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Auditor Report of SMS Pharmaceuticals Ltd.

Mar 31, 2016

We have audited the accompanying financial statements of SMS PHARMACEUTICALS LIMITED("the Company") which comprise the Balance Sheet as at March 31, 2016, the Statement of Profit and Loss and the Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements

The Company''s Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 201 3 ("the Act") with respect to the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility 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.

Auditors'' Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit.

We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made there under and the Order under Section 143( I I) of the Act.

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

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

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

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at March 3 1, 2016, and its Profit and its Cash Flow for the year ended on that date.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditors'' Report) Order, 2016 ("the Order"), as amended, issued by the Central Government of India in terms of sub-section (I I) 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.

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

d. In our opinion, the aforesaid financial statements comply with the Accounting Standards specified under section I 33 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

e. On the basis of written representations received from the directors as on March 3 1, 2016 taken on record by the Board of Directors, none of the director is disqualified as on March 31, 2016 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 B".

g. With respect to the other matters to be included in the Auditors'' Report in accordance with Rule

I I of the Companies (Audit and Auditors) Rules, 2014 and 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 as at 31st March 2016 on its financial position in its financial statements as referred to in note 30, 3 I, and 32 to the financial statements.

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

iii. The Company has been regular in transferring amounts to the Investor Education and Protection Fund in accordance with the relevant provisions of the Companies Act 201 3 and the Rules made there under.

Referred to in paragraph I under the heading ''Report on Other Legal & Regulatory Requirement'' of our report of even date to the financial statements of the Company for the year ended March 31, 2016:

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

b) The Company has a regular program of physical verification of its fixed assets by which all fixed assets are verified in a phased manner. In our opinion the periodicity of physical verification is reasonable having regard to the size of the Company and the nature of its assets. According to the information and explanations given to us, no material discrepancies were noticed on such verification.

ii) In respect of Inventories:.

a) As explained to us the inventories except goods in transit and stocks lying with third parties have been 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 nature of its business.

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

iii) The Company has not granted any loans, secured or unsecured to companies, firms, Limited Liability partnerships or other parties covered in the Register maintained under section 189 of the Act. Accordingly, the provisions of clause 3 (iii) (a) to (C) of the Order are not applicable to the Company and hence not commented upon.

iv) 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 Companies Act, 2013 in respect of loans, investments, guarantees, and security.

v) The Company has not accepted any deposits from the public and hence the directives issued by the Reserve Bank of India and the provisions of Sections 73 to 76 or any other relevant provisions of the Act and the Companies (Acceptance of Deposit) Rules, 2015 with regard to the deposits accepted from the public are not applicable.

vi) We have broadly reviewed the cost records maintained by the Company pursuant to the rules prescribed by the Central Government of India 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 determine whether they are accurate or complete.

vii) a) According to information and explanations given to us and on the basis of our examination of the books of account, and records, the Company has been generally 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 any other statutory dues with the appropriate authorities. According to the information and explanations given to us, no undisputed amounts payable in respect of the above were in arrears as at March 31, 2016 for a period of more than six months from the date on when they become payable.

b) According to the information and explanation given to us, there are no dues of income tax, sales tax, service tax, duty of customs, duty of excise, value added tax outstanding on account of any dispute, except the following:

Forum where

SI. Name of Nature of dispute is Year No. the Statute the dues pending

1 Central Excise Central AP High Court 1995-96 to Act, 1944 Excise 1997-98

2 Income Tax Income Tax BIFR 1988-89 Act, 1961

3 Income Tax Income Tax BIFR 1991-92 Act, 1961

4 Income Tax Income Tax BIFR 1992-93 Act, 1961

5 Income Tax Income Tax BIFR 1993-94 Act, 1961

6 Income Tax Income Tax BIFR 1994-95 Act, 1961

7 Income Tax Income Tax BIFR 1994-95 Act, 1961

8 Income Tax Income Tax BIFR 2003-04 Act, 1961

9 Income Tax Income Tax BIFR 2005-06 Act, 1961

10 Income Tax Interest BIFR 1992-2015 Act, 1961 on IT

11 Central Excise Interest on AP High Court 1992-2010 Act, 1944 CEX

12 Central Excise Interest on AP High Court 1995-2011 Act, 1944 CEX

Total



Name of THE Statute Amount Amount Amount not Involved Deposited Deposited Rs, in Lakhs Rs, in Lakhs Rs, in Lakhss

Central Excise 38.91 38.91 -- Act, 1944

Income Tax 0.01 - 0.01 Act, 1961

Income Tax 0.09 - 0.09 Act, 1961

Income Tax 11.19 - 11.19 Act, 1961

Income Tax 2.47 - 2.47 Act, 1961

Income Tax 14.25 - 14.25 Act, 1961

Income Tax 1.02 - 1.02 Act, 1961

Income Tax 36.50 - 36.50 Act, 1961

Income Tax 9.54 - 9.54 Act, 1961

Income Tax 102.23 - 102.23 Act, 1961

Income Tax 66.48 - 66.48 Act, 1961

Central Excise 16.40 - 16.40 Act, 1944

Central Excise 299.09 38.91 260.18 Act, 1944

c) The Company has been regular in transferring amounts to the Investor Education and Protection Fund in accordance with the relevant provisions of the Companies Act 2013 and the Rules made there under.

viii) In our opinion and according to the information and explanations given to us, the Company has not defaulted in the repayment of dues to banks. The Company has not issued any debentures.

ix) Based upon the audit procedures performed and the information and explanations given by the management, the Company has not raised moneys by way of initial public offer or further public offer including debt instruments and term Loans. Accordingly, the provisions of clause 3 (ix) of the Order are not applicable to the Company and hence not commented upon.

x) Based upon the audit procedures performed and the information and explanations given by the management, we report that no fraud by the Company or on the Company by its officers or employees has been noticed or reported during the year.

xi) Based upon the audit procedures performed and the information and explanations given by the management, the managerial remuneration has been paid or provided in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Companies Act,2013.

xii) In our opinion, the Company is not a Nidhi Company. Therefore, the provisions of clause 4 (xii) of the Order are not applicable to the Company.

xiii) In our opinion, all transactions with the related parties are in compliance with section 177 and 188 of Companies Act, 2013 and the details have been disclosed in the Financial Statements as required by the applicable accounting standards.

xiv) Based upon the audit procedures performed and the information and explanations given by the management, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review. Accordingly, the provisions of clause 3 (xiv) of the Order are not applicable to the Company and hence not commented upon.

xv) Based upon the audit procedures performed and the information and explanations given by the management, the Company has not entered into any non-cash transactions with directors or persons connected with him. Accordingly, the provisions of clause 3 (xv) of the Order are not applicable to the Company and hence not commented upon.

xvi) In our opinion, the Company is not required to be registered under section 45 IA of the Reserve Bank of India Act, 1934 and accordingly, the provisions of clause 3 (xvi) of the Order are not applicable to the Company and hence not commented upon.

(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

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

In our opinion the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting 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 RAM BABU & Co.,

Chartered Accountants

FRN : 002976S



RAVI RAMBABU

Place : Hyderabad Partner

Date : 14-05-2016 M. No. 018541


Mar 31, 2015

We have audited the accompanying financial statements of SMS PHARMACEUTICALS LIMITED ("the Company"), which comprise the Balance Sheet as at 31st March 2015, the Statement of Profit and Loss, the Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management's Responsibility for the Financial Statements

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

Auditor's Responsibility

Our responsibility is to express an opinion on these 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, to the extent applicable.

We conducted our audit in accordance with the Standards on Auditing specified under section 143(10) of the Act and other applicable authoritative pronouncements 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 misstatements.

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

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial statements, give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at March 31st, 2015, and its profit and its cash flows for the year ended on that date.

Report on other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order, 2015 ("the Order") issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to us, we give in the Annexure a statement on the matters specified in paragraphs 3 and 4 of the Order to the extent applicable.

2. As required by section 143(3) of the Act, we 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 Cash Flow Statement dealt with by this Report are in agreement with the books of account.

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

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

f. With respect to the other matters to be included in the Auditor's Report in accordance with Rule 11 of 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 as at 31st March 2015 on its financial position in its financial statements as referred to in note 33, 34, 35 and 36 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 during the year ended 31st March 2015..

The Annexure referred to in the Independent Auditors' Report of even date on the Financial Statements to the Members of SMS Pharmaceuticals Limited for the year ended 31st March 2015. We report that:

i. Inrespect of its 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 regular program of physical verification of its fixed assets by which all fixed assets are verified in a phased manner. In our opinion the periodicity of physical verification is reasonable having regard to the size of the Company and the nature of its assets. According to the information and explanations given to us, no material discrepancies were noticed on such verification.

ii. Inrespect of Inventories:

a) As explained to us, the inventories except goods in transit and stocks lying with third parties have been 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 nature of its business.

c) In our opinion and according to the information and explanations given to us the Company has maintained proper records of its inventories 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 in the register maintained under section 189 of the Companies Act 2013. Hence we have not reported on the related matters of this clause and sub-clauses.

iv. 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 with regard to purchase of inventory and fixed assets and with regard to sale of goods and services. We have not observed any major weakness in the internal control system during the course of the audit.

v. According to the information and explanations given to us, the Company has not accepted any deposits from the public. .

vi. We have broadly reviewed the cost records maintained by the Company pursuant to the rules prescribed by the Central Government of India 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 determine whether they are accurate or complete.

vii. According to the information and explanations given to us in respect of statutory dues:

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

b) There were no undisputed amounts payable in respect of income tax, sales tax, wealth tax, service tax, duty of customs, duty of excise, value added tax or cess and other material statutory dues in arrears as at 31st March 2015 for a period of more than six months from the date they became payable.

c) Details of statutory dues which have not been deposited as on 31st March 2015 on account of disputes are given below: Forum where Sl. Name of Nature of dispute is Year No. the Statute the dues pending

1 Central Excise Central AP High 1995-96 to Act, 1944 Excise Court 1997-98

2 Income Tax Income Tax BIFR 1988-89 Act,1961

3 Income Tax Income Tax BIFR 1991-92 Act,1961

4 Income Tax Income Tax BIFR 1992-93 Act,1961

5 Income Tax Income Tax BIFR 1993-94 Act,1961

6 Income Tax Income Tax BIFR 1994-95 Act,1961

7 Income Tax Income Tax BIFR 1994-95 Act,1961

8 Income Tax Income Tax BIFR 2003-04 Act,1961

9 Income Tax Income Tax BIFR 2005-06 Act,1961

10 Income Tax Interest BIFR 1992-2011 Act,1961 on IT

11 Central Excise Interest AP High Court 1992-2010 Act, 1944 on CEX

12 Central Excise Interest AP High Court 1995-2011 Act, 1944 on CEX

Amount Amount not Amount Deposited Deposited Rs.in Lakhs Rs.in Lakhs Rs.in Lakhss

Central Excise Act, 1944 38.91 38.91 -

Income Tax Act, 1961 0.01 - 0.01

Income Tax Act, 1961 0.09 - 0.09

Income Tax Act, 1961 11.19 - 11.19

Income Tax Act, 1961 2.47 - 2.47

Income Tax Act, 1961 14.25 - 14.25

Income Tax Act, 1961 1.02 - 1.02

Income Tax Act, 1961 36.50 - 36.50

Income Tax Act, 1961 9.54 - 9.54

Income Tax Act, 1961 93.22 - 93.22

Central Excise Act, 1944 66.48 - 66.48

Central Excise Act, 1944 16.40 - 16.40

Total 290.08 38.91 251.17

(d) The Company has been regular in transferring amounts to the Investor Education and Protection Fund in accordance with the relevant provisions of the Companies Act 2013 and the Rules made thereunder.

viii. The Company has no accumulated losses at the end of the financial year and it has not incurred cash losses during the financial year covered by audit and in the immediately preceding financial year.

ix. In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to financial institutions and banks.The Company has not issued any debentures.

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

xi. In our opinion and according to the information and explanations given to us, term loans obtained by the Company during the year were applied for the same purpose for which they were obtained.

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

for RAMBABU & Co.

Chartered Accountants

FRN : 002976S

RAVI RAMBABU

Place : Hyderabad Partner

Date : 30-05-2015 M No. 018541


Mar 31, 2014

We have audited the accompanying financial statements of M/s. SMS PHARMACEUTICALS LIMITED, HYDERABAD ("the Company"), which comprise the Balance Sheet as at March 3l, 20l4, and 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.

Managements Responsibility for the Financial Statements:

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards referred to in sub-section (3C) of section 2ll of the Companies Act, l956 ("the Act"), read with the General Circular l5/20l3 dated l3th September, 20l3 of the Ministry of Corporate Affairs in respect of Section l33 of the Companies Act, 20l3 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:

a) In the case of the Balance Sheet, of the state of affairs of the Company as at March 3l, 20l4;

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.

Report on Other Legal and Regulatory Requirements:

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

2. As required by section 227(3) of the Act, we report that:

a) We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the 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) 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 2ll of the Companies Act, l956 read with the General Circular l5/20l3 dated l3th September, 20l3 of the Ministry of Corporate Affairs in respect of Section l33 of the Companies Act, 20l3.

e) On the basis of written representations received from the directors as on March 3l, 20l4, and taken on record by the Board of Directors, none of the directors is disqualified as on March 3l, 20l4, from being appointed as a director in terms of clause (g) of sub-section (l) of section 274 of the Companies Act, l956.

The Annexure referred to in paragraph 1 of the Our Report of even date to the members of SMS PHARMACEUTICALS LIMITED on the accounts of the company for the year ended 31st March, 2014.

1. In respect of 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 in a phased periodical manner, which in our opinion is reasonable having regard to the size of the company and nature of its assets. No material discrepancies were noticed on such verification.

(c) As per the information and explanations given to us, during the year the company has not disposed off any substantial part of the fixed assets that would affect the going concern status of the company.

2. In respect of its Inventories

(a) As explained to us, inventories have been physically verified during the year by the management at regular intervals. In our opinion, the frequency of verification is reasonable.

(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 are reasonable and adequate in relation to the size of the company and the nature of its business.

(c) The company has maintained proper records of inventories. In our opinion and according to the information and explanations given to us, the discrepancies noticed on physical verification as compared to the book records are not material.

3. According to the information and explanations given to us, that the company has not granted / not taken any loans secured or unsecured from/to the companies, firms or other parties to whom the provisions of Sec.30l of the Companies Act l956 apply. Accordingly paragraph 4(iii) of the order is not applicable.

4. In our opinion and according to the information and explanations given to us, there is generally an adequate internal control procedure commensurate with the size of the company and the nature of its business, for the purchase of inventories and fixed assets and payment for expenses and for sale of goods. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in the internal control system.

5. In respect of contracts or arrangements preferred to in Section 30l of the Companies Act, l956:

(a) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements, that needed to be entered into the register maintained under section 30l of the Companies Act, l956 have been so entered.

(b) In our opinion and 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 30l of the Companies Act, l956 and exceeding the value of Rs. 5,00,000/- in respect of each party covered above during the year have been made at prices which appear reasonable as per information available with the Company.

6. According to the information and explanations given to us, the Company has not accepted any deposits from the public covered under section 58A and 58AA of the Companies Act, l956.

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

8. We have broadly reviewed the cost records maintained by the Company pursuant to the Companies (Cost Accounting Records) Rules, 20ll prescribed by the Central Government under Section 209(l)(d) of the Act and we are of the opinion that prima facie the prescribed accounts and 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. In respect of statutory dues:

(a) According to the records of the company, undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees'' State Insurance, Income-tax, Sales-tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess to the extent applicable and any other statutory dues have generally been regularly deposited with the appropriate authorities. According to the information and explanations given to us there were no outstanding statutory dues as on 3lst of March, 20l4 for a period of more than six months from the date they became payable.

(c) According to the information and explanation given to us, the following amounts have not been deposited with the appropriate authorities on account of dispute.

Form S. Name of Nature of where Year Amount No. the the dues dispute is Rs. in Lakhs Statute pending

1 Central Excise Central AP High 38.9l Act, l944 Excise Court

2 Income Tax Income Tax BIFR l988-89 0.0l Act,l96l

3 Income Tax Income Tax BIFR l99l-92 0.09 Act,l96l

4 Income Tax Income Tax BIFR l992-93 ll.l9 Act,l96l

5 Income Tax Income Tax BIFR l993-94 2.47 Act,l96l 6 Income Tax Income Tax BIFR l994-95 l4.25 Act,l96l

7 Income Tax Income Tax BIFR l994-95 l.02 Act,l96l

8 Income Tax Income Tax BIFR 2003-04 36.50 Act,l96l

9 Income Tax Income Tax BIFR 2005-06 9.54 Act,l96l

10 Income Tax Interest BIFR l992-20ll l25.l4 Act,l96l on IT

11 Central Excise Interest AP High l992-20l0 60.73 Act, l944 on CEX Court

12 Central Excise Interest AP High l995-20ll l6.40 Act, l944 on CEX Court

Total 316.25

Amount Amount ot S. Deposited DepositeD No. Rs. in Lakhs Rs. in Lakhs

1 Central Excise 38.9l - Act, l944

2 Income Tax - 0.0l Act,l96l

3 Income Tax - 0.09 Act,l96l

4 Income Tax - ll.l9 Act,l96l

5 Income Tax - 2.47 Act,l96l 6 Income Tax - l4.25 Act,l96l

7 Income Tax - l.02 Act,l96l

8 Income Tax - 36.50 Act,l96l

9 Income Tax - 9.54 Act,l96l

10 Income Tax - l25.l4 Act,l96l

11 Central Excise - 60.73 Act, l944

12 Central Excise - l6.40 Act, l944

Total 38.91 277.34

10. The Company does not have any 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 explanations given by the management, we are of the opinion that, the Company has not defaulted in repayment of dues to financial institutions, bank and debenture holders.

12. In our opinion and according to the explanations 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 /mutual benefit fund/society. Therefore, the provision of this clause of the Companies (Auditor''s Report) Order, 2003 (as amended) is not applicable to the Company.

14. In our opinion, the Company is not dealing in or trading in Shares, securities, debentures, mutual funds & other Investments. Accordingly, the provisions of clause 4(xiii) of the companies (Auditor''s Report) order, 2003 are not applicable to the company.

15. In our opinion, according to the information and explanations given to us, the company has not given guarantees for loans taken by the others from banks or financial institutions.

16. Based on our audit procedures and on the information given by the management, we report that during the year Export Import Bank of India sanctioned term loan for an amount of Rs. 3,000.00 Lakhs and the same were applied for the purpose for which they were obtained.

17. In our opinion, according to the information and explanations given to us and on an overall examination of the Balance Sheet of the Company as at 3lst March, 20l4, we report that no funds raised on short-term basis have been used for long-term investment by the Company.

18. Based on the audit procedures performed and the information and explanations given to us by the management, we report that the Company has not made any preferential allotment of shares during the year.

19. According to the information and explanations given to us, the Company has not issued debentures during the period covered by our report. Hence, the Company is not required to create or register or modify any security or charge.

20. The Company has not raised any money by public issue during the year.

21. Based on the audit procedures performed and the information and explanations given by the management, we report that no material fraud on or by the Company has been noticed or reported during the year.

for P. MURALI & CO., for RAMBABU & Co. Chartered Accountants Chartered Accountants Firm Reg.No.007275S Firm Reg No. 002976S

P. MURALI MOHAN RAO RAVI RAMBABU Partner Partner M. No. 234l2 M No. 0l854l

Place : Hyderabad Date : 30-05-20l4


Mar 31, 2013

Report on Financial Statements

We have audited the accompanying financial statements of M/s. SMS PHARMACEUTICALS LIMITED, HYDERABAD ("the Company"), which comprise the Balance Sheet as at March 31, 2013, and 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.

Managements Responsibility for the Financial Statements

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting 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

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. 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:

a) In the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2013;

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.

Report on Other Legal and Regulatory Requirements

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

2. As required by section 227(3) of the Act, we report that:

a) We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the 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) In pur opinion, the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement comply with the Accounting Standards referred to in subsection (3C) of section 211 of the Companies Act, 1956;

e) On the basis of written representations received from the directors as on March 31, 2013, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2013, from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

The Annexure referred to in paragraph 1 of the Our Report of even date to the members of SMS PHARMACEUTICALS LIMITED on the accounts of the company for the year ended 31st March, 2013.

1. In respect of 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 in a phased periodical manner, which in our opinion is reasonable having regard to the size of the company and nature of its assets. No material discrepancies were noticed on such verification.

(c) During the year, the Company has disposed off a substantial part of its fixed assets and in our opinion, disposal of fixed assets does not affect the going concern status of the company.

2. In respect of its Inventories

(a) As explained to us, inventories have been physically verified during the year by the management at regular intervals. In our opinion, the frequency of verification is reasonable.

(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 are reasonable and adequate in relation to the size of the company and the nature of its business.

(c) The company has maintained proper records of inventories. In our opinion and according to the information and explanations given to us, the discrepancies noticed on physical verification as compared to the book records are not material.

3. According to the information and explanations given to us, that the company has not granted/not taken any loans secured or unsecured from/to the companies, firms or other parties to whom the provisions of Section 301 of the Companies Act 1956 apply, Accordingly paragraph 4(iii) of the order is not applicable

4. In our opinion and according to the information and explanations given to us, there is generally an adequate internal control procedure commensurate with the size of the company and the nature of its business, for the purchase of inventories & fixed assets and payment for expenses & for sale of goods. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in the internal control system.

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

(a) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements, that needed to be entered into the register maintained under section 301 of the Companies Act, 1956 have been so entered.

(b) In our opinion and according to the information and 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 and exceeding the value of Rs. 5,00,000/- in respect of each party covered above during the year have been made at prices which appear reasonable as per information available with the Company.

6. According to the information and explanations given to us, the Company has not accepted any deposits from the public covered under section 58A and 58AA of the Companies Act, 1956.

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

8. We have broadly reviewed the cost records maintained by the Company pursuant to the Companies (Cost Accounting Records) Rules, 2011 prescribed by the Central Government under Section 209(1) (d) of the Act and we are of the opinion that prima facie the prescribed accounts and 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. In respect of statutory dues:

(a) According to the records of the company, undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees'' State Insurance, Income-tax, Sales-tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess to the extent applicable and any other statutory dues have generally been regularly deposited with the appropriate authorities. According to the information and explanations given to us there were no outstanding statutory dues as on 31st of March, 2013 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us, there are no undisputed amounts payable in respect of Income Tax, Wealth Tax, Sales Tax, Customs Duty, Excise Duty and Cess were in arrears, as at 31st March, 2013 for a period of more than six Months from the date they became payable, except the following:

Amount S. No. Name of the Statute Nature of the dues Year Rs. in Lakhs

1. Income Tax Act, 1961 Income Tax 1988-89 0.01

2. Income Tax Act, 1961 Income Tax 1991-92 0.09

3. Income Tax Act, 1961 Income Tax 1992-93 15.08

4. Income Tax Act, 1961 Income Tax 1993-94 2.47

5. Income Tax Act, 1961 Income Tax 1994-95 15.27

TOTAL 32.92

(c) According to the information and explanation given to us, the following amounts have not been deposited with the appropriate authorities on account of dispute.

Forum S. Name of Nature of where Year No. the Statute the dues dispute is pending

1. Income Tax Interest AO 1992-2013 Act,1961

2. Central Excise Interest APHIGH 1992-2010 Act 1944 COURT

3. Income Tax Income Tax ITAT 2000-01 Act,1961

4. Income Tax Income Tax ITAT 2001-02 Act,1961

5. Income Tax Income Tax AO 2001-02 Act,1961

6 Income Tax Income Tax ITAT 2002-03 Act,1961

7 Income Tax Income Tax AO 2003-04 Act,1961

8 Income Tax Income Tax AO 2005-06 Act,1961

9 Income Tax Income Tax CIT (A) 2007-08 Act,1961

10 Central Exice Interest AP High 1992-93 Act, 1944 Court to 2010-11

TOTAL

Name of the Statute Amount Amount Amount Deposit not Deposit Rs. in Lakhs Rs. in Lakhs Rs. in Lakhs

Income Tax Act,1961 118.11 - 118.11

Central Excise Act,1944 60.70 - 60.70

IIncome Tax Act,1961 0.69 - 0.69

Income Tax Act,1961 54.18 54.43 (0.25)

Income Tax Act,1961 1.22 - 1.22

Income Tax Act,1961 6.98 7.00 (0.02)

Income Tax Act,1961 36.50 - 36.50

Income Tax Act,1961 9.54 - 9.54

Income Tax Act,1961 7.75 7.75 -

Central Exice Act,1944 21.74 - 21.74

TOTAL 317.41 69.18 248.23

10. The Company does not have any 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 explanations given by the management, we are of the opinion that, the Company has not defaulted in repayment of dues to financial institutions, banks and debenture holders.

12. In our opinion and according to the explanations 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 /mutual benefit fund/society. Therefore,the provision of this clause of the Companies (Auditor''s Report) Order, 2003 (as amended) is notapplicable to the Company.

14. In our opinion, the Company is not dealing in or trading in Shares, securities, debentures, mutualfunds & other Investments. Accordingly, the provisions of clause 4(xiii) of the companies(Auditor''s Report) order, 2003 are not applicable to the company.

15. In our opinion, according to the information and explanations given to us, the company has not given guarantees for loans taken by the others from banks or financial institutions.

16. Based on the information given by the management, we report that the company has not raised any term loans during the year.

17. In our opinion, according to the information and explanations given to us and on an overall examination of the Balance Sheet of the Company as at 31st March, 2013, we report that no funds raised on short-term basis have been used for long-term investment by the Company.

18. Based on the audit procedures performed and the information and explanations given to us by the management, we report that the Company has not made any preferential allotment of shares during the year.

19. According to the information and explanations given to us, the Company has not issued debentures during the period covered by our report. Hence, the Company is not required to create or register or modify any security or charge.

20. The Company has not raised any money by public issue during the year.

21. Based on the audit procedures performed and the information and explanations given to us, we report that no material fraud on or by the Company has been noticed or reported during the year,nor have we been informed of such case by the management.



for RAMBABU & Co., for P. Murali & Co.,

Chartered Accountants Chartered Accountants

Firm Reg. No.002976S Firm Reg.No.007275S

RAVI RAMBABU P. MURALI MOHAN RAO

Partner Partner

M.No.18541 M.No.23412

Place : Hyderabad

Date : 29-05-2013


Mar 31, 2012

We have audited the attached Balance Sheet of SMS PHARMACEUTICALS LIMITED, HYDERABAD, as at 31st March, 2012 and the Statement of Profit and Loss for the year ended on that date annexed thereto and Cash Flow Statement for the year ended on that date which we signed in reference to this report. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

1. 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 give in the annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

2. Further to our comments in the annexure referred to in paragraph 1 above, we report that :

i) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purpose of our audit.

ii) In our opinion proper books of account as required by law have been kept by the company so far as appears from our examination of those books.

iii) In our opinion, 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.

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

v) On the basis of written representation received from the directors of the Company as at 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) to Section 274 of the Companies Act, 1956; and

vi) In our opinion and to the best of our information and according to the explanations given to us, the said accounts read with significant accounting policies and 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 so far as it relates to Balance Sheet, of the state of affairs of the Company as at 31st March, 2012.

b) In so far as it relates to Statement of Profit and Loss, of the Profit of the Company for the year ended on that date.

And

c) In so far as it relates to Cash Flow Statement, of the Cash Flows of the Company for the year ended on that date.

ANNEXURE TO THE AUDITORS' REPORT:

Referred to as in paragraph 1 of our report of even date.

1. In respect of its Fixed assets:

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

(b) As explained to us, the management has physically verified the fixed assets during the year and there is a regular program of verification in a phased periodical manner, which in our opinion is reasonable, having regard to the size of the company and the nature of its assets. No material discrepancies were noticed on such physical verification.

(c) As per the information and explanations given to us, during the year the company has not disposed off any substantial part of the fixed assets that would affect the going concern status of the company.

2. In respect of its Inventories:

(a) Inventories were physically verified during the year by the management at regular intervals. In our opinion, the frequency of verification is reasonable.

(b) The procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the company and the nature of its business.

(c) The company is maintaining proper records of inventories. The discrepancies noticed on verification between the physical stocks and the book records were not material.

3. According to the information and explanations given to us, that the company has not granted / not taken

any loans secured or unsecured from/to the companies, firms or other parties to whom the provisions of

Sec.301 of the Companies Act 1956 apply. Accordingly paragraph 4(iii) of the order is not applicable.

4. In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the company and the nature of its business, for the purchase of inventory, fixed assets and for the sale of goods and services. During the course of audit, we have not observed any continuing failure to correct major weaknesses in internal control system.

5. (a) In our opinion and according to the information and explanations given to us, we are of the opinion

that the particulars of contracts or arrangements referred to in section 301 of the Companies Act, 1956 have been entered in the register to be maintained under that section.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements entered in the register maintained under section 301 of the companies Act, l956 have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

6. The company has not accepted Deposits from public. Hence, the provisions of sections 58-A and 58-AA and other relevant provisions of the Companies Act, 1956, and the Companies (Acceptance of Deposits) Rules, l975, are not applicable to the company.

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

8. We have broadly reviewed the books of account maintained by the Company pursuant to the rules prescribed by the Central Government for maintenance of Cost Records under Section 209(1) (d) of the Companies act, l956 in respect of manufacturing activities of the company and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. However, we have not made a detailed examination of the records.

9. In respect of its statutory dues:

(a) According to the records of the company and as per the information and explanations given to us, the company is generally regular in depositing with appropriate authorities undisputed Statutory dues including Provident Fund, Investor Education & Protection Fund, Employee's State Insurance, Income Tax, Sales Tax, Wealth Tax, Customs Duty, Excise Duty, Cess and other material statutory dues applicable to it.

(b) According to the information and explanations given to us, there are no undisputed amounts payable in respect of Income Tax, Wealth Tax, Sales Tax, Customs Duty, Excise Duty and Cess were in arrears, as at 31st March, 2012 for a period of more than six Months from the date they became payable, except the following:

S. No. Name of the Statute Nature of the dues Year Amount Rs in Lakhs

1 Income Tax Act,l96l Income Tax 1988-89 0.01

2 Income Tax Act,l96l Income Tax 1991-92 0.09

3 Income Tax Act,l96l Income Tax l992-93 l5.08

4 Income Tax Act,l96l Income Tax l993-94 2.47

5 Income Tax Act,l96l Income Tax l994-95 l5.27

TOTAL 32.92

(c) According to the information and explanation given to us, the following amounts have not been deposited with the appropriate authorities on account of dispute.

Forum S. Name of Nature of where No. the Statute the dues dispute is pending

1 Income Tax Act,l96l Interest AO

2 Central Excise Interest AP HIGH Act, l944 COURT

3 Income Tax Income Tax ITAT Act,l96l

4 Income Tax Income Tax ITAT Act,l96l

5 Income Tax Income Tax AO Act,l96l

6 Income Tax Income Tax ITAT Act,l96l

7 Income Tax Income Tax AO Act,l96l

8 Income Tax Income Tax AO Act,l96l

9 Income Tax Income Tax CIT(A) Act,l96l

Name of the Amount Amount Year Amount Deposit not Deposit Rs. in Lakhs Rs. in Rs. in Lakhs Lakhs

Income Tax Act,1961 l992-20l2 lll.00 - lll.00

Central Excise Act,1944 l992-20l0 6l.00 - 6l.00

Income Tax Act,1961 2000-0l 0.69 - 0.69

Income Tax Act,1961 2001-02 54.l7 54.43 (0.26)

Income Tax Act,1961 200l-02 l.2l - l.2l

Income Tax Act,1961 2002-03 6.98 7.00 (0.02)

Income Tax Act,1961 2003-04 36.50 - 36.50

Income Tax Act,1961 2005-06 9.54 - 9.54

Income Tax Act,1961 2007-08 7.75 7.75 -

TOTAL 288.84 69.18 219.66

10. The Company has no accumulated losses at the end of the financial year and it has not incurred cash losses in the financial year under report and in the immediately preceding financial year.

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

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 and explanations given to us, the company is not a chit fund / nidhi / mutual benefit fund/society.

14. According to the information and explanations given to us, the company is not dealing or trading in shares, securities, debentures and other investments.

15. In our opinion, according to the information and explanations given to us, the company has not given guarantees for loans taken by the others from banks or financial institutions.

16. As informed to us, the term loans to the extent availed by the company were, prima-facie, applied for the purpose, for which the loans were obtained.

17. In our opinion, according to the information and explanations given to us and on an overall examination of statements and records of the company, that the funds raised on short-term basis have, prima facie, not been used during the year for long-term investment.

18. In our opinion, according to the information and explanations given to us, the company has not issued debentures during the period covered by our report and hence the Company is not required to create/ register/modify any security (charge).

19. In our opinion, and as per the information and explanations given to us, the company has not raised any money by public issue during the year.

20. In our opinion, the Company has not made any preferential allotment of shares/securities during the year to parties and companies covered in the register maintained under section 301 of the companies act, 1956.

21. According to the information and explanations given to us and based on audit procedures performed, no fraud on or by the Company has been noticed during the year.

for RAMBABU & Co., for P. Murali & Co.,

Chartered Accountants Chartered Accountants

Firm Reg. No.002976S Firm Reg.No.007257S

RAVI RAMBABU P. MURALI MOHAN RAO

Partner Partner

M.No.18541 M.No.23412

Place: Hyderabad

Date: 10-08-2012


Mar 31, 2010

We have audited the attached Balance Sheet of M/s. SMS PHARMACUETICALS LIMITED, HYDERABAD, as at 31st March 2010 and the Profit and Loss Account for the year ended on that date annexed thereto and Cash Flow statement for the year ended on that date which we signed in reference to this report. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

1. As required by the Companies (Auditors Report) Order, 2003, issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Companies Act, 1956, we give in the annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

2. Further to our comments in the annexure referred to in paragraph one above, we report that :

i) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purpose of our audit.

ii) In our opinion proper books of account as required by law have been kept by the company so far as appears from our examination of those books.

iii) In our opinion, the Balance Sheet, Profit & Loss Account and Cash Flow statement dealt with by this report are in agreement with the books of account.

iv) In our opinion, the Balance Sheet, Profit & Loss Account and Cash Flow statement read with significant accounting policies and notes thereon, dealt with by this report comply with the accounting standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956.

v) On the basis of written representation received from the directors of the Company as at 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) to Section 274 of the Companies Act, 1956; and

vi) In our opinion and to the best of our information and according to the explanations given to us, the said accounts read with significant accounting policies and 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 so far as it relates to Balance Sheet, of the state of affairs of the Company as at 31st March 2010.

b) In so far as it relates to Profit and Loss Account, of the Profit of the Company for the year ended on that date.

And

c) In so far as it relates to Cash Flow Statement, of the Cash Flows of the Company for the year ended on that date.



ANNEXURE TO THE AUDITORS REPORT:



Referred to as in paragraph 1 of our report of even date.

1. In respect of its Fixed assets:

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

(b) As explained to us, the management has physically verified the fixed assets during the year and there is a regular program of verification in phased periodical manner, which in our opinion is reasonable, having regard to the size of the company and the nature of its assets. No material discrepancies were noticed on such physical verification

(c) As per the information and explanations given to us, during the year the company has not disposed off any substantial part of the fixed assets that would affect the going concern status of the company.

2. In respect of its Inventories:

(a) Inventories were physically verified during the year by the management at regular intervals. In our opinion, the frequency of verification is reasonable.

(b) The procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the company and the nature of its business.

(c) The company is maintaining proper records of inventories. The discrepancies noticed on verification between the physical stocks and the book records were not material.

3. According to the information and explanations given to us, that the company has not granted / not taken any loans secured or unsecured from/to the companies, firms or other parties to whom the provisions of Sec.301 of the Companies Act 1956 apply. Accordingly paragraph 4(iii) of the order is not applicable.

4. In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the company and the nature of its business, for the purchase of inventory, fixed assets and for the sale of goods. During the course of audit, we have not observed any continuing failure to correct major weaknesses in internal control system.

5. (a) In our opinion and according to the information and explanations given to us, we are of the opinion

that the particulars of contracts or arrangements referred to in section 301 of the Companies Act, 1956 have been entered in the register to be maintained under that section.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of 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 prevailing market prices at the relevant time.

6. The company has not accepted Deposits from public. Hence, the provisions of sections 58-A and 58-AA and other relevant provisions of the Companies Act, 1956, and the Companies (Acceptance of Deposits) Rules, 1975, are not applicable to the company.

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

8. We have broadly reviewed the books of account maintained by the Company pursuant to the rules prescribed by the Central Government for maintenance of Cost records under Section 209(1) (d) of the Companies Act, 1956 in respect of manufacturing activities of the company and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. However, we have not made a detailed examination of the records.

9. In respect of its statutory dues:

(a) According to the records of the company and as per the information and explanations given to us, the company is generally regular in depositing with appropriate authorities undisputed Statutory dues including Provident fund, Investor education & protection fund, Employees state insurance, Income tax, Sales tax, Wealth tax, Customs duty, Excise duty, Cess and other material statutory dues applicable to it.

(b) According to the information and explanations given to us, there are no undisputed Amounts payable in respect of Income tax, Wealth tax, Sales tax, Customs duty, Excise duty and Cess were in arrears, as at 31st March, 2010 for a period of more than six Months from the date they became payable, except the following:

S.No Name of the Statute Nature of the dues Year Amount. Rs

1 Income Tax Act,1961 Income Tax 1988-89 672

2 Income Tax Act,1961 Income Tax 1991-92 8,809

3 Income Tax Act,1961 Income Tax 1992-93 15,07,858

4 Income Tax Act,1961 Income Tax 1993-94 2,47,280

5 Income Tax Act,1961 Income Tax 1994-95 15,26,900

6 Income Tax Act,1961 Income Tax 1996-97 19,53,992

Total 52,45,511

(c) According to the information and explanation given to us, the following amounts have not been deposited with the appropriate authorities on account of dispute. (Amount in Rs.)

Forum

S. Name of Nature of where Year

No. the Statute the dues dispute is

pending

1 Income Tax Interest AO 1992-2010

Act,1961

2 Central Excise Interest AP 1992-2010

Act, 1944 High Court

3 Income Tax Income Tax ITAT 2000-01

Act, 1961

4 Income Tax Income Tax ITAT 2001-02

Act,1961

5 Income Tax Income Tax AO 2001-02

Act,1961

6 Income Tax Income Tax ITAT 2002-03

Act,1961

7 Income Tax Income Tax AO 2003-04

Act,1961

8 Income Tax Income Tax AO 2005-06

Act,1961

(Amount in Rs.)

Not

S Name of Amount Amount Deposited No the Statute Deposited Due to

Dispute

1 Income Tax 1,22,00,000 -- 1,22,00,000

Act,1961

2 Central Excise 65,00,000 -- 65,00,000

Act, 1944

3 Incom Tax 68,520 -- 68,520

Act,1961

4 Incom Tax 52,63,610 50,40,279 2,23,331

Act,1961

5 IncomTax 1,21,475 -- 1,21,475

Act,1961

6 Incom Tax 10,15,048 7,90,000 2,25,048

Act,1961

7 Incom Tax 36,50,000 -- 36,50,000

Act,1961

8 Incom Tax 9,54,203 -- 9,54,203

Act,1961

Total 2,97,72,856 58,30,279 2,39,42,577

10. The Company has no accumulated losses at the end of the financial year and it has not incurred cash losses during the financial year under report and in the immediately preceding financial year.

11. In our opinion and according to the information and explanations given to us, the company has not defaulted in repayment of dues to its bankers or debenture holders or to any financial institutions.

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 and explanations given to us, the company is not a chit fund / nidhi / mutual benefit fund/society.

14. According to the information and explanations given to us, the company is not dealing or trading in shares, securities, debentures and other investments.

15. In our opinion, according to the information and explanations given to us, the company has not given guarantees for loans taken by the others from banks or financial institutions.

16. As informed to us, the term loans to the extent availed by the company were, prima-facie, applied for the purpose, for which the loans were obtained.

17. In our opinion, according to the information and explanations given to us and on an overall examination of statements and records of the company, that the funds raised on short-term basis have, prima facie, not been used during the year for long-term investment.

18. In our opinion, according to the information and explanations given to us, the company has not issued debentures during the period covered by our report and hence the Company is not required to create/ register/modify any security (charge).

19. In our opinion, and as per the information and explanations given to us, the end-use of money raised by public issue has been disclosed in the notes to the financial statements.

20. In our opinion, the Company has not made any preferential allotment of shares/securities during the year to parties and companies covered in the register maintained under section 301 of the companies act, 1956.

21. According to the information and explanations given to us and based on audit procedures performed, no fraud on or by the Company has been noticed during the year.



for RAMBABU & Co., for P. Murali & Co.,

Chartered Accountants Chartered Accountants

Registration No.02976S Registration No.007257S

RAVI RAMBABU P.MURALI MOHAN RAO

Partner Partner

M.No.18541 M.No.23412

Place: Hyderabad

Date : 27-08-2010

 
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