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Auditor Report of Zenotech Laboratories Ltd.

Mar 31, 2015

We have audited the accompanying standalone financial statements of Zenotech Laboratories 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 (collectively referred to as the 'standalone financial statements').

Management's Responsibility for the Standalone Financial Statements

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

Auditor's Responsibility

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

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 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 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 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 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 qualified audit opinion on the standalone financial statements.

Basis for Qualified Opinion

1. As more fully explained in note 2.25 to the financial statements, based on the available information the books of account for the financial years ended 31 March 2011 and 2012 were reconstructed by the Management post 12 November 2011. Given the fact that certain matters relating to the differences between the current Management and the then Co- Managing Director are currently sub-judice and unresolved, our audit opinion on the related financial results for the years ended 31 March 2011, 31 March 2012, 31 March 2013 and 31 March 2014 were modified accordingly. These related to obtaining audit evidence on the related financial statements and the consequential impact of the adjustments if any relating to the unresolved matters pertaining to non-compliance with applicable laws and regulations and any consequential adjustments/disclosures arising out of the outcome of ongoing legal proceedings.

The Company has represented to us that based on the steps taken by the Management and evidence available so far, in its assessment the risk that the financial statements may be materially misstated is low.

In view of the non-resolution of these, our opinion on the current year's financial statements is qualified in respect of both, the current year and the corresponding year, as we are unable to determine the adjustments/disclosures which may become necessary depending upon the outcome and the possible effects of the matters mentioned above.

2. As more fully explained in Note 2.26(b) to the financial statements, the Company has filed a legal case against the erstwhile co-managing director for recovering the managerial remuneration paid amounting to INR 7,980 thousands during the period from 1 October 2007 to 31 March 2011, including an amount of INR 2,280 thousands which was in excess of the prescribed limits for the year ended 31 March 2011 without obtaining the necessary prior approval from the Central Government of India which is in contravention of the provisions of the Companies Act, I956. Since the current management has filed a claim for the entire amount, there is a continuing default in relation to the excess remuneration paid

3. As more fully explained in Note 2.26(a) to the financial statements, the Company's application under the Companies Act, I956 to the Ministry of Corporate Affairs (MCA), Government of India is pending for approval of managerial remuneration. Pending requisite approval of the amount, no adjustment in this regard has been made in the accompanying financial statements.

Qualified Opinion

In our opinion and to the best of our information and according to the explanations given to us, except for the possible effects of the matters described in the Basis for Qualified Opinion paragraph, the aforesaid standalone financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at 31 March 2015, and its losses 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 II of Section 143 of the Companies Act, 2013 (hereinafter referred to as the "Order"), 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.

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 of the current period except for the matter number 1 explained in the 'Basis for Qualified Opinion' paragraph;

b) in our opinion proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books;

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 standalone financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014, to the extent applicable;

e) In our opinion, the matter described in matter number 1 in the 'Basis for Qualified Opinion' paragraph above, may have an adverse effect on the functioning of the Company;

f) on the basis of written representations received from the directors as on 31 March, 2015, and 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.

g) The qualification relating to the maintenance of accounts and other matters connected therewith are as stated in the matter number 1 in the Basis for Qualified Opinion paragraph above.

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

i. The Company has disclosed the impact of pending litigations as at 31 March 2015 on its financial position in its financial statements - Refer Note 2.25, 2.26 and 2.27 to the standalone financial statements;

ii. Based on the information provided by the Management, the Company does not have any long-term con- tracts including derivative contracts; and

iii. Based on the information there were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.

ANNEXURE TO THE INDEPENDENT AUDITORS' REPORT ON THE STANDALONE FINANCIAL STATEMENTS

The Annexure referred to in the Independent Auditors' Report of even date, on the Standalone Financial Statements to the Members of Zenotech Laboratories Limited ("the Company") for the year ended 31 March 2015. We report that:

(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 programme of physical verification of its fixed assets by which all fixed assets are verified over a period of three years. In our opinion, this periodicity of physical verification is reasonable having regard to the size of the Company and the nature of its assets. In accordance with this programme, the Company has verified all its fixed assets during the previous year and no material discrepancies were noticed on such verification.

(ii) (a) The inventories have been physically verified by the Management during the year. In our opinion, the frequency of such verification is reasonable.

(b) In our opinion, the procedures for the 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 inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material.

(iii) 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 ('the Act').

(iv) In our opinion and according to the information and explanations given to us, and having regard to the explanation that purchases of certain items of inventories and fixed assets are for the Company's specialized requirements and similarly goods sold are for the specialized requirements of the buyers and suitable alternative sources are not avail- able to obtain comparable quotations, 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. The activities of the Company do not involve rendering of services. We have not observed any major weaknesses in the internal control system during the course of the audit.

(v) The Company has not accepted any deposits from the public.

(vi) We have broadly reviewed the books of account maintained by the Company pursuant to the rules prescribed by the Central Government of India for maintenance of cost records under sub section (1) of Section 148 of the Act 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.

(vii) (a) According to the information and explanations given to us and on the basis of our examination of the records of the Company, amounts deducted/accrued in the books of account in respect of undisputed statutory dues including Provident fund, Employees' state insurance, Income-tax, Sales-tax, Service tax, Duty of Customs, Duty of Excise, Value added tax and other material statutory dues have generally been regularly deposited during the year by the Company with the appropriate authorities. As explained to us, the Company did not have any dues on account of Wealth tax.

According to the information and explanations given to us, no undisputed amounts payable in respect of Provident fund, Employees' state insurance, Income-tax, Sales-tax, Wealth tax, Service tax, Duty of Excise, Duty of Customs, Value added tax and other material statutory dues were in arrears as at 31 March 2015 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 dues of Income tax, Wealth tax, Duty of Customs and Duties of excise which have not been deposited with the appropriate authorities on account of any dispute. According to the information and explanations given to us, the following dues of Value added tax and Service tax have not been deposited by the Company on account of disputes:

Name of the Nature of Amount in Statute Dues thousands of INR*

The Finance Act, Service tax 8,498 1994

The Finance Act, Service tax 4,611 1994

The Finance Act, Service tax 11,124 1994 (1,000 paid under protest)

The A.P. Vat Act, Valued added tax 3,952 2005 (I,664 paid under protest)



NAME OF THE STATUTE Period to which the Forum where dis- amount relates pute is pending

The Finance ACt,1994 Financial Year 2007-08 Commissioner of Central Excise and Service Tax, Hyder- abad IV

The Finance Act,1994 Financial Year 2007-08, Commissioner of 2008-09 and 2009-10 Central Excise and Service Tax, Hyder- abad IV

The Finance Act,1994 Financial Year 2006-07 Commissioner of and 2007-08 Central Excise and Service Tax, Hyder- abad IV

The A.P.Vat Act,2005 Financial Year 2009-10, Deputy Commis- 2010-11,2012-2013 sioners Commercial Taxes (Appeal)

* excluding interest and penalty.

(c) As explained to us, the Company did not have any dues on account of investor education and protection fund.

(viii) The Company's accumulated losses at the end of the financial year are more than fifty percent of its net worth and it has incurred cash losses in the current year and immediately preceding financial year.

(ix) On the basis of audit procedures performed by us, and according to the information, explanations and representation given to us by the Management, the Company had delayed in repayments of certain dues (including interest) to financial institutions. The delayed principal amount and the interest aggregates to INR 30,488 thousands and INR 18,479 thousands respectively, and delays ranges from 142 days to 2,678 days. The Company has outstanding dues of INR 48,967 thousands as of balance sheet date. The Company did not have any outstanding debentures during the year.

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

(xi) According to the information and explanations given to us, the Company has applied term loan for the purpose for which the loans were obtained.

(xii) According to the information and explanations given to us, no fraud on or by the Company has been noticed or report- ed during the course of our audit.

for B S R & Associates LLP

Chartered Accountants

Registration Number : 116231W/W-100024



Sriram Mahalingam

Place: Hyderabad Partner

Date: 26 May 2015 Membership No: 049642


Mar 31, 2014

We have audited the accompanying financial statements of Zenotech Laboratories Limited (''the Company''), which comprise the Balance Sheet as at 31 March 2014, 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 (collectively referred to as the "financial statement").

Management''s Responsibility for the Financial Statements

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance 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 but not for the purpose of expressing an opinion on the effectiveness of the entity''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 qualified audit opinion.

Basis for Qualified Opinion

1 . As more fully explained in note 2.25 to the financial statements, based on the available information the books of account for the financial years ended 31 March 2011 and 2012 were reconstructed by the Management post 12 November 2011. Given the fact that certain matters relating to the differences between the current Management and the then Co- Managing Director are currently sub-judice and unresolved, our audit opinion on the related financial statement for the years ended 31 March 2011, 31 March 2012 and 31 March 2013 were modified accordingly. These related to obtaining audit evidence on the related financial statements and the consequential impact of the adjustments if any relating to the unresolved matters pertaining to non-compliance with applicable laws and regulations and any consequential adjustment/ disclosures arising out of the outcome of ongoing legal proceedings.

The Company has represented to us that based on the steps taken by the Management and evidence available so far, in its assessment the risk that the financial statements may be materially misstated is low. Further no additional significant claims have been received or any additional significant adjustments have been identified after 31 March 2012.

In view of the non-resolution of these, our opinion on the current year''s financial statements is qualified in respect of both, the current year and the corresponding year, as we are unable to determine the adjustments/ disclosures which may become necessary depending upon the outcome and the possible effects of the matters mentioned above.

2 . As more fully explained in Note 2.26(b) to the financial statements, the Company has filed a legal case against the erstwhile co-managing director for recovering the managerial remuneration paid amounting to INR 7,980 thousand during the period from 1 October 2007 to 31 March 2011, including an amount of INR 2,280 thousand which was in excess of the prescribed limits for the year ended 31 March 2011 without obtaining the necessary prior approval from the Central Government of India which is in contravention of the provisions of the Companies Act 1956. Since the current management has filed a claim for the entire amount, there is a continuing default in relation to the excess remuneration paid.

3 . As more fully explained in Note 2.26(a) to the financial statements, the Company''s application under the Act to the Ministry of Corporate Affairs (MCA), Government of India is pending for approval of managerial remuneration of Rs.3,000 thousands payable to Mr. B. K. Raizada, the erstwhile co-managing director for the period from 19 March 2011 to 18 March 2013. Pending requisite approval of the amount, no adjustment in this regard has been made in the accompanying financial statements.

4 . As more fully explained in Note 2.35 to the financial statements, regarding completeness of the list of related parties with the Company due to non receipt of form 24AA "Notice by the Interested Directors" pursuant to Section 299 of the Act from one of its ex-directors for the year ended 31 March 2013 and in the context of non-availability of complete information in this regard, we are unable to comment on the completeness of disclosures related to related parties as required under Accounting Standard 18 "Related Party Disclosures" as well as whether there would be any other impact on the financial statements for the corresponding year ended 31 March 2013.

Qualified Opinion

In our opinion and to the best of our information and according to the explanations given to us, except for the possible effects of the matters described in the Basis for Qualified Opinion paragraph, the financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

(a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31 March 2014;

(b) in the case of the Statement of Profit and Loss, of the loss 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"), as amended, 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 of the current period except for the matters explained in the Basis for Qualified Opinion paragraph.

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, except for possible effects, if any, as discussed in Basis for Qualified Opinion, the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement comply with the Accounting Standards referred to in sub- section (3C) of Section 211 of the Act, to the extent applicable;

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

Annexure to the Independent Auditors'' report

The Annexure referred to in the Independent Auditors'' Report to the Members of Zenotech Laboratories Limited ("the Company") for the year ended 31 March 2014. We report that:

(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 programme of physical verification of its fixed assets by which all fixed assets are verified over a period of three years. In our opinion, this periodicity of physical verification is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noted on such verification.

(c) Fixed assets disposed off during the year were not substantial, and therefore, do not affect the going concern assumption.

(ii) (a) The inventory has been physically verified by the Management at the year end. In our opinion, the frequency of such verification is reasonable.

(b) The procedures for the 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 inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material.

(iii) The Company has neither granted nor taken any loans, secured or unsecured, to or from companies, firms or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956 (''the Act'').

(iv) In our opinion and according to the information and explanations given to us, and having regard to the explanation that purchases of certain items of inventories and fixed assets are for the Company''s specialised requirements and similarly goods sold and services rendered are for the specialised requirements of the buyers and suitable alternative sources are not available to obtain comparable quotations, 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. The activities of the Company does not involve rendering of services. We have not observed any major weaknesses in the internal control system during the course of the audit.

(v) In our opinion and according to the information and explanations given to us, there are no contracts and arrangements the particulars of which need to be entered into the Register referred to in Section 301 of the Act.

(vi) The Company has not accepted any deposits from the public.

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

(viii) We have broadly reviewed the books of account maintained by the Company pursuant to the rules prescribed by the Central Government of India for maintenance of cost records under Section 209(1)(d) of the Act in respect of sales of goods by 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.

(ix) (a) According to the information and explanations given to us and on the basis of our examination of the records of the Company, amounts deducted/ accrued in the books of account in respect of undisputed statutory dues including Income tax, Service tax, Sales tax, Excise duty, Provident fund, Employees'' state insurance and other material statutory dues have generally been regularly deposited during the year by the Company with the appropriate authorities. As explained to us, the Company did not have any dues on account of Custom duty, Investor Education and Protection Fund and Wealth tax.

According to the information and explanations given to us, there are no undisputed amounts payable in respect of Sales tax, Provident fund, Employees'' state insurance, Income tax, Customs duty, Excise duty and other material statutory dues that were in arrears as at 31 March 2014 for a period of more than six months from the date they became payable except for following dues of Service tax:

Name of the Nature of Amount in Period to which the Statute Dues INR''000 amount relates

The Finance Act, Service tax 3,395 Financial Year 2009-10 1994 and 2010-11



Name of the Statute Due Date of Date Payment

The Finance Act, 1994 Various Yet not paid

Annexure to the Independent Auditors'' report (Contd.)

(b) According to the information and explanations given to us, there are no dues of Income tax, Sales tax, Wealth tax, Excise duty, Custom duty and other material statutory dues which have not been deposited by the Company on account of disputes. However, the Company disputes the following Service tax dues.

Name of the Nature of Amount in Period to which the Statute Dues INR''000 amount relates

The Finance Service tax 8,498 Financial Year 2007-08 Act, 1994

The Finance Service tax 4,611 Financial Year 2007-08, Act, 1994 2008-09 and 2009-10

The Finance Service tax 11,124 Financial Year 2006-07 Act, 1994 (1,000 paid and 2007-08 under protest)

The A.P. VAT Valued added 3,952 Financial Year 2009-10, Act, 2005 tax 2010-11, 2012-2013

Name of the Forum where dispute is pending* Statute

The Finance Act, 1994 Superintendent of Central Excise Medchal Range Sector II

The Finance Act, 1994 Superintendent of Central Excise Medchal Range Sector II

The Finance Act, 1994 Commissioner of Custom and Central Excise, Hyderabad

The A.P. VAT Act, 2005 Deputy Commissioner, Commercial Taxes (Appeal)

(x) The Company''s accumulated losses at the end of the financial year are more than fifty percent of its net worth and it has incurred cash losses in the current year and immediately preceding financial year.

(xi) On the basis of audit procedures performed by us, and according to the information, explanations and representation given to us by the Management, the Company had delayed in repayments of certain dues (including interest) to financial institutions. The delayed principal amount and the interest aggregates to Rs.30,320 thousand and Rs.13,963 thousand respectively, and delays ranges from 142 days to 2,302 days. The Company has outstanding dues of Rs.44,283 thousand as of balance sheet date. The Company did not have any outstanding debentures during the year.

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

(xiii) In our opinion and according to the information and explanations given to us, the Company is not a chit fund or a nidhi / mutual benefit fund/ society.

(xiv) According to the information and explanations given to us, the Company is not dealing or trading in shares, securities, debentures and other investments.

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

(xvi) The Company did not have any term loans outstanding during the year.

(xvii) According to information and explanations given to us, and on an overall examination of the balance sheet of the Company, we are of the opinion that funds of Rs.498,275 thousand raised on short term basis have been used for long term investment.

(xviii) The Company has not made any preferential allotment of shares to companies/ firms/ parties covered in the Register maintained under Section 301 of the Act.

(xix) The Company did not have any outstanding debentures during the year.

(xx) The Company has not raised any money by public issues.

(xxi) According to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the course of our audit.

for B S R & Associates LLP Chartered Accountants Firm Registration Number: 116231W

Sriram Mahalingam Place:Hyderabad Partner Date :26 May 2014 Membership No: 049642


Mar 31, 2013

Report on the Financial Statements

We have audited the accompanying fi nancial statements of Zenotech Laboratories Limited (''the Company''), which comprise the Balance Sheet as at 31 March 2013, the Statement of Profi t and Loss and the Cash Flow Statement for the year then ended, and a summary of signifi cant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements

Management is responsible for the preparation of these fi nancial statements that give a true and fair view of the fi nancial position, fi nancial performance and cash fl ows 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 fi nancial 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 fi nancial 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 fi nancial statements are free from material misstatement.

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

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

Basis for Qualifi ed Opinion

1. As more fully explained in note 2.26 to the fi nancial statements, as a result of the ongoing dispute being adjudicated before the Company Law Board, between the current Management and the erstwhile co-managing director, who is also a signifi cant shareholder of the Company and its erstwhile promoter, the Company is not in possession of certain books and records including supporting documents and statutory registers required to be maintained as per the various provisions of the Companies Act, 1956 for periods upto 12 November 2011. The books of account upto the said period have been reconstructed by the Management post 12 November 2011 on the basis of intensive efforts made to establish alternative appropriate evidence of transactions. Photocopies/duplicate copies of relevant documents and records have been obtained from external sources in support of many transactions for which the original documents and records were not available. In view of this, we had carried out reasonable alternative audit procedures to obtain suffi cient appropriate evidence except as stated below:

a) We were not able to obtain corroborative documentary evidence for certain administrative and other expenses aggregating to INR 382 thousands and certain product development and manufacturing expenses aggregating to INR 1,885 thousands recognized in the statement of profi t and loss for the year ended 31 March 2012. Further, we were not been able to obtain corroborative documentary evidence for administrative and other expenses aggregating to INR 20,520 thousands, product development expenses of INR 12,063 thousands and certain manufacturing expenses aggregating to INR 21,829 thousands recognized in the statement of profi t and loss for the year ended 31 March 2011. Therefore, we are unable to comment on the private or business nature, completeness, validity and accuracy of the above expenditures and their consequent impact on the fi nancial statements.

b) The Company had not complied with many provisions of applicable laws and regulations in the period upto 12 November 2011. In the absence of complete documentation, the fi nancial implications of such non compliances cannot presently be determined, and no provision for any potential fi nancial consequence has been made in the fi nancial statements. The Management is of the view that since matters relating to several fi nancial and non fi nancial irregularities are sub judice and various legal proceedings are ongoing, any further adjustments / disclosures in the fi nancial statements, if required, would be made in the fi nancial statements of the Company as and when the outcome of the above uncertainties can be reliably determined and the consequential adjustments disclosures are identifi ed. Accordingly, we are unable to comment on the impact, of any, of such irregularities on the fi nancial statements.

c) The Company had under the new management carried out an operational and business review including technical assessment of manufacturing facilities by an independent valuation expert, basis which, in the fi nancial statements for the year ended 31 March 2011, it had recorded certain exceptional charges aggregating to an amount of INR 230,103 thousands towards impairment charges relating to certain fi xed assets, capital work in progress identifi ed as unsuitable for use, provision for doubtful debts, write down of investment in subsidiaries and provisions for loans and advances and demands from authorities. While these charges were appropriate in the context of information available in this regard, we are unable to conclude whether this would be so, if complete information is available.

d) As more fully explained in Note 2.37 to the fi nancial statements, regarding completeness of the list of related parties with the Company due to non receipt of form 24AA "Notice by the Interested Directors" pursuant to Section 299 of the Act from one of its ex-directors for the years ended 31 March 2013 and 31 March 2012 and in the context of non-availability of complete information in this regard, we are unable to comment on the completeness of disclosures related to related parties as required under Accounting Standard 18 "Related Party Disclosures" as well as whether there would be any other impact on the fi nancial statements for the year ended 31 March 2013 and the corresponding fi gures for the year ended 31 March 2012.

The Company has represented to us that it has been able to substantively reconstruct the books of account and that based on the steps taken by management and evidence available so far, in its assessment the risk that the fi nancial statements may be materially misstated is low. Further no additional signifi cant claims have been received or any additional signifi cant adjustments identifi ed after 31 March 2012.

2. As more fully explained in Note 2.27 to the fi nancial statements, the Company has fi led a legal case against the erstwhile co-managing director for recovering the managerial remuneration paid amounting to INR 7,980 thousands during the period from 1 October 2007 to 31 March 2011, including an amount of INR 2,280 thousands which was in excess of the prescribed limits for the year ended 31 March 2011 without obtaining the necessary prior approval from the Central Government of India which is in contravention of the provisions of the Companies Act 1956. Pending resolution of the matter, recovery of the said amounts is not certain and no adjustment in this regard has been made in the accompanying fi nancial statements.

3. As more fully explained in Note 2.27 to the fi nancial statements, the Company''s application under the Act to the Ministry of Corporate Affairs (MCA), Government of India for approval of managerial remuneration of Rs.. 3,000 thousands payable to Mr. B. K. Raizada, the co-managing director for the period from 19 March 2011 to 18 March 2013 is still pending. Pending requisite approval of the amount, no adjustment in this regard has been made in the accompanying fi nancial statements.

In view of the non-resolution of above signifi cant matters, our opinion on the current period''s fi nancial statements is qualifi ed in respect of both, the current period and the corresponding period, as we are unable to determine the adjustments/ disclosures which may become necessary depending upon the outcome and the possible effects of the matters mentioned above.

Qualifi ed Opinion

In our opinion and to the best of our information and according to the explanations given to us, except for the possible effects of the matters described in the Basis for Qualifi ed Opinion paragraph, the fi nancial 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 31 March 2013;

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

(c) in the case of the Cash Flow Statement, of the cash fl ows 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"), as amended, 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 specifi ed 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 of the current period except for the matters explained in the Basis for Qualifi ed Opinion paragraph.

b) As explained in Basis for Qualifi ed Opinion paragraph, not all the original books and supporting documents upto 12 November 2011 were available for our examination. The company has made comprehensive efforts to reconstruct the books of account. In our opinion, in respect of the transactions of the current period, proper books of account as required by law have been kept by the Company so far as appears from our examination of those books. However, we are unable to express an opinion whether proper books of account as required by law were kept by the Company in the previous year and whether these were maintained at the registered offi ce of the Company;

c) the Balance Sheet, Statement of Profi t and Loss, and Cash Flow Statement dealt with by this Report are in agreement with the books of account/reconstructed books of the account, as the case may be;

d) In our opinion, except for possible effects, if any, as might have been determined to be necessary had all original documents, vouchers and records been available as discussed in Basis for Qualifi ed Opinion paragraph 1 above and of the matters described in the Basis for Qualifi ed Opinion paragraphs 2 and 3 above, the Balance Sheet, Statement of Profi t and Loss, and Cash Flow Statement comply with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Act, to the extent applicable;

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

Annexure to the Independent Auditors'' Report

The Annexure referred to in the independent auditors'' report to the Members of Zenotech Laboratories Limited ("the Company") for the year ended 31 March 2013. We report that:

(i) (a) As part of reconstruction of books of account for the year ended 31 March 2011 and 31 March 2012, the Company had carried out a detailed exercise comprising physical verifi cation and an independent valuation in the absence of complete historical information of its fi xed assets. Based on such an exercise, it has updated the fi xed asset register and maintained proper records showing full particulars, including quantitative details and situation of fi xed assets.

(b) The Company has formulated policy in respect of regular programme of physical verifi cation of its fi xed assets. However, as mentioned in clause (a) above, as part of a one-time exercise the Company had physically verifi ed all of its fi xed assets during the previous year and material discrepancies noted on such verifi cation of fi xed assets had been properly dealt with in the books of account for the year ended 31 March 2011.

(c) Fixed assets disposed off during the year were not substantial, and therefore, do not affect the going concern assumption.

(ii) (a) The inventory has been physically verifi ed by the Management at the year end. In our opinion, the frequency of such verifi cation is reasonable.

(b) The procedures for the physical verifi cation 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 inventory. The discrepancies noticed on verifi cation between the physical stocks and the book records were not material.

(iii) The Company has neither granted nor taken any loans, secured or unsecured, to or from companies, fi rms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956 (‘the Act'').

(iv) In our opinion and according to the information and explanations given to us, and having regard to the explanation that purchases of certain items of inventories and fi xed assets are for the Company''s specialised requirements and similarly goods sold and services rendered are for the specialised requirements of the buyers and suitable alternative sources are not available to obtain comparable quotations, 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 fi xed assets and with regard to sale of goods. The activities of the Company does not involve rendering of services. We have not observed any major weaknesses in the internal control system during the course of the audit.

(v) In our opinion and according to the information and explanations given to us, there are no contracts and arrangements the particulars of which need to be entered into the register referred to in Section 301 of the Act.

(vi) The Company has not accepted any deposits from the public.

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

(viii) 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 Act in respect of sales of goods by 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.

(ix) (a) According to the information and explanations given to us and on the basis of our examination of the records of the Company, amounts deducted/ accrued in the books of account in respect of undisputed statutory dues including Sales tax, Excise duty and other material statutory dues have generally been regularly deposited during the year by the Company with the appropriate authorities though there are slight delays in few cases of Provident fund, Employees'' state insurance, Service tax and Income tax. As explained to us, the Company did not have any dues on account of Custom duty, Investor Education and Protection Fund and Wealth tax.

Medchal Range Sector II Financial Year 2007-08, Suprintendent of Central Excise 2008-09 and 2009-10 Medchal Range Sector II Financial Year 2006-07 Suprintendent of Central Excise and 2007-08 Medchal Range Sector II

Financial Year 2009-10 Suprintendent of Central Excise Medchal Range Sector II

* The Company is in process of fi ling an appeal with the concerned authorities in respect of these disputes.

(x) The Company''s accumulated losses at the end of the fi nancial year are more than fi fty percent of its net worth and it has incurred cash losses in the current year and immediately preceding fi nancial year.

(xi) On the basis of audit procedures performed by us, and according to the information, explanations and representation given to us by the Management, the Company had delayed in repayments of certain dues (including interest) to fi nancial institutions. The delayed principal amount and the interest aggregates to Rs.. 29,984 thousands and Rs.. 9,522 thousands respectively, and delays ranges from 142 days to 1,937 days. The Company has outstanding dues of Rs.. 39,170 thousands as of balance sheet date. The Company did not have any outstanding debentures during the year.

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

(xiii) In our opinion and according to the information and explanations given to us, the Company is not a chit fund or a nidhi / mutual benefi t fund/ society.

(xiv) According to the information and explanations given to us, the Company is not dealing or trading in shares, securities, debentures and other investments.

(xv) According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks or fi nancial institutions.

(xvi) The Company did not have any term loans outstanding during the year.

(xvii) According to information and explanations given to us, and on an overall examination of the balance sheet of the Company, we are of the opinion that funds of Rs.. 2,89,541 thousands raised on short term basis have been used for long term investment.

(xviii) The Company has not made any preferential allotment of shares to companies/fi rms/parties covered in the register maintained under Section 301 of the Act.

(xix) The Company did not have any outstanding debentures during the year.

(xx) The Company has not raised any money by public issues.

(xxi) According to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the course of our audit.

for B S R & Associates

Chartered Accountants

Firm registration No.: 116231W

Sriram Mahalingam

Place : Hyderabad Partner

Date : 25 May 2013 Membership No.: 049642


Mar 31, 2011

1. We were engaged to audit the attached balance sheet of Zenotech Laboratories Limited ("the Company") as at March 31, 2011, 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. It has been represented to us that the financial statements have been considered and approved by the Board of Directors in their meeting conducted in Hyderabad, India on May 19, 2012.

2. Except as discussed in the following paragraph, 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. Because of the matters described in paragraphs 3 and 4 below, we were not able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion.

3. As more fully explained in note 1 of schedule 22 to the financial statements, as a result of the ongoing dispute between the current Management and the co-managing director, who is also a significant shareholder of the Company and the erstwhile promoter, the Company is not in possession of certain books and records including supporting documents and statutory registers required to be maintained as per the various provisions of the Companies Act, 1956. The Company has reconstructed the books of account on the basis of intensive efforts made to establish alternate appropriate evidence of transactions. Photocopies/duplicate copies of relevant documents and records have been obtained from external sources in support of many transactions for which the original documents and records were not available. In view of this we carried out reasonable alternative audit procedures to obtain sufficient appropriate evidence except as stated below:

(a) We have not been able to obtain corroborative documentary evidence for administrative and other expenses aggregating to INR 20,520 thousands, product development expenses of INR 12,063 thousands, certain manufacturing expenses aggregating to INR 21,829 thousands recognized in the profit and loss account. In the absence of such documents, we are unable to comment on the private or business nature, completeness, validity and accuracy of the above expenditures;

(b) As more fully explained in note 1 of schedule 22 to the financial statements, the Company has not complied with many provisions of applicable laws and regulations. In the absence of complete documentation, the financial implications of such non compliances cannot presently be determined, and no provision for any potential financial consequence has been made in the financial statements. Accordingly we are unable to comment on the impact, if any, of such non compliances on the loss for the year ended March 31, 2011 and net assets of the Company as at March 31, 2011;

(c) The Company has under the new Management carried out an operational and business review including technical assessment of manufacturing facilities by an independent valuation expert, basis which it has recorded certain exceptional charges aggregating to an amount of INR 230,103 thousands towards impairment charges relating to certain fixed assets, capital work in progress identified as unsuitable for use, provision for doubtful debts, write down of investment in subsidiaries and provision for loans and advances and demands from authorities. While these charges are appropriate in the context of information available in this regard, we are unable to conclude whether this would be so, had original books of accounts and complete information been available.

(d) As more fully explained in Note 16 of schedule 22 to the financial statements, regarding completeness of the list of related parties with the Company due to non receipt of form 24AA "Notice by the Interested Directors" pursuant to Section 299 of the Companies Act, 1956 from two of its directors, and in the context of non-availability of complete information in this regard, we are unable to comment on the completeness of disclosures related to related parties as required under Accounting Standard 18 "Related Party Disclosures" as well as whether there would be any other impact on the financial statements.

4. The Company has represented to us that it has been able to substantively reconstruct the books of account and that based on the steps taken by Management and evidence available from subsequent events, it believes that in its assessment the risk that the financial statements may be materially misstated is not significant. However, since certain original books and supporting documents are not available we an unable to verify this assertion.

5. As more fully explained in Note 1 (c)(ii) of Schedule 22 to the financial statements, the Company has filed a legal case against the co-managing director for recovering the managerial remuneration paid amounting to INR 7,980 thousands during the period from October 1, 2007 to March 31, 2011, including an amount of INR 2,280 thousands which is in excess of the prescribed limits for the year ended March 31, 2011 without obtaining the necessary prior approval from the Central Government of India which is in contravention of the provisions of the Companies Act, 1956. Pending resolution of the matter, recovery of the said amounts is not certain and accordingly no adjustment in this regard has been made in the accompanying financial statements;

6. As required by the Companies (Auditor's Report) Order, 2003 ("the Order"), as amended, issued by the Ministry of Corporate Affairs 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.

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

(i) In view of the matters discussed above we have not been able to obtain all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit;

(ii) as explained in paragraph 3 above, certain books and supporting documents were not available for our examination. In our opinion the Company has made comprehensive efforts to reconstruct the books of account. However, we are unable to express an opinion whether whether proper books of account as required by law were kept by the Company and whether these were maintained at the registered office of the Company;

(iii) the balance sheet, the profit and loss account and the cash flow statement dealt with by this report are in agreement with the reconstructed books of account;

(iv) in our opinion, subject to adjustments, if any, as might have been determined to be necessary had all original documents, vouchers and records been available as discussed in paragraphs 3 and 4 above, the balance sheet, the profit and loss account and the 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) Mr. A Raghu Vasu, director and Dr. Jayaram Chigurupati, director and Co-Managing Director have not produced written representation as to whether the companies in which Mr. A Raghu Vasu and Dr. Jayaram Chigurupati are also directors as on March 31, 2011, have not defaulted in terms of section 274(1)(g) of the Companies Act, 1956. In the absence of this representation, we are unable to comment whether Mr. A Raghu Vasu and Dr. Jayaram Chigurupati are disqualified from being appointed as a director under clause (g) of sub-section (1) of section 274 of the Companies Act, 1956. As far as other directors are concerned, on the basis of the written representations received from such directors, and taken on record by the Board of Directors, we report that none of the remaining directors is disqualified as on 31 March, 2011 from being appointed as a director in terms of clause (g) of sub- section (1) of section 274 of the Companies Act, 1956; and

(vi) Because of the significance of the matters discussed in paragraphs 3-5 above, we are unable to express an opinion on the financial statements.

Annexure to the Auditors' report

Annexure referred to in the Auditors' Report to the Members of Zenotech Laboratories Limited ("the Company") for the year ended March 31, 2011. We report that:

i. (a) The Company has carried out, subsequent to year end, a detailed exercise comprising physical verification of fixed assets and an independent valuation in the absence of complete historical information of its fixed assets. Based on such an exercise, it has updated the fixed asset register and now maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

(b) The Company does not have regular programme of physical verification of its fixed assets during the year. However, as mentioned in clause (a) above, as part of a one-time exercise the Company has physically verified all of its fixed assets subsequent to the year end and material discrepancies noted on such verification of fixed assets have been properly dealt with in the books of account.

(c) Fixed assets disposed off during the year were not substantial, and therefore, do not affect the going concern assumption.

ii. (a) The inventory has been verified by the Management at the year end. In our opinion, the frequency of such verification is reasonable.

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

(c) The internal control procedures were inadequate with regard to tracking quantitative movements of inventories during the year and maintaining adequate records during the year. Whilst the Company is in process of implementing a robust internal control system regarding inventory movements subsequent to year end, the year end inventories were valued based on a physical verification conducted with the closing inventory being adjusted for shortages/excesses.

iii. As fully explained in the note 1 of schedule 22 to the financial statements, the Company is not in possession of the mandatory secretarial records required as per various provisions of the Companies act, 1956. Accordingly, we are unable to comments on clause 4(iii) of the Order.

iv. In our opinion and according to the information and explanations given to us, there are weaknesses in internal control procedures with regard to purchase of inventory and fixed assets and for sales of goods and services during the year including absence of a formal internal control framework and which continues as on the date of the financial statements. However, the current management has initiated institution of certain internal controls over purchases of goods and fixed assets and sale of goods and services post year-end.

v. As fully explained in the note 1 of schedule 22 to the financial statements, the Company is not in possession of the mandatory secretarial records required as per various provisions of the Companies act, 1956. Accordingly, we are unable to comments on clause 4(v) of the Order.

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

vii. The Company does not have an internal audit system.

viii. The Company has not maintained cost records as required under Section 209(1)(d) of the Companies Act, 1956 for any of the products manufactured/services rendered by the Company.

ix. (a) According to the information and explanations given to us and on the basis of examination of the statutory returns of the Company, supporting records, amounts deducted/accrued in the books of account in respect of undisputed statutory dues including Income Tax, Provident Fund, Employees' State Insurance, Sales-Tax, Service Tax, Custom Duty, Excise Duty and Wealth tax have generally been regularly deposited with the appropriate authorities though there have been slight delays in the case of Professional Tax dues. As explained to us, the provisions of Investor Education and Protection Fund are not applicable to the Company.

According to the information and explanations given to us, there are no undisputed amounts payable in respect of Provident Fund, Employees' State Insurance, Income-tax, Sales tax and Wealth tax, and other material statutory dues were in arrears as at March 31, 2011 for a period of more than six months from the date they became payable except for following dues of Service tax, Customs duty and Excise duty.

Name of the Nature of Amount in Period to which the Statute Dues INR'000 amount relates

The Central Excise duty 1,835 Financial year 2005-06 Excise Act, 1944 to 2008-09

The Custom Act, Custom duty 12,145 Financial Year 2006-07 1962

The Finance Act, Service Tax 360 Financial Year 2009-10 1994 and 2010-11

Name of the Due Date of Statute Date Payment

The Central Various August 1, 2011 Excise Act,1944

The Custom Act Financial Year April 16, 2012, 19962 2006-07 April 23, 2012 and May 2, 2012

The Finance Act Various Yet not paid 1994

As explained to us, the Company did not have dues on account of Investor Education and Protection Fund.

(b) According to the information and explanations given to us, there are no dues of Income-tax, Sales tax, Wealth tax, Custom duty, Excise duty and Cess which have not been deposited with the appropriate authorities on account of any dispute as at balance sheet date. The Company however disputes the following Service tax dues-

Name of the Nature of Amount in Statute Dues INR'000

The Finance Act, Service Tax 8,504 1994

The Finance Act, Service Tax 4,522 1994

The Finance Act, Service Tax 11,016 1994

Name of the Period to which the Forum where dispute Statute amount relates is pending*

The Finance Act Financial Year Suprintendent of Central Excise 1994 2007-08 Medchal Range Sector II

The Finance Act Financial Year 2007-08, Suprintendent of Central Excise 1994 2008-09 and 2009-10 Medchal Range Sector II

The Finance Act Financial Year 2006-07 Suprintendent of Central 1994 and 2007-08 Excise Medchal Range Sector II

* The Company has sought legal advise and is in process of filing an appeal with the concerned authorities in respect of these disputes.

x. The Company's accumulated losses at the end of the financial year are not less than fifty percent of its net worth and it has incurred cash losses in the current year and immediately preceding financial year.

xi. On the basis of audit procedures performed by us, and according to the information, explanations and representation given to us by the Management, the Company had delayed in certain repayments of dues (including interest) to financial institutions. The delayed principal amount and the interest aggregates to Rs. 50,705 thousands and Rs 22,242 thousands respectively, and delays ranges from 19 days to 1,207 days. The Company has outstanding dues of Rs. 24,235 thousands as of balance sheet date. The Company did not have any outstanding debentures during the year.

xii. In our opinion and according to the information and explanations given to us, the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

xiii. In our opinion and according to the information and explanations given to us, the Company is not a chit fund or a nidhi/ mutual benefit fund/ society. Therefore, the provisions of clause 4(xiii) of the Order are not applicable to the Company.

xiv. According to the information and explanations given to us, the Company is not dealing or trading in shares, securities, debentures and other investments. Therefore, the provisions of clause 4(xiv) of the Order are not applicable to the Company.

xv. As fully explained in the note 1 of schedule 22 to the financial statements, the Company is not in possession of the mandatory secretarial records required as per various provisions of the Companies act, 1956. Accordingly, we are unable to comments on clause 4(xv) of the Order.

xvi. In the absences of adequate documentations and records, we are unable to comments whether the term loans taken by the company have been applied for the purpose for which they were raised during earlier years.

xvii. According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we are of the opinion that the funds raised on short-term basis have not been used for long-term investment.

xviii. The Company has not made any preferential allotment of shares to companies/ firms/ parties covered in the register maintained under Section 301 of the Companies Act, 1956.

xix. The Company did not have any outstanding debentures during the year.

xx. The Company has not raised any money by public issues during the year.

xxi. According to the information and explanations provided to us, given the state of affairs which exists and the events arising out of the ongoing disputes as more fully explained in note 1 of Schedule 22, the irregularities noted are under investigation. Pending assessment of the financial consequences by the current management, we are unable to comment whether any fraud on or by the Company has been noticed or reported during the year.

for B S R & Associates

Chartered Accountants

Firm Registration No: 116231W

Sriram Mahalingam

Place : Hyderabad Partner

Date : June 4, 2012 Membership No: 049642


Mar 31, 2010

1. We have audited the attached Balance Sheet of ZENOTECH LABORATORIES LIMITED ("the Company") as at March 31, 2010, the Profit and Loss Account for the year ended on that date and the Cash Flow Statement for the year ended on that date, both 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.

2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. 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 the 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 (Auditors Report) Order, 2003 [CARO], issued by the Central Government of India in terms of Section 227(4A) of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in the paragraphs 4 and 5 of the said Order.

4. We invite attention to:

a) Note 21 of Schedule 21 to the Financial Statements regarding investment of Rs. 105.60 lakhs (31.3.2009 - Rs. 105.60 lakhs) in and advances of Rs.366.04 lakhs (31.3.2009 - Rs. 398.93 lakhs) made to a wholly owned subsidiary and in respect of which no provision has been made for reasons stated therein. We are unable to comment on the carrying cost of the investment and the recoverability of the amounts advanced.

b) Note 22 of Schedule 21 to the Financial Statements regarding investment of Rs. 0.24 lakhs in and loan of Rs. 14.71 lakhs made to an associate company and in respect of which no provision has been made for reasons stated therein. We are unable to comment on the carrying cost of the investment and the recoverability of the loans given.

c) Note 23 of Schedule 21 to the Financial Statements regarding carrying cost of Fixed Assets of Rs. 1,040.03 lakhs (31.3.2009 - Rs. 1041.65 lakhs) relating to an export oriented unit which is yet to be commissioned. We are unable to comment on the appropriateness of the stated value in the financial statements.

d) In the absence of an assessment of indications that the Companys Plant & Machinery may be impaired and consequential estimation of the recoverable amounts as required by Accounting Standard (AS) 28 - Impairment of Assets - we are unable to comment on the appropriateness of the carrying cost of Plant & Machinery of Rs. 4,845.58 lakhs.

e) Note 25 of Schedule 21 to the Financial Statements in respect of Product Development Expenditure amounting to Rs. 152.32 lakhs being carried forward as at March 31, 2010 to be written of in future years for the reasons stated therein. We are unable to comment in this regard.

The matters referred to in paragraphs (a) and (c) above, were also subject matters of qualifications in our audit report on the financial statements for the year ended March 31, 2009.

5. Attention is invited to Note 24 (c) regarding absence of disclosures relating to Earnings Per Share as required in terms of the Guidance Note on Accounting for Employee Share-based Payment issued by the Institute of Chartered Accountants of India.

6. The financial statements do not disclose information relating to amounts due to Micro enterprises and Small Enterprises as at the Balance Sheet date and other disclosures required in terms of Schedule VI to the Companies Act, 1956.

7. Further to our comments in the Annexure referred to in paragraph 3 above and subject to paragraphs 4, 5 and 6 above, we report that:

a) we have obtained all the information and explanation, which to the best of our knowledge and belief, were necessary for the purposes of our audit;

b) in our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of those books;

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

d) in our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report comply with the Accounting Standards referred to in Section 211(3C) of the Companies Act, 1956;

e) in our opinion and to the best of our information and explanations given to us, the said accounts, subject to adjustments which may be required in respect of matters dealt with in paragraph 4 above, the effect of which we are unable to determine, give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

(i) in the case of Balance Sheet, of the state of affairs of the Company as at March, 31, 2010;

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

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

8. On the basis of the written representations received from the directors as on March 31, 2010 and taken on record by the Board of Directors, none of the Directors is disqualified as on March 31, 2010 from being appointed as a director in terms of Section 274 (1)(g) of the Companies Act, 1956.

(referred to in paragraph 3 of our report of even date)

(i) Having regard to the nature of the Companys business/ activities/ result, clauses (vi), (xii), (xiii), (xiv), (xv), (xviii), (xix) and (xx) of CARO are not applicable.

(ii) In respect of fixed assets:

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

(b) The fixed assets have been physically verified during the year by the management in accordance with a regular programme of verification which, in our opinion, provides for physical verification of all fixed assets at reasonable intervals, 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.

(c) The fixed assets disposed off during the year, in our opinion, do not constitute substantial part of the fixed assets of the Company and such disposal has, in our opinion, not affected the going concern status of the Company.

(iii) In respect of inventory:

(a) As explained to us, the inventories 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 the 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.

(iv) The Company has neither granted nor taken any loans, secured or unsecured, to/from companies, firms or other parties listed in the Register maintained under Section 301 of the Companies Act, 1956.

(v) In our opinion and according to the information and explanations given to us, having regard to the explanation that some of the items purchased are of special nature and suitable alternative sources are not readily available for obtaining comparable quotations, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchases of inventory and fixed assets and the sale of goods and services. During the course of our audit, we have not observed any major weakness in such internal control system.

(vi) In respect of contracts or arrangements entered in the Register maintained in pursuance of Section 301 of the Companies Act, 1956, to the best of our knowledge and belief and according to the information and explanations given to us:

(a) The particulars of contracts or arrangements referred to Section 301 that needed to be entered in the Register maintained under the said Section have been so entered.

(b) Where each such transaction is in excess of rupees five lakhs in respect of any party, the transactions have been made at prices which are prima facie reasonable having regard to the prevailing market prices at the relevant time except in respect of certain purchases for which comparable quotations are not available and in respect of which we are unable to comment.

(vii) The Company does not have an internal audit system. ,

(viii) We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government for maintenance of cost records under Section 209 (1) (d) of the Companies Act, 1956 in respect of Pharmaceutical Products and 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 records with a view to determining whether they are accurate or complete. .

(ix) According to the information and explanations given to us in respect of statutory dues:

(a) The Company has generally been regular in depositing undisputed statutory dues including, investor education and protection fund, employees state insurance, income tax, sales tax, wealth tax, service tax, customs duty, excise duty, cess and any other statutory dues applicable to it with the appropriate authorities. In respect of provident fund there are delays in depositing dues.

(b) Except for provident fund dues of Rs. 45,000, there were no undisputed amounts payable in respect of income tax, wealth tax, customs duty, excise duty, cess and other material statutory dues in arrears as at March 31, 2010 for a period of more than six months from the date they became payable.

(c) There are no dues of income tax, sales tax, wealth tax, service tax, customs duty, excise duty and cess which have not been deposited as at March 31, 2010 on account of any dispute.

(x) The accumulated losses of the Company at the end of the financial year are not less than fifty percent of its net worth. The Company has incurred cash loss during the financial year, and in the immediately preceding financial year.

(xi) According to the information and explanations given to us, the Company has defaulted in repayment of dues to financial institutions and banks as stated below:

Amount of default (loan and interest) Period of delay (Rs. Lakhs) (in days)

80.28 121

81.91 304

83.63 486

66.67 669

46.15 852

(xii) In our opinion and according to the information and explanations given to us, the term loans have been applied for the purposes for which they were obtained.

(xiii) In our opinion and according to the information and explanations given to us and on an overall examination of the Balance Sheet of the Company, we report that funds raised on short term basis have not been used during the year for long term investment.

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

For Deloitte Haskins & Sells

Chartered Accountants (Registration No 008072S)

K.Rajasekhar Place : Secunderabad Partner

Date : August 5, 2010 Membership No.: 23341


Mar 31, 2009

1. We have audited the attached Balance Sheet of Zenotech Laboratories Limited ("the Company") as at 31st March, 2009, the Profit and Loss Account for the year ended on that date and the Cash Flow Statement for the year ended on that date, both 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.

2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the 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 (Auditors Report) Order, 2003 [CARO], 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 the paragraphs 4 and 5 of the said Order, to the extent applicable.

4. Attention is invited to Note 2(a) of Schedule 18 form part of the financial statements, regarding the accounts for the year ended 31st March, 2008 not having been adopted by the members.

5. We invite attention to:

a) Note 23 of Schedule 18 of the financial statements regarding investment of Rs. 105.60 lakhs in and advances of Rs.398.93 lakhs made to the wholly owned subsidiary and inrespect of which no provision has been made for reasons stated therein. We are unable to comment on the carrying cost of the investment and the recoverability of amounts advanced.

b) Note 24 of Schedule 18 of the financial statements regarding carrying cost of Rs. 1,041.65 lakhs relating to an export oriented unit which is yet to be commissioned. We are unable to comment on the appropriateness of the stated value in the financial statements.

6. Further to our comments in the annexure referred to in paragraph 3 above and subject to para 5 above, we report that:

a) we have obtained all the information and explanation, which to the best of our knowledge and belief, were necessary for the purposes of our audit;

b) in our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of those books;

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

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

e) in our opinion and to the best of our information and explanations given to us, the said accounts, give the information required by the Companies Act, 1956, in the manner so required and subject to adjustments which may be required in respect of matters dealt with in para 5 above, the effect of which we are unable to determine, give a true and fair view in conformity with the accounting principles generally accepted in India:

(i) in the case of Balance Sheet, of the state of affairs of the Company as at 31st March, 2009;

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

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

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

Annexure referred to in paragraph 3 of our report of even date to the members of Zenotech Laboratories Limited on the accounts for the year ended 31st March, 2009

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

(b) Some of the fixed assets were physically verified during the year by the management in accordance with a programme of verification which, in our opinion, provides for physical verification of all fixed assets at reasonable intervals 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.

(c) The fixed assets disposed off during the year, in our opinion, do not constitute substantial part of the fixed assets of the company.

(ii) (a) Inventory has been physically verified by the management at reasonable intervals during the year. 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 inventory 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 inventory and discrepancies noticed on physical verification were not material.

(iii) According to the information and explanations given to us, the Company has not granted or taken any loans, secured or unsecured to/ from companies, firms or other parties covered in the register maintained under Section 301 of the Act. Accordingly paragraph (iii)(b),(c),(d), (f) and (g) of the Order are not applicable.

(iv) In our opinion and according to the information and explanations given to us, having regard to the explanation that certain items of the expenditure are of a special nature and their prices cannot be compared with alternative quotations, there are adequate internal control systems 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, we have not observed any continuing failure to correct major weaknesses in internal control systems.

(v) (a) As explained to us and according to the information and explanations given to us, the particulars of contracts or arrangements that need to be entered in the register in pursuance of section 301 of the Companies Act, 1956 in respect of each party during the year have been entered in the register.

(b) In our opinion and according to the information and explanations given to us, having regard to our comments in para (iv) above, the transactions made in pursuance of such contracts or arrangements and exceeding the value of five lakhs rupees in respect of any party during the year have been made at prices which were reasonable having regard to the prevailing market prices at the relevant time.

(vi) The Company has not accepted deposits from the public to which the provisions of Section 58(A) and 58 (AA) of the Companies Act, 1956 and the rules made there under apply.

(vii) The Company does not have an internal audit system.

(viii) We have broadly reviewed the books of account maintained by the Company pursuant to the Order made by the Central Government for the maintenance of cost records under Section 209 (1) (d) of the Companies Act, 1956, in respect of manufacture of Pharmaceutical Products and are of the opinion that prima facie the prescribed accounts and records have been substantially made and maintained. We have not, however, made a detailed examination of the said records.

(ix) (a) According to the information and explanations given to us and according to the books and records as produced and examined by us in accordance with the generally accepted auditing practices in India, the Company has been generally regular in depositing undisputed statutory dues including provident fund, investor education and protection fund, employees state insurance, income tax, wealth tax, sales tax, excise duty, customs duty, cess and other material statutory dues as applicable with the appropriate authorities during the year.

(b) As at 31st March, 2009, according to the records of the Company and the information and explanations given to us there were no dues on account of income tax, sales tax, wealth tax, service tax, customs duty, excise duty and cess matters that have not been deposited on account of any dispute.

(x) The accumulated losses of the Company as at 31st March, 2009, are less than fifty percent of its net worth as on that date. Further the Company has incurred cash loss during the financial year, and in the immediately preceding financial year.

(xi) According to the information and explanations given to us, the Company has defaulted in repayment of dues to financial institutions and banks as stated below:

Amount of default (loan and interest) Period of delay (Rs. Lakhs) (in days)

106.50 1-10

21.91 11-20

18.64 31-40

66.67 121

152.48 More than 180 days

(xii) The Company during the year has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) The Company is not a nidhi / mutual benefit fund/ society to which the provisions of special statute relating to chit fund are applicable.

(xiv) In our opinion and according to the information and explanations given to us, the Company is not a dealer or trader in securities.

(xv) As explained to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions.

(xvi) As explained to us, the term loans taken by the Company have been applied for the purpose for which they were obtained.

(xvii) Based on the information and explanations given to us and on an overall examination of the balance sheet of the Company, in our opinion, funds raised on short term basis have not been used for long term investment.

(xviii) The Company has not made any preferential allotment of shares to parties and companies covered in the Register maintained under Section 301 of the Companies Act, 1956 during the year.

(xix) As there are no debentures outstanding as at the year end, paragraph (xix) of the order is not applicable.

(xx) The Company has not raised any money by way of public issue during the year.

(xxi) According to the information and explanations given to us, during the year, no fraud on or by the Company has been noticed or reported.

For Deloitte Haskins & Sells

Chartered Accountants

K.Rajasekhar

Place : Secunderabad Partner

Date : 16.11.2009 M.No. 23341


Mar 31, 2008

1. We have audited the attached Balance Sheet of Zenotech Laboratories Limited as at March 31, 2008 and also the Profit and Loss Account and the Cash Flow Statement of the Company 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.

2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the 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 (Auditors Report) Order, 2003 issued by the Central Government 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 the paragraphs 4 and 5 of the said Order.

4. Further to our comments in the Annexure referred to in paragraph 3 above, we report that:

a) we have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the 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, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with books of account;

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

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

(i) in the case of Balance Sheet, of the state of affairs of the Company as at March 31, 2008;

(ii) in the case of Profit and Loss Account, of the loss 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.

5. On the basis of the written representations received from the directors as on March 31, 2008 and taken on record by the Board of Directors, we report that none of the Directors is disqualified as on March 31, 2008 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

Annexure referred to in paragraph 3 of our report of even date to the members of Zenotech Laboratories Limited on the accounts for the year ended March 31, 2008

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

(b) All the fixed assets have not been physically verified by the management during the year but there is a regular programme of verification which, in our opinion, is reasonable, having regard to the size of the Company and the nature of its assets and no material discrepancies were noticed in respect of those assets which have been physically verified during the year.

(c) The fixed assets disposed off during the year, in our opinion, do not constitute substantial part of the fixed assets of the Company.

(ii) (a) Inventory has been physically verified by the management at reasonable intervals during the year. 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 inventory 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 inventory and discrepancies noticed on physical verification were not material.

(iii) According to the information and explanations given to us, the Company during the year has not granted or taken any loans, secured or unsecured to/from companies, firms or other parties covered in the register maintained under Section 301 of the Act. Accordingly paragraph (iii)(b),(c),(d), (f) and (g) of the Order are not applicable.

(iv) In our opinion and according to the information and explanations given to us, having regard to the explanation that certain items of the expenditure are of a special nature and their prices cannot be compared with alternative quotations, there are adequate internal control systems 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, we have not observed by continuing failure to correct major weaknesses in internal control systems.

(v) (a) As explained to us and according to the information and explanations given to us, the particulars of contracts or arrangements that need to be entered in the register in pursuance of section 301 of the Companies Act, 1956 in respect of each party during the year have been entered in the register.

(b) In our opinion and according to the information and explanations given to us, having regard to our comments in para (iv) above, the transactions made in pursuance of such contracts or arrangements and exceeding the value of five lakhs rupees in respect of any party during the year have been made at prices which were reasonable having regard to the prevailing market prices at the relevant time.

(vi) The Company has not accepted deposits from the public to which the provision of Section 58(A) and 58 (AA) of the Companies Act, 1956 and the rules made there under apply.

(vii) The Company does not have an internal audit system.

(viii) We have broadly reviewed the books of account maintained by the Company pursuant to the Order made by the Central Government for the maintenance of cost records under Section 209 (1) (d) of the Companies Act, 1956, in respect of manufacture of Pharmaceutical Products 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 said records.

(ix) (a) According to the information and explanations given to us and according to the books and records as produced and examined by us in accordance with the generally accepted auditing practices in India, the Company has been generally regular in depositing undisputed statutory dues including provident fund, investor education and protection fund, employees state insurance, income tax, wealth tax, sales tax, excise duty, customs duty, cess and other material statutory dues as applicable with the appropriate authorities during the year.

(b) As at March 31, 2008, according to the records of the Company and the information and explanations given to us there were no dues on account of income tax, sales tax, wealth tax, service tax, customs duty, excise duty and cess matters that have not been deposited on account of any dispute.

(x) The accumulated losses of the Company as at March 31, 2008, are less than fifty percent of its net worth as on that date. The Company has incurred cash loss during the financial year, however, no cash loss was incurred in the immediately preceding financial year.

(xi) According to the information and explanations given to us, the Company has defaulted in repayment of dues to financial institutions and banks as stated below:

Amount of default (loan and interest) Period of delay (Rs. Lakhs) (in days)

117.48 1.10

92.32 11-20

71.35 21-30

97.76 31-49

105.83 50-90

5.30 115

116.67 122

134.67 More than 180 days

(xii) The Company during the year has not granted loans advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) The Company is not a nidhi / mutual benefit fund / society to which the provisions of special statute relating to chit fund are applicable.

(xiv) In our opinion and according to the information and explanations given to us, the Company is not a dealer or trader in securities.

(xv) As explained to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions.

(xvi) As explained to us, the term loans taken by the Company have been applied for the purpose for which they were obtained.

(xvii) Based on the information and explanations given to us and on an overall examination of the balance sheet of the Company, in our opinion, funds raised on short term basis have not been used for long term investment.

(xviii) During the year Company has made preferential allotment of equity shares to a Company covered in the register maintained under Section 301 of the Companies Act, 1956. According to the information and explanations given to us, and based on the records verified by us, the price at which the shares have been issued is not pre-judicial to the interest of the Company.

(xix) As there are no debentures outstanding as at the year end, paragraph (xix) of the order is not applicable.

(xx) The Company has not raised any money by way of public issue during the year.

(xxi) According to the information and explanations given to us, during the year, no fraud on or by the Company has been noticed or reported.

For Deloitte Haskins & Sells

Chartered Accountants

A.C. Gupta

Place : Hyderabad Partner

Date : June 30, 2008 M.No.8538