Mar 31, 2023
Zenotech Laboratories Limited
Report on the Audit of the Standalone Financial Statements
Opinion
We have audited the standalone financial statements of Zenotech Laboratories Limited (âthe Companyâ), which comprise the standalone balance sheet as at 31 March 2023, and the standalone statement of Profit and Loss (including other comprehensive income), standalone statement of changes in equity and standalone statement of cash flows for the year then ended, and notes to the standalone financial statements, including a summary of significant accounting policies and other explanatory information.
In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Companies Act, 2013 (''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 2023, and Profit and other comprehensive income, changes in equity and its cash flows for the year ended on that date.
Basis for Opinion
We conducted our audit in accordance with the Standards on Auditing (SAs) specified under section 143(10) of the Act. Our responsibilities under those SAs are further described in the Auditor''s Responsibilities for the Audit of the Standalone Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India (ICAI) together with the ethical requirements that are relevant to our audit of the standalone financial statements under the provisions of the Act and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the standalone financial statements of the current period. These matters were addressed in the context of our audit of the standalone financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
We have determined the matters described below to be the key audit matters to be communicated in our report.
Key audit matters |
Auditor''s response |
revenue |
|
The Company solely depends on its holding company for its Revenue as stated below: 1. All the manufacturing job work is |
Our Audit Procedures included: ⢠Validating appropriate approval process for the agreements with related party and verifying that the job work charges invoiced are aligned with the agreements. |
done as per their requirements at the agreed conversion charges. 2. Revenue is earned by leasing out its biotech facility & equipment In view of the significance of the dependence on holding company for revenue, it represented a key audit matter in the audit |
⢠Validating comprehensiveness of revenue recognition through testing of transactions and production records ⢠Cut off procedures performed. ⢠Carrying out analytical procedures and identifying reasons for significant variance. ⢠Confirming with the balance confirmation received from external parties. ⢠Evaluating the disclosures made with requirements under the Accounting Standards and the Companies Act, 2013 |
information Other than the Standalone Financial Statements and Auditors'' report There on
The Company''s management and Board of Directors are responsible for the preparation of the other information. The other information comprises the information included in the Board of Directors'' report and Management Discussion & Analysis Report but does not include the financial statements and our auditors'' report thereon. These reports are expected to be made available to us after the date of this auditor''s report.
Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the standalone financial statements, or our knowledge obtained during the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Management and Those Charged with Governance for Standalone Financial Statements
The Company''s management and Board of Directors are responsible for the matters stated in section 134(5) of the Act with respect to the preparation of these financial statements that give a true and fair view of the state of affairs, profit and other comprehensive income, changes in equity and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Indian accounting Standards (Ind AS) prescribed under section 133 of the Act. 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.
In preparing the standalone financial statements, management and Board of Directors are responsible for assessing the Company''s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so
Board of Directors are also responsible for overseeing the Company''s financial reporting process.
Auditors'' responsibilities for the Audit of the Standalone Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors'' report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these standalone financial statements.
As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
⢠Identify and assess the risks of material misstatement of the standalone financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
⢠Obtain an understanding of internal financial control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Act, we are also responsible for expressing our opinion on whether the company has adequate internal financial controls with reference to the standalone financial statements in place and the operating effectiveness of such controls.
⢠Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
⢠Conclude on the appropriateness of management''s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company''s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors'' report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors'' report. However, future events or conditions may cause the Company to cease to continue as a going concern; and
⢠Evaluate the overall presentation, structure and content of the standalone financial statements, including the disclosures, and whether the standalone financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the standalone financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors'' report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditors'' Report) Order, 2020 (âthe Orderâ), issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in the âAnnexure Aâ a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.
2. As required by Section 143(3) of the Act, we report that:
(a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit.
(b) In our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books.
(c) The standalone Balance Sheet, the standalone Statement of Profit and Loss (including other comprehensive income), the standalone Statement of Changes in Equity and the standalone statement of cash flows dealt with by this Report are in agreement with the books of account.
(d) In our opinion, the aforesaid standalone financial statements comply with the Indian Accounting Standards (Ind AS) prescribed under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.
(e) On the basis of the written representations received from the directors as on 31 March 2022 taken on record by the Board of Directors, none of the directors is disqualified as on 31 March 2022 from being appointed as a director in terms of Section 164 (2) of the Act.
(f) With respect to the adequacy of the internal financial controls with reference to the standalone financial statements of the Company and the operating effectiveness of such controls, refer to our separate Report in âAnnexure Bâ.
(g) With respect to the other matters to be included in the Auditors'' Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:
i. The Company has disclosed the impact of pending litigations as at 31 Match 2022 on its financial position in its financial statements - Refer Note 31 to the standalone financial statements;
ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses.
iii. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company during the year ended 31 March 2022; and
iv. (a) The management has represented that, to the best of its knowledge and belief, as detailed in Note
38(g) , no funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the company to or in any other person(s) or entity(ies), including foreign entities (âIntermediariesâ), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, whether, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company (âUltimate Beneficiariesâ) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries
(b) The management has represented, that, to the best of its knowledge and belief, as detailed in Note 38(h) , no funds have been received by the company from any person(s) or entity(ies), including foreign entities (âFunding Partiesâ), with the understanding, whether recorded in writing or otherwise, that the company shall, whether, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (âUltimate Beneficiariesâ) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries
(c) Based on such audit procedures that the we have considered reasonable and appropriate in the circumstances, nothing has come to our notice that has caused us to believe that the representations under sub-clause (a) and (b) contain any material misstatement.
v. The Company has not declared any dividend during the year.
vi. Proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 for maintaining books of account using accounting software which has a feature of recording audit trail (edit log) facility is applicable to the Company with effect from April 1, 2023, and accordingly, reporting under Rule 11(g) of Companies (Audit and Auditors) Rules, 2014 is not applicable for the financial year ended March 31,2023.
3. With respect to the matter to be included in the Auditors'' Report under section 197(16):
In our opinion and according to the information and explanations given to us, the remuneration paid by the Company to its directors during the current year is in accordance with the provisions of Section 197 of the Act. The remuneration paid to any director is not in excess of the limit laid down under Section 197 of the Act. The Ministry of Corporate Affairs has not prescribed other details under Section 197(16) which are required to be commented upon by us.
For PKF Sridhar & Santhanam LLP
Chartered Accountants Firm''s Registration No.003990S/S200018
Place of Signature: Hyderabad Partner
Date: 28-04-2023 Membership No. 210789
UDIN:23210789BGYTBT2185
Mar 31, 2018
INDEPENDENT AUDITORâS REPORT
To
the members of
Zenotech Laboratories Limited
Report on the Ind AS Financial Statements
We have audited the accompanying Ind AS financial statements of Zenotech Laboratories Limited (âthe Companyâ), which comprise the Balance Sheet as at 31st March, 2018, the Statement of Profit and Loss (including Other Comprehensive Income), the Cash Flow Statement and the Statement of Changes in Equity for the year then ended, and a summary of the significant accounting policies and other explanatory information.
Managementâs Responsibility for the Ind AS Financial Statements
The Company''s Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 (âthe Actâ) with respect to the preparation of these Ind AS financial statements that give a true and fair view of the financial position, financial performance (including Other Comprehensive Income), cash flows and changes in equity of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards specified in the Companies (Indian Accounting Standards) Rules, 2015 (as amended) under Section 133 of the Act. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the Ind AS financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
Auditorâs Responsibility
Our responsibility is to express an opinion on these Ind AS financial statements based on our audit.
We have taken into account the provisions of the Act and the Rules made thereunder including the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder.
We conducted our audit of the Ind AS financial statements in accordance with the Standards on Auditing specified under Section 143(10) of the Act and other applicable authoritative pronouncements issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the Ind AS financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the Ind AS financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the Ind AS financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company''s preparation of the Ind AS financial statements that give a true and fair view, in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company''s Directors, as well as evaluating the overall presentation of the Ind AS financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Ind AS financial statements.
Opinion
In our opinion and to the best of our information and according to the explanations given to us, the aforesaid Ind AS 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 31st March, 2018, and its loss (including Other Comprehensive Income), its cash flows and changes in equity for the year ended on that date.
Emphasis of Matters
We draw attention to Note 27 of Ind AS financial statements which describes the reconstruction of financial records and various legal proceedings as follows:
(a) Based on the information provided to us by the Management, the books of accounts for the financial years ended 31st March, 2011 & 31st March 2012 were reconstructed by the Management post 12th November, 2011.
(b) The matters relating to several financial and non-financial irregularities pertaining to period prior to 12th November 2011 are currently sub-judice and the impact of the various legal proceedings would be made in the financial results of the Company as and when the outcome of the above uncertainties becomes known and the consequential adjustments/ disclosures are identifiable/determinable. The Company has represented to us that based on the steps taken by the Management and evidence available so far, any financial impact on the results of the Company is likely to be significantly low.
Our report is not qualified in respect of these matters.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor''s Report) Order, 2016 issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act (âthe Orderâ), 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 âAnnexure Aâ, a statement on the matters specified in paragraphs 3 and 4 of the Order.
2. As required by Section 143 (3) of the Act, we report that:
(a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit.
(b) In our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books.
(c) The Balance Sheet, the Statement of Profit and Loss (including Other Comprehensive Income), the Cash Flow Statement and the Statement of Changes in Equity dealt with by this Report are in agreement with the books of account.
(d) In our opinion, the aforesaid Ind AS financial statements comply with the Accounting Standards specified under Section 133 of the Act.
(e) The matter described in the Emphasis of Matter paragraph above, in our opinion, may have an adverse effect on the functioning of the Company.
(f) On the basis of the written representations received from the directors as on 31st March, 2018 taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2018 from being appointed as a director in terms of Section 164 (2) of the Act.
(g) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate Report in âAnnexure Bâ.
(h) With respect to the other matters to be included in the Auditor''s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our knowledge and belief and according to the information and explanations given to us:
i. The Company has disclosed the impact of pending litigations on its financial position in its financial statements - Refer Note 27(a) and 28 to the financial statements.
ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses.
iii. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.
Referred to in paragraph 1 on âReport on Other Legal and Regulatory Requirementsâ of our report of even date
(i) (a) The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets.
(b) The Company has a regular program of verifying fixed assets over a period of three years, which, in our opinion, is reasonable having regard to the size of the company and nature of its assets. Fixed assets have been physically verified by the management during the year as per the said program. As informed, discrepancies noticed on such verification were not material and have been properly dealt with in the books of account.
(c) Title deeds of immovable properties are held in the name of the Company.
(ii) The Company has conducted physical verification of inventories at reasonable intervals. As informed, discrepancies noticed on such verification were not material and these have been properly dealt with in the books of account.
(iii) The company has not granted any loans, secured or unsecured to parties covered in the register maintained under section 189 of the Act and hence clause (iii) is not applicable.
(iv) Based on our audit procedures & according to the information and explanation given to us, the company has not granted any loans or made any investments or provided any guarantees or security to the parties covered under section, 185 and 186. Therefore, the provisions of Clause 3(iv) of the said order are not applicable to the company.
(v) Based on our audit procedures & according to the information and explanation given to us, the Company has not accepted any deposits from the public within the meaning of the Act and the rules made there under and hence clause (v) is not applicable.
(vi) The Company is not required to maintain cost records prescribed by the Central Government under sub-section (1) of section 148 of the Act.
(vii) (a) According to the information and explanations given to us and the records of the Company examined by us, the Company has generally been regular in depositing undisputed statutory dues including provident fund, employees'' state insurance, income-tax, sales tax, service tax, duty of customs, duty of excise, value added tax, gst, cess and any other statutory dues with the appropriate authorities. According to the information and explanation given to us and the records of the Company examined by us, no undisputed amounts payable in respect of provident fund, employees'' state insurance, income-tax, sales tax, service tax, duty of customs, duty of excise, value added tax, gst, cess and any other statutory dues were in arrears, as at 31st March 2018 for a period of more than six months from the date they became payable.
(b) Dues relating to income tax / sales tax / service tax / duty of customs / duty of excise / value added tax, gst, which have not been deposited on account of any dispute, are stated in the table below:
Name of the statute |
Period |
Amount (in Rs. thousands)* |
Forum where the dispute is pending |
The Finance Act, 1994 |
Financial Year 2007-08 |
4,498 |
Commissioner of Central Excise and Service Tax, Hyderabad IV |
The Finance Act, 1994 |
Financial Year 2007-08, 2008-09 and 2009-10 |
4,611 |
Commissioner of Central Excise and Service Tax, Hyderabad IV |
The Finance Act, 1994 |
Financial Year 2006-07 and 2007-08 |
10,124 |
Commissioner of Central Excise and Service Tax, Hyderabad IV |
The Finance Act, 1994 |
Financial Year 2009-10, 2010-11, 2012-13 |
2,267 |
Deputy Commissioner Commercial Taxes (Appeal) |
The Finance Act, 1994 |
Prior to Financial year 201112 (Service Tax) |
3,405** |
N/A |
The Finance Act, 1994 |
Prior to Financial year 201112 (Wealth Tax) |
69 ** |
N/A |
The Finance Act, 1994 |
Prior to Financial year 201112 (Sales Tax) |
39 ** |
Commercial Tax Officer, Srinagar Colony Circle |
The Customs Act, 1962 |
Prior to Financial year 201112 (Customs Act) |
5,160 |
Principal Commissioner of Customs, Hyderabad |
The Income Tax Act, 1961 |
Assessment Year 2006-07, 2009-10, 2013-14 |
44,677 |
Office of the Deputy Commissioner of Income Tax , Circle -17(2), Hyderabad |
Name of the Lender |
Period |
Amount (in Rs. Thousands of INR)* |
Technology Development Board |
Financial Year 2012-13 |
27,645 |
* excluding penalty & Interest
** Provision for Service Tax on Forex outgo, Wealth Tax and Sales Tax for which no records/ details are available with the Company and hence Interest not ascertained.
(viii) Based on our audit procedures and as per the information and explanations given by the management, the Company has defaulted in repayment of loans or borrowings to financial institutions, Government agencies which are as follows.
* amount of accrued interest only.
(ix) In our opinion and according to the information and explanations given to us, the Company has utilized the money raised by way of Rights issue of Equity shares during the year for the purposes for which they were raised.
(x) To the best of our knowledge and belief and according to the information and explanations given to us, we report that no fraud by the Company or on the Company by its officers or employees has been noticed or reported during the year.
(xi) Based on our audit procedures and as per the information and explanations given to us, the Company does not have a whole time director or Managing Director. Accordingly, the provision of clause(xi) of the Order are not applicable to the company.
(xii) The Company is not a Nidhi company in accordance with Nidhi Rules 2014. Accordingly, the provisions of clause (xii) of the Order are not applicable.
(xiii) Based on our audit procedures and according to the information and explanations given to us, all the transactions with related parties during the year are in compliance with Section 177 and Section 188 of the Act where applicable and the details have been disclosed in the Ind AS Financial statements etc. as required by the applicable accounting standards
(xiv) Based on our audit procedures and according to the information and explanations given to us, the Company has not made any preferential allotment or private placement of shares/ fully or partly convertible debentures during the year under review.
(xv) Based on our audit procedures and according to the information and explanations given to us, the Company has not entered into any non-cash transactions with directors or persons connected with them.
(xvi) Based on our audit procedures and according to the information and explanations given to us, the Company is not required to be registered under Section 45-IA of Reserve Bank of India Act, 1934.
Referred to in paragraph 2(g) on âReport on Other Legal and Regulatory Requirementsâ of our report of even date
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 (âthe Actâ)
We have audited the internal financial controls over financial reporting of Zenotech Laboratories Limited (âthe Companyâ) as of March 31, 2018 in conjunction with our audit of the Ind AS financial statements of the Company for the year ended on that date.
Managementâs Responsibility for Internal Financial Controls
The Company''s management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India. These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to company''s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.
Auditorsâ Responsibility
Our responsibility is to express an opinion on the Company''s internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the âGuidance Noteâ) and the Standards on Auditing, issued by ICAI and deemed to be prescribed under section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls, both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting were established and maintained and if such controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the Ind AS financial statements, whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company''s internal financial controls system over financial reporting.
Meaning of Internal Financial Controls Over Financial Reporting
A company''s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of Ind AS financial statements for external purposes in accordance with generally accepted accounting principles. A company''s internal financial controls over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of Ind AS financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company''s assets that could have a material effect on the Ind AS financial statements.
Inherent Limitations of Internal Financial Controls Over Financial Reporting
Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Opinion
In our opinion, the Company has maintained, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at March 31, 2018, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.
For PKF Sridhar & Santhanam LLP
Chartered Accountants
Firm''s Registration No.003990S/S200018
S. Prasana Kumar
Place of Signature: Mumbai Partner
Date: 19th May 2018 Membership No.212354
Mar 31, 2016
To the members of Zenotech Laboratories Limited Report on the Standalone Financial Statements
We have audited the accompanying standalone financial statements of Zenotech Laboratories Limited (âthe Companyâ), which comprise the Balance Sheet as at 31st March, 2016, the Statement of Profit and Loss, the Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information. Managementâs Responsibility for the Standalone Financial Statements
The Companyâs Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 (âthe Actâ) 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 of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
Auditorâs Responsibility
Our responsibility is to express an opinion on these standalone financial statements based on our audit.
We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made there under.
We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditorâs judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Companyâs preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Companyâs Directors, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the standalone financial statements.
Basis for Qualified Opinion
1. As more fully explained in Note 2.25 to the financial statements, the books of accounts for the financial years ended 31 March 2011 and 2012 were reconstructed by the Management post 12 November 2011. Certain matters relating to the differences between the current management and the then Co- Managing Director are currently sub-judice and still unresolved. These related to obtaining audit evidence on the related financial results and 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 results may be materially misstated is low.
In view of the non-resolution of these, our opinion on the current yearâs financial statement is qualified in respect of both, the current year and 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 the Note 2.26 (a) to the financial statement, the Companyâs application under the Companies Act, 1956, to the Ministry of Corporate Affairs (MCA), Government of India for approval of managerial remuneration of INR 30.00 lakhs payable to Late Mr.B.K.Raizada, another erstwhile Co- Managing Director for the period from 19 March 2011 to 18 March 2013 was conditionally approved by MCA on 27 February, 2012. Pending compliance with the conditional approval by the Company, no adjustment in this regard has been made in the accompanying financial results
3. As more fully explained in the Note 2.26(b) to the financial statement, the Company has filed a legal case against Dr.Jayaram Chigurupati, the erstwhile Co-Managing Director for recovering the managerial remuneration paid amounting to INR 79.80 lakhs during the period from 1 October 2007 to 31 March 2011, including an amount of INR 22.80 lakhs 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 continuing default in relation to excess remuneration paid.
Qualified Opinion
In our opinion and to the best of our information and according to the explanations given to us, with the exception of the matters described in the preceding paragraphs 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 31st March, 2016, and its loss and its cash flows for the year ended on that date.
Emphasis of matter
The Company has, notwithstanding, accumulated losses its net worth being completely eroded, prepared the accounts on a going concern basis, as it is working on plans to raise further funds with which it will be able to meet its business operations for growth and revival.
Our report is not qualified in this regard.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditorâs Report) Order, 2016 (âthe Orderâ) issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in the âAnnexure Aâ, a statement on the matters specified in paragraphs 3 and 4 of the Order.
2. As required by Section 143 (3) of the Act, we report that:
(a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit of the current period except for the matter number 1 explained in the âBasis for Qualified Opinionâ 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.
(e) In our opinion, the matter discussed in matter number 1 explained in the âBasis for Qualified Opinionâ paragraph and the matter discussed in âEmphasis of Matterâ paragraph above, may have an adverse effect on the functioning of the Company.
(f) On the basis of the written representations received from the directors as on 31st March, 2016 taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2016 from being appointed as a director in terms of Section 164 (2) of the Act.
(g) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate Report in âAnnexure Bâ.
(h) The qualification relating to maintenance of accounts and other matters connected therewith are as stated in the matter number 1 explained in the âBasis for Qualified Opinionâ paragraph above.
(i) With respect to the other matters to be included in the Auditorâs Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:
i. The Company has disclosed the impact of pending litigations on its financial position in its financial statements - Refer Note 2.25, 2.26 and 2.27 to the financial statements;
ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses.
iii. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.
Annexure A to Independent Auditors Report
Referred to in paragraph 1 on âReport on Other Legal and Regulatory Requirementsâ of our report of even date
(i) (a) The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets.
(b) The Company has a regular program of verifying fixed assets over a period of three years, which in our opinion, is reasonable having regard to the size of the company and nature of its assets. Fixed assets have been physically verified by the management as per the said program. As informed, discrepancies noticed on such verification were not material and have been properly dealt with in the books of account.
(c) Title deeds of immovable properties, as disclosed in Note 2.10 on fixed assets to the financial statements are held in the name of the Company.
(ii) The Company has conducted physical verification of inventories at reasonable intervals. As informed, discrepancies noticed on such verification were not material.
(iii) The company has not granted any loans, secured or unsecured to parties covered in the register maintained under section 189 of the Act and hence clause iii is not applicable.
(iv) During the current year, the company has not granted any loans or made any investments or provided any guarantees or security to the parties covered under section, 185 and 186. Therefore, the provisions of Clause 3(iv) of the said order are not applicable to the company.
(v) Based on our audit procedures & according to the information and explanation given to us, the Company has not accepted any deposits from the public within the meaning of the Act and the rules made there under and hence clause (v) is not applicable.
(vi) The Company is not required to maintain cost records specified by the Central Government under subsection (1) of section 148 of the Act
(vii) (a) According to the information and explanations given to us and the records of the Company examined
by us, the Company has generally been regular in depositing undisputed statutory dues including provident fund, employeesâ state insurance, income-tax, sales tax, service tax, duty of customs, duty of excise, value added tax, cess and any other statutory dues with the appropriate authorities. According to the information and explanation given to us and the records of the Company examined by us, no undisputed amounts payable in respect of provident fund, employeesâ state insurance, income-tax, sales tax, service tax, duty of customs, duty of excise, value added tax, cess and any other statutory dues were in arrears, as at 31st March 2016 for a period of more than six months from the date they became payable.
(b) Dues relating to income tax / sales tax / service tax / duty of customs / duty of excise / value added tax, which have not been deposited on account of any dispute, are stated in the table below:
Name of the statute |
Period to which the amount relates |
Amount (in Rs. Thousands of INR)* |
Forum where the dispute is pending |
The Finance Act, 1944 |
Financial Year 2007-08 |
4,498 |
Commissioner of Central Excise and Service Tax, Hyderabad IV |
The Finance Act, 1944 |
Financial Year 2007-08, 2008-09 and 2009-10 |
4,611 |
Commissioner of Central Excise and Service Tax, Hyderabad IV |
The Finance Act, 1944 |
Financial Year 2006-07 and 2007-08 |
10,124 |
Commissioner of Central Excise and Service Tax, Hyderabad IV |
The Finance Act, 1944 |
Financial Year 2009-10, 2010-11, 2012-13 |
2,267 |
Deputy Commissioners Commercial Taxes ( Appeal) |
* excluding interest and penalty.
(viii) Based on our audit procedures and as per the information and explanations given by the management, the Company has defaulted in repayment of loans and borrowings to financial institutions, Government which are as follows:
Name of the Lender |
Period |
Amount (in Rs. Thousands of INR)* |
Biotech Consortium India Limited |
Financial Year 2008-09 |
1,355 |
Technology Development Board |
Financial Year 2012-13 |
52,431 |
* including accrued interest and penal interest.
(ix) The Company has, during the current year, not raised any moneys by way of initial public offer, further public offer (including debt instruments) and term loans. Accordingly, the provisions of Clause 3(ix) of the Order are not applicable to the company.
(x) To the best of our knowledge and belief and according to the information and explanations given to us, we report that no fraud by the Company or on the Company by its officers or employees has been noticed or reported during the year.
(xi) Based on our audit procedures and as per the information and explanations given to us, the company does not have a whole time director or Managing Director. Accordingly, the provision of clause (xi) of the Order are not applicable to the company.
(xii) The Company is not a Nidhi company in accordance with Nidhi Rules 2014. Accordingly, the provisions of clause (xii) of the Order are not applicable to the company.
(xiii) Based on our audit procedures and according to the information and explanations given to us, all the transactions entered into with the related parties during the year are in compliance with Section 177 and Section 188 of the Act where applicable and the details have been disclosed in the Financial statements as required under Accounting Standards (AS) 18, Related Party Disclosures.
(xiv) The Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review. Accordingly, the provisions of Clause (xiv) of the Order are not applicable to the company.
(xv) Based on our audit procedures and according to the information and explanations given to us, the Company has not entered into any non-cash transactions with directors or persons connected with him.
(xvi) Based on our audit procedures and according to the information and explanations given to us, the Company is not required to be registered under Section 45-IA of Reserve Bank of India Act, 1934.
Annexure B
Referred to in paragraph 2(h) on âReport on Other Legal and Regulatory Requirementsâ of our report of even date
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 (âthe Actâ)
We have audited the internal financial controls over financial reporting of Zenotech Laboratories Limited (âthe Companyâ) as of March 31, 2016 in conjunction with our audit of the standalone financial statements of the Company for the year ended on that date.
Managementâs Responsibility for Internal Financial Controls
The Companyâs management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India. These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to companyâs policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.
Auditorsâ Responsibility
Our responsibility is to express an opinion on the Companyâs internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over
Financial Reporting (the âGuidance Noteâ) and the Standards on Auditing, issued by ICAI and deemed to be prescribed under section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls, both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting were established and maintained and if such controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditorâs judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Companyâs internal financial controls system over financial reporting.
Meaning of Internal Financial Controls Over Financial Reporting
A companyâs internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A companyâs internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the companyâs assets that could have a material effect on the financial statements.
Inherent Limitations of Internal Financial Controls Over Financial Reporting
Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Opinion
In our opinion, the Company has maintained, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at March 31, 2016, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.
For PKF Sridhar & Santhanam LLP
Chartered Accountants
Firmâs Registration No.003990S/S200018
T V Balasubramanian
Place of Signature : Mumbai Partner
Date : 21st May, 2016 Membership No.027251
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 (Âthe
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