companies Act,1956;

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

6. In our opinion and to the best of our information and according to the explanations given to us, the said accounts read together with the Significant Accounting Policies and other notes thereon, give the information required by the Companies Act,1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

(a) in the case of the Balance Sheet, of the state of Affairs of the Company as at 31st March, 2011;

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

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

ANNEXURE REFERRED TO IN OUR REPORT OF EVEN DATE

On the basis of such checks as we considered appropriate and in terms of information and explanation given to us, we further state that:

1. In respect of Fixed Assets:

a) The Company has maintained proper records, showing full particulars including Quantitative details and situation of Fixed Assets.

b) As explained to us, Fixed Assets have been physically verified wherever feasible by the Management and no material discrepancy with respect to book records was noticed on such verification.

c) During the year the Company has not disposed off a substantial part of the Fixed Assets.

2. In respect of Inventories:

a) The Inventory in its possession has been physically verified by the Management. In our opinion the frequency of the verification is reasonable. The Stocks lying with third parties have been verified with reference to Statements of Accounts or Subsequent return of goods.

b) The procedure as explained to us and followed by the Management for physical verification of Inventories is reasonable and adequate in relation to the size of the Company and the nature of its business.

c) According to the information and explanations given to us, no material discrepancies were noticed on physical verification as compared to book records.

3. In respect of the loans, secured or unsecured, granted or taken by the Company to/from companies, firm or other parties covered in the register maintained under Section 301 of the Companies Act, 1956:

a) The Company has not taken any secured / unsecured loan from any Company covered in the register maintained under Section 301 of the Act. However, it had outstanding opening balance of unsecured loan (Dr) amounting to Rs. 2479.52 Lakhs to two of its subsidiaries and Rs. 645.65 Lakhs (including interest) was given during the year and Rs. 79.60 Lakhs during the year was given to one of its associate Company. Of which Rs. 922.33 Lakhs and Rs. 79.60 Lakhs are outstanding as on 31.03.2011 from the subsidiary and associate companies respectively, covered in the register maintained under Section 301 of the Act.

b) The rates of interest and the terms and conditions of the above said transactions where-ever applicable, are prima- facie not prejudicial to the interest of the Company.

c) The payment of Principal amount and interest thereon, where-ever applicable are regular.

d) There were no overdue amounts of the aforesaid transactions.

4. In our opinion and according to the information and explanations given to us, there is an 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 also for the sale of goods. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control systems.

5. In respect of contracts or arrangements referred to in Section 301 of the Companies Act,1956:

a) According to information and explanations given to us, the transactions made in pursuance of contracts or arrangements that needs to be entered in the Register maintained under Section 301 of the Companies Act, 1956, have been so entered.

b) According to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements entered in the register maintained under Section 301 of the Companies Act, 1956 have been made at prices which are reasonable having regard to the prevailing market prices 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.

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

8. On the basis of records produced, we are of the opinion that prima-facie cost records and accounts prescribed by the Central Government under Section 209(1) (d) of the Companies Act, 1956 in respect of the products of the Company under the rules under said section are generally maintained / are under preparation. However, we have not made a detailed examination of the records with a view to determining whether they are accurate or complete.

9. In respect of statutory dues:

a) According to the records of the Company, undisputed statutory dues including Provident Fund, Investors Education Fund, Income-tax, Sales-tax, Wealth-tax, Service tax, Customs duty, Excise duty, Cess and any other statutory dues has generally been regularly deposited with the appropriate authorities. According, to the information and explanations given to us, no undisputed amount payable in respect of the aforesaid dues were outstanding as at 31st March, 2011 for a period of more than six months from the date they became payable.

b) Details of dues of Income-tax which have not been deposited as on 31st March, 2011 on account of disputes are given below :

Forum where the Period to which the Amount involved Statute Nature of dues dispute is pending amount relates (Rs. in Lakhs)

Commissioner of Income- tax Act Income-tax AY: 2008-09 *53.43 Income tax (Appeals)

* Out of this sum of Rs. 23.28 lacs is paid under protest against the disputed Tax demand.

10. The Company does not have accumulated losses at the end of the fi nancial year. The Company has not incurred cash losses during the fi nancial year covered by the audit and in the immediately preceding fi nancial year.

11. Based on our audit procedures and according to the information and explanation given to us, the Company has not defaulted in repayment of dues to financial institutions, banks or debenture holders.

12. According to the information and explanation given to us and based on the information available, no loans and advances have been granted by the Company on the basis of security by way of pledge of shares, debentures and other securities.

13. In our opinion the Company is not a chit fund or a nidhi fund/mutual benefit fund/society Therefore, provisions of Clause4 (xiii) of the Companies (Auditor's Report) Order, 2003 is not applicable to the Company.

14. The Company did not either deal or trade in shares, securities, debentures and other investment and hence Clause 4(xiv) is not applicable.

15. According to the information provided to us, the Company has issued a letter of comfort amounting to Euro 20.00 Lakhs for loans taken by step down subsidiary from banks or financial institutions.

16. In our opinion and according to information and explanation given to us, the term loans have been applied for the purpose for which they were raised.

17. According to the information and explanations given to us and on an overall examination of the Balance Sheet of the Company, we are of the opinion that there are no funds raised on short-term basis that have been used for long-term investment and vice versa.

18. During the year, the Company has not made preferential allotment of Equity shares to parties and companies covered in the Register maintained under Section.301 of the Companies Act, 1956.

19. The Company has not raised funds by way of issue of Debentures; hence, Clause 4(xix) of Companies (Auditor's Report) Order, 2003 is not applicable to the Company.

20. The Company has not raised any funds through Public Issue during the year and hence Clause 4(xx) of Companies (Auditor's Report) Order, 2003 is not applicable to the Company.

21. Based upon the Audit procedures performed and information and explanations given to us, we report that no material fraud on or by the Company has been noticed or reported during the course of our Audit.

For Bohara Bhandari Bung And Associates

Chartered Accountants

Firm Regn No:008127S

CA. P.M.Bhandari

Place : Hyderabad Partner

Date : 11th August, 2011 M.No.036241




Mar 31, 2010

We have audited the attached Balance Sheet of Shilpa Medicare Limited ("the Company") as at 31st March, 2010, and also the Profit and Loss Account and the Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Companys Management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

As required by the Companies (Auditors Report) Order, 2003 (as amended) ("the order") issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 & 5 of the said Order to the extent applicable.

Further to our comments in the Annexure referred to above, we report that:

1. 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;

2. 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;

3. The Balance Sheet, Profit and Loss Account and Cash flow statement, dealt with by this report are in agreement with the books of account;

4. In our opinion, the Balance Sheet, Profit and Loss Account and Cash flow statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of Section 211 of the Companies Act,1956;

5. 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;

6. In our opinion and to the best of our information and according to the explanations given to us, the said accounts read together with the Significant Accounting Policies and other notes thereon, give the information required by the Companies Act,1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

(a) in the case of the Balance Sheet, of the state of Affairs of the Company as at 31st March, 2010;

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

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

ANNEXURE REFERRED TO IN OUR REPORT OF EVEN DATE On the basis of such checks as we considered appropriate and in terms of information and explanation given to us, we further state that:

1. In respect of Fixed Assets:

a) The Company has maintained proper records, showing full particulars including Quantitative details and situation of Fixed Assets.

b) As explained to us, Fixed Assets have been physically verified wherever feasible by the Management and no material discrepancy with respect to book records was noticed on such verification.

c) During the year the company has not disposed off a substantial part of the Fixed Assets.

2. In respect of Inventories:

a) The Inventory in its possession has been physically verified by the management. In our opinion the frequency of the verification is reasonable. The Stocks lying with third parties have been verified with reference to Statements of Accounts or Subsequent return of goods.

b) The procedure as explained to us and followed by the Management for physical verification of Inventories is reasonable and adequate in relation to the size of the company and the nature of its business.

c) According to the information and explanations given to us, no material discrepancies were noticed on physical verification as compared to book records.

3. In respect of the loans, secured or unsecured, granted or taken by the company to/from companies, firm or other parties covered in the register maintained under section 301 of the Companies Act, 1956:

a) The Company has advanced interest free Unsecured Loan of Rs.867.14 Lakhs to its subsidiary Companies, of which Rs.2479.51 are outstanding as on 31.03.2010, from the companies covered in the register maintained under section 301 of the Act.

b) The rates of interest and the terms and conditions of the above said transactions where ever applicable, are prima-facie not prejudicial to the interest of the company.

c) The payment of Principal amount and interest thereon, where ever applicable are regular.

d) There were no overdue amounts of the aforesaid transactions.

4. In our opinion and according to the information and explanations given to us, there is an 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 also for the sale of goods. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control systems.

5. In respect of contracts or arrangements referred to in Section 301 of the Companies Act, 1956:

a) According to information and explanations given to us, the transactions made in pursuance of contracts or arrangements that needs to be entered in the Register maintained under sections 301 of the Companies Act, 1956, have been so entered.

b) According to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements entered in the register maintained under sec.301 of the Companies Act, 1956 have been made at prices which are reasonable having regard to the prevailing market prices 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.

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

8. On the basis of records produced, we are of the opinion that prima-facie cost records and accounts prescribed by the central government under section 209(1) d of the Companies Act, 1956 in respect of the products of the company under the rules under said section are generally maintained / are under preparation. However, we have not made a detailed examination of the records with a view to determining whether they are accurate or complete.

9. In respect of statutory dues:

a) According to the records of the company, undisputed statutory dues including Provident Fund, Investors Education Fund, Income-tax, Sales-tax, Wealth-tax, Service tax, Customs duty, Excise duty, Cess and any other statutory dues have been regularly deposited with the appropriate authorities. According, to the information and explanations given to us, no undisputed amount payable in respect of the aforesaid dues were outstanding as at 31st March, 2010 for a period of more than Six months from the date they became payable.

10. The company does not have accumulated losses at the end of the financial year. The Company has not incurred cash losses during the financial year covered by the audit and in the immediately preceding financial year.

11. Based on our audit procedures and according to the information and explanation given to us, the company has not defaulted in repayment of dues to financial institutions, banks or debenture holders.

12. According to the information and explanation given to us and based on the information available, no loans and advances have been granted by the Company on the basis of Security by way of pledge of shares, debentures and other Securities.

13. In our opinion the company is not a chit fund or a nidhi fund/mutual Benefit fund/society. Therefore, provisions of clause4 (xiii) of the Companies (Auditors Report) Order, 2003 is not applicable to the company.

14. The Company did not either deal or trade in shares, securities, debentures and other Investment and hence clause 4(xiv) is not applicable.

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

16. In our opinion and according to information and explanation given to us, the term loans have been applied for the purpose for which they were raised.

17. According to the information and explanations given to us and on an overall examination of the Balance Sheet of the Company, we are of the opinion that there are no funds raised on short-term basis that have been used for long-term investment and vice versa.

18. During the year, the company has not made preferential Allotment of Equity shares to parties and companies covered in the Register maintained under Section.301 of the Companies Act, 1956.

19. The Company has not raised funds by way of issue of Debentures; Hence, Clause 4(xix) of Companies (Auditors Report) Order, 2003 is not applicable to the company.

20. The Company has not raised any funds through Public Issue during the year and hence Clause 4(xx) of Companies (Auditors Report) Order, 2003 is not applicable to the company.

21. Based upon the Audit procedures performed and information and explanations given to us, we report that no material fraud on or by the Company has been noticed or reported during the course of our Audit.

For Bohara Bhandari Bung And Associates

Chartered Accountants

(Firm Reg No: 008127S)

Sd/-

CA.P.M.Bhandari

Partner

M.No.036241

Place : Raichur

Dated : 01st September,2010

 
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