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Auditor Report of Source Natural Foods & Herbal Supplements Ltd.

Mar 31, 2015

We have audited the accompanying financial statements of SOURCE NATURAL FOODS AND HERBAL SUPPLEMENTS LIMITED ("the company"), which comprise the Balance Sheet as at 31 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 provision 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; mid design, implementation and maintenance of 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 financial statements based on our audit. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made there under.

We conducted our audit in accordance with the Standards on Auditing specified under section 143(10) ofthe 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 mis-statement.

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 ofthe financial statements that give 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 an adequate internal financial controls system over financial reporting in place 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 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;

a) In the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2015;

b) In the case of the 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

As required by section 143(3) ofthe 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 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 relevant books of account maintained for the purpose of preparation of the financial statements.

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

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

f) We have made statements on matters specified in Companies Audit Report Order 2015, in the Annexure attached to this report.

The Annexure referred to in our report to the members of Source Natural Foods and Herbal Supplements Limited for the year ended on 31st March, 2015.

1. IN RESPECT OF ITS FIXED ASSETS:[ (i) ]

a. The Company has maintained proper records showing full particulars including quantitative details and the situation of fixed assets on the basis of available information.

b. As explained to us ,all the 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 the nature of its assets .No material discrepancies were noticed on such physical verification.

2. IN RESPECT OF INVENTORIES: :[(ii) ]

a. The inventories have been physically verified during the year by the management .In our opinion, the frequency of verification is reasonable.

b. In our opinion and according to the information and explanation 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 .As explained to us, there were no material discrepancies noticed on physical verification of inventories as compared to the book records.

3. IF LOANS GRANTED: [(iii) ]

In our opinion and according to the information and explanation 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.

4. IN RESPECT OF INTERNAL CONTROL:[(iv) ]

In our opinion and according to the information and explanation 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 and services. During the course of our audit, we have not observed any continuing failure to correct major weakness in internal control system.

5. IN RESPECT OF DEPOSIT FROM PUBLIC: [(v) ]

According to information and explanations given to us, the Company has not accepted any deposits from the public. Therefore, the provisions of the Clause (v) of the order are not applicable.

6. COST ACCOUNTING RECORDS: [ (vi) ]

According to information and explanations given to us the provisions of section 148 of Companies Act, 2013 relating to cost audit and maintenance of cost records are not mandatory to the company. Therefore, the provisions of clause (vi) of the order are not applicable.

7. IN RESPECT OF STATUTORY DUES: [ (vii) ]

a. According to the records of the company, UNDISPUTED STATUTORY DUES including Provident Fund, Employees' State Insurance, Income tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and any other statutory dues have been generally regularly deposited with the appropriate authorities. According to the information and explanation given to us, no undisputed amounts payable in respect of the aforesaid dues were outstanding as at March 31, 2015 for the period exceeding 6 months from the date of becoming payable.

b. The DISPUTED STATUTORY DUES aggregating to Rs.32,17,173/-, that have not been deposited on account of disputed matters pending before appropriate authorities are as under:

c. According to information and explanations given to us the company is not under the obligation to make contribution necessary to the Investor Education and Protection Fund in accordance with the relevant provisions of the Companies Act, 1956 and rules made thereunder.

8. LOSS MAKING COMPANY: [ (viii)]

The Company does not have accumulated losses more than fifty percent of its net worth at the end of the financial year. The Company has not incurred any cash losses during the financial year covered by the audit and no cash loss incurred in the immediately preceding financial year.

9. REPAYMENT OF DUES: [ (is) ]

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

10. GUARANTEE GIVEN: [(a)]

According to information and explanations given to us the company has not given guarantee for the loans taken by others from banks or financial institution; hence clause (x) the Order is not applicable.

11. END -USE-OF BORROWING: [ (xi)]

According to information and explanations given to us the Company has raised new term loans during the year. The term loans have been applied for the purposes for which they were raised.

12. FRAUD: [ (xii)]

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 fraud on or by the company has been noticed or reported during the course of our audit.

Place: Hyderabad for Vijay Narayan & Co Date: 27-05-2015 Chartered Accountants

Vijay N Kale Proprietor MM No 020322 FRN No 010917S


Mar 31, 2014

1. We have audited the attached Balance Sheet of SOURCE NATURAL FOODS AND HERBAL SUPPLEMENTS LIMITED as at 31st March 2014 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 Company''s management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

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

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

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

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

iii) The Balance sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account:

iv) The Balance sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report Comply with the Accounting Standards referred to in sub –section (3c) of Section 211 of the Companies Act, 1956.

v) On the basis of the written representation received from the directors, as on 31st March, 2014 and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 31st March, 2014 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

vi) In our opinion and to the best of our information and according to the explanations given to us the said accounts give the information required by the Companies Act,1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India .

a) In the case of the Balance Sheet, of the state of affairs of the Company as at 31st March 2014.

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 Cash Flow Statement, of the Cash Flows for the year ended on that date.

ANNEXURE TO THE AUDITOR''S REPORT (Referred to in Paragraph 3 of our report of even date)

1. 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, the Fixed Assets have been physically verified by the management every quarter. No material discrepancies were observed on such verification.

c) The Fixed assets disposed off during the year don''t represent substantial part of Fixed Assets of the Company of the Company.

2. INVENTORIES

a) The management has conducted physical verification of inventory at reasonable intervals during the year.

b) In our opinion & according to explanation given to us the procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

c) In our opinion, the Company is maintaining proper records of inventory and no material discrepancies were noticed on physical verification.

3. Loans Granted/Taken

a) As informed, the Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956.

b) As informed, the Company has taken loans, secured or unsecured from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. The number of parties and the amount involved in the transaction are giver below.

Number of Parties Amount Involved (Rs.)

1 2,46,76,000/-

c) The rate of interest and other term and conditions of loans taken by the company secured or unsecured are prime facie not prejudicial to the interests of company.

d) The terms of repayment for loans taken have not been specified.

e) There is no overdue amount more than rupees one Lakh to be recovered and as such no action is required in this regard.

4. INTERNAL CONTROL SYSTEM

In our opinion and according to the information and explanation 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 for the sale of goods and services, During the course of our audit, no major weakness has been noticed in internal control system in respect of these areas. During the course of our audit, we have not observed any continuing failure to correct major weakness in internal control system of the company.

5. MAINTENANCE OF REGISTER UNDER SECTION 301 OF COMPANIES ACT, 1956

a) The transactions that need to be entered into register in pursuance of section 301 of the Companies Act, 1956 have been so entered.

b) Each of these transactions has been made at prices which are reasonable having regard to the prevailing market prices.

6. PUBLIC DEPOSITS

The Company has not accepted any deposits from the public to which the provisions of section 58A, 58AA or any other relevant provision of the Companies Act, 1956 and the Companies (Acceptance of Deposit ) Rules ,1975 Apply

7. INTERNAL AUDIT SYSTEM

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

8. COST RECORDS

We have broadly reviewed the books of account maintained by the company pursuant to the rules made by the Central Government for the maintenance of cost records under section 209(1) (d) Of the Companies Act, 1956, and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the same.

9. STATUTORY DUES

a) According to the records of the Company, provident fund, investor education and protection fund, employees'' state insurance, income tax, sales tax, wealth tax, service tax, custom duty, excise duty, cess and other material statutory dues applicable to it have generally been regularly deposited during the year with appropriate authorities.

b) According to the records of the Company , the dues outstanding of income tax , sales tax, wealth tax, service tax , custom duty, excise duty, cess on account of any dispute , are as follows :

Name of the Name of the Dues Amount F.Y to which Forum where Tax/Duty Amount relates. dispute is pending.

Income Tax Disallowance of Work NIL 2007-08 Assistant in Progress Commissio -ner of Income Tax

VAT/ Sales Tax Additional Sales Tax 3,40,633.00 1999-2000 Sales Tax order dated 7/11/2013 Department ESI Omission of ESI under 5,51,907.00 1999-2002 ESI Court Different Heads

Excise Duty CENVAT Credit 5,11,930.00 October,2007 Appellate tribunal availed- dispute in proof of documents.

Excise Duty Demand relating to tax 13,42,727.00 2005-06 Appellate Tribunal on exempted goods for the period

10. NET WORTH EROSION

Accumulated losses of Rs. 2,52,07,432/- at the end of the financial year are less than 50% of its net worth and the company has not incurred cash losses in the current financial year and in the financial year immediately preceding financial year also.

11. REPAYMENT OF LOANS

As per the information and explanations given by the management, the Company has not taken any loan from financial institutions, bank or debenture holders, the Provisions of Clause (xi) of the Para 4&5 of the order are not applicable to the company during the year.

12. According to the information and explanation given to us and based on the document and records provided to us, the company has not granted loans and advances on the basis of security by way of pledge of share, debenture and other securities. The Provisions of Clause (xi) of the Para 4&5 of the order are not applicable to the company during the year.

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

14. In our opinion , the Company is not dealing in or trading in shares , securities, debentures and other investment , Accordingly ,the provisions of clause (xiv) of the Companies (Auditor'' Report )Order, 2003,(as amended) are not applicable to the company .

15. According to the information and explanation given to us, the Company has not given any guarantee for which the loans were obtained. The Provisions of Clause (xv) of the Para 4&5 of the order are not applicable to the company during the year.

16. Based on information and explanation given to us by the management, the company has not taken any term loans. The Provisions of Clause (xvi) of the Para 4&5 of the order are not applicable to the company during the year.

17. According to the information and explanations given to us and on an overall examination of the Balance Sheet of the Company, we report that no funds raised on short –term basis have been used for long–term investment and vice versa. The Provisions of Clause (xvii) of the Para 4&5 of the order are not applicable to the company during the year.

18. The Company has made preferential allotment of shares to parties or companies covered in the register maintained under section 301 of the companies Act, 1956. The price fixed for such preferential allotment shares to companies & parties listed in the register maintained under section 301 is not prejudicial to the interest of the company.

19. The Company has not issued any debentures and this clause is not applicable to the company.

20. The Company has not raised any money by the way of public issue during the year. Therefore the provisions of clause (xx) of the said Order are not applicable to the Company.

21. No fraud on or by the company has been noticed or reported during the year. The Provisions of Clause (xxi) of the Para 4&5 of the order are not applicable to the company during the year.

For Vijay Narayan & Co Chartered Accountants

Sd/- Vijay N Kale

(Proprietor)

Member Ship No. 020322

Firm Registration No. 010917S

Place: Hyderabad

Date : 26-05-2014


Mar 31, 2010

We have audited the attached Balance Sheet of INWINEX PHARMACEUTICALS LIMITED, HYDERABAD as at 31st March, 2010 and 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 have 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 test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the ac- counting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

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

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

(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 accounts as required by law have been kept by the company so far as it appears from our examination of those books.

(iii) The Balance Sheet and Profit and 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 and Profit & Loss Account and Cash Flow Statement dealt with by this report comply with the accounting standards referred to in section 211 (3c) of the Companies Act, 1956.

(v) 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 appointed as a director in terms of clause(g) of sub-section (1) to section 274 of the Companies Act, 1956.

(vi) In our opinion and to the best of our information and according to the explanation given to us, the said accounts give the information required by the Companies Act, 1956 in the manner so required 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 affairs of the company as at 31st March, 2010 and

(ii) in the case of the Profit & Loss Account of the Profit of the Company for the year ended on that date; and

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

Annexure Referred to in paragraph 3 of my report of even date

On the basis of such checks as we considered appropriate and according to the information and explanations given to us during the course of audit, we state that:

1. a. The fixed asset register showing full particulars including quantitative details and situation is being updated.

b. As explained to me, the management has physically verified the fixed assets and there is a regular program of verification, which in my opinion, is reasonable having regard to the size of the company and the nature of its assets. No material discrepancies were noticed on such verification.

2. a. As explained to me, the inventories were physically verified by the management at reasonable intervals during the year. However there are no physical stocks in the hands of company at the end of the year.

b. In my opinion and according to the information and explanation given to me, the procedures of physical verification of inventories followed by the management are reasonable and adequate in relation the size of the company and the nature of its business.

c. In my opinion and according to the information and explanation given to me, the company has maintained proper records of its inventories and the discrepancies noticed on such physical verification between physical stock and the book records were not material and have been adequately dealt with in the books of accounts.

3. a. During the year, the company had taken a interest free unsecured loan from a party covered in the register maintained under Section 301 of the Companies Act, 1956 and the company has not granted any loans secured or unsecured to the companies firms, or other parties covered in the register maintained under section 301 of the companies act, 1956.

b. No interest is being paid on the loan taken by the company.

c. No stipulation has been made for the repayment of the loans, so it is not possible to make comment.

d. As explained to me by the management, the loan taken by the company will be repaid during the due course of time. No. of parties-1 Amount involved is Rs.47,26,000/-

4. In my opinion and according to the information and explanations given to me, the internal control procedure is adequate to commensurate with the size of the company and the nature of its business, for the purchase of stores, raw materials including components, plant and machinery and equipments and for sale of goods.

5. There are few transactions during the year exceeding in value rupees five lakhs in respect of party which need to be entered in the register maintained under section 301 of the companies act, 1956 and has been so entered as required.

6. In my opinion and according to the information and explanation given to me, the company has not accepted any deposits as defined under section 58A and 58AA of the companies act, 1956 and the rules framed there under would apply.

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

8. Maintenance of cost records has been prescribed by the Central Government under clause (d) of the subsection (1) of section 209 of the Companies Act 1956 for the products of the company. The company has maintained records to show the cost of production. We have not, however, made a detailed examination of the records with a view to determining whether they are accurate or complete.

9. a. According to the records of the company, there is delay in depositing Provident fund dues. However, payments were made during the course of audit.

b. According to the information and explanation give to me, no undisputed amounts payable in respect of Income Tax, Sales Tax, Wealth Tax, Customs Duty, Excise Duty and Cess were in arrears, as at 31s1 March, 2010 for a period of more than six months from the date they became payable.

c. According to the information and explanation given to me, disputed Sales tax demand aggregating to Rs.3.40 Lakhs (net of pre deposit) have not been deposited since the matter is pending with the appellate authority.

10. The company has accumulated losses. It has incurred cash losses in the current financial year.

11. In my opinion and according to the information and explanations given to me, the company has not defaulted in repayment of dues to any financial institution or bank.

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

13. The provisions of any special statue applicable to Chit Fund, Nidhis or Mutual Benefit funds/Societies are not applicable to the company.

14. The company is not dealing in or trading in shares, securities, debentures or other investments and hence, requirement of paragraph 4(xiv) are not applicable to the company.

15. According to the information and explanation given to me, the company has not given any guarantee for loans taken by others from the banks and financial institutions.

16. The company has not taken any term loans during the year.

17. According to the cash flow statement and other records examined by me on the basis of information and explanation given to me, on an overall basis, funds raised on short term basis have prima face, not been used during the year for long term investment and vice versa.

18. According to the information and explanation given to me, the company has made preferential allotment of 36,76,000 shares to various parties according to the Scheme of Arrangement approved by the Honorable High Court of Andhra Pradesh.

19. Since the company does not have any debentures, the question of creation for securities for debentures does not arise.

20. During the year, the company has not raised money by public issue. Accordingly, the question of disclosure of end use of such monies does not arise.

21. To the best of my knowledge and belief and according to the information and explanations given to me, and based upon the audit procedures performed, no fraud on or by the company was noticed or reported during the year.

For PRAKASH CHOKDA

Chartered Accountants

Place : Hyderabad PRAKASH CHOKDA

Date: 31st May, 2010 (Proprietor)

M.No. 207582






Mar 31, 2009

We have audited the attached Balance Sheet of INWINEX PHARMACEUTICALS LIMITED, HYDERABAD as at 31st March, 2009 and 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 have 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 test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

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

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

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

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

(iii) The Balance Sheet and Profit and 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 and Profit & Loss Account and Cash Flow Statement dealt with by this report comply with the accounting standards referred to in section 211 (3c) of the Companies Act, 1956.

(v) On the basis of written representations received from the Directors as on 31st March, 2009, and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 31st March, 2009 from appointed as a director in terms of clause(g) of sub-section (1) to section 274 of the Companies Act, 1956.

(vi) In our opinion and to the best of our information and according to the explanation given to us, the said accounts give the information required by the Companies Act, 1956 in the manner so required 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 affairs of the company as at 31st March, 2009 and

(ii) in the case of the Profit & Loss Account of the Profit of the Company for the year ended on that date; and

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

Annexure Referred to in paragraph 3 of my report of even date

On the basis of such checks as we considered appropriate and according to the information and explanations given to us during the course of audit, we state that:

1. a. The fixed asset register showing full particulars including quantitative details and situation is being updated.

b. As explained to me, the management has physically verified the fixed assets and there is a regular program of verification, which in my opinion, is reasonable having regard to the size of the company and the nature of its assets. No material discrepancies were noticed on such verification.

2. a. As explained to me, the inventories were physically verified by the management at reasonable intervals during the year. However there are no physical stocks in the hands of company at the end of the year.

b. In my opinion and according to the information and explanation given to me, the procedures of physical verification of inventories followed by the management are reasonable and adequate in relation the size of the company and the nature of its business.

c. In my opinion and according to the information and explanation given to me, the company has maintained proper records of its inventories and the discrepancies noticed on such physical verification between physical stock and the book records were not material and have been adequately dealt with in the books of accounts.

3. a. During the year, the company had taken a interest free unsecured loan from a party covered in the register maintained under Section 301 of the Companies Act, 1956 and the company has not granted any loans secured or unsecured to the companies firms, or other parties covered in the register maintained under section 301 of the companies act, 1956.

b. No interest is being paid on the loan taken by the company.

c. No stipulation has been made for the repayment of the loans, so it is not possible to make comment.

d. As explained to me by the management, the loan taken by the company will be repaid during the due course of time No. of parties-2 Amount involved is Rs. 2,83,58,227/-

4. In my opinion and according to the information and explanations given to me, the internal control procedure is adequate to commensurate with the size of the company and the nature of its business, for the purchase of stores, raw materials including components, plant and machinery and equipments and for sale of goods.

5. There are no transactions during the year exceeding in value rupees five lakhs in respect of party which need to be entered in the register maintained under section 301 of the companies act, 1956.

6. In my opinion and according to the information and explanation given to me, the company has not accepted any deposits as defined under section 58A and 58AA of the companies act, 1956.

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

8. Maintenance of cost records has been prescribed by the Central Government under clause (d) of the subsection (1) of section 209 of the Companies Act 1956 for the products of the company. The company has maintained records to show the cost of production. We have not, however, made a detailed examination of the records with a view to determining whether they are accurate or complete.

9. a. According to the records of the company, there is delay in depositing Provident fund dues. However, payments were made during the course of audit.

b. According to the information and explanation give to me, no undisputed amounts payable in respect of Income Tax, Sales Tax, Wealth Tax, Customs Duty, Excise Duty and Cess were in arrears, as at 31st March, 2009 for a period of more than six months from the date they became payable.

c. According to the information and explanation given to me, disputed Sales tax demand aggregating to Rs.3.40 Lakhs (net of pre deposit) have not been deposited since the matter is pending with the appellate authority.

10. The company has accumulated losses. It has not incurred cash losses in the current Financial year.

11. In my opinion and according to the information and explanations given to me, the company has not defaulted in repayment of dues to any financial institution or bank.

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

13. The provisions of any special statue applicable to Chit Fund, Nidhis or Mutual Benefit funds/Societies are not applicable to the company.

14. The company is not dealing in or trading in shares, securities, debentures or other investments and hence, requirement of paragraph 4(xiv) are not applicable to the company.

15. According to the information and explanation given to me, the company has not given any guarantee for loans taken by others from the banks and financial institutions.

16. The company has not taken any term loans during the year.

17. According to the cash flow statement and other records examined by me on the basis of information and explanation given to me, on an overall basis, funds raised on short term basis have prima face, not been used during the year for long term investment and vice versa.

18. According to the information and explanation given to me, the company has not made any preferential allotment of shares to any party.

19. Since the company does not have any debentures, the question of creation for securities for debentures does not arise.

20. During the year, the company has not raised money by public issue. Accordingly, the question of disclosure of end use of such monies does not arise.

21. To the best of my knowledge and belief and according to the information and explanations given to me, and based upon the audit procedures performed, no fraud on or by the company was noticed or reported during the year.

For PRAKASH CHOKDA

Chartered Accountant

Sd/-

PRAKASH CHOKDA

Place: Hyderabad (Proprietor)

Date : 29.06.2009

 
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