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Auditor Report of Venkat Pharma Ltd.

Mar 31, 2013

Report on the Financial Statements

We have audited the accompanying financial statements of M/s. Venkat Pharma Limited which comprise the balance sheet as at 31s March, 2013, the statement of Profit and loss and the cash flow statement for the yearthen ended and a summary of significant accounting policies and otherexplanatory information.

Management''s Responsibility for the Financial Statements

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance 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.

sponsible 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.

Sponsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 ("the Act"). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor''s Responsibility

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

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

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

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

(i) in the case of the balance sheet, of the state of affairs of the Company as at 31.03.2013;

(ii) In the case of the statement of profit and loss, of the Loss of the Company for the year ended on that date; and

(iii) in the case of the cash flow statement, of the cash flows of the company for the year ended on that date.

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 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 under provisions of section 227(3) of the Act, we report that:

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

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

c. The Balance Sheet, 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 Balance Sheet, Statement of Profit and Loss and Cash flow statement comply with the Accounting Standards referred to in sub section 3(c ) of section 211 of the Act; and

e. On the basis of written representations received from the directors as on 31.03.2013 taken on record by the Board of Directors, none of the directors is disqualified as on 31al March, 2013 from being appointed as director in terms of clause (g) of subsection (1) of section 274 of the Act.

VENKAT PHARMA LIMITED

Referred to in paragraph 3 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) All the 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. No material discrepancies were noticed on such verification.

(c) During the year, the company has not disposed off any major part of the plant and machinery.

(ii) (a) The Inventory was not physically verified during the year by the management, since the same is under the custody of Commercial Tax Department.

(b) In that contest no opinion is expression on inventory valuation by us.

(iii) The Company has not granted/taken loans, secured or unsecured to/from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Subclauses (b), (c) and (d) of Clauses (iii) of this Order not applicable as the company has not granted ortaken any loan from such parties.

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

(v) (a) According to the information and explanations given to us, we are of the opinion that there are no transactions that need to be entered into the register maintained under section 301 ofthe Companies Act-1956.

(a) In view ofthe above, clause v (b) is not applicable.

(vi) In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits which come under the provisions of sections 58A and 58AA of the Companies Act 1956 and the Companies (Acceptance of Deposits) Rules, 1975.

(vii) In the obscene of any business the question of an internal audit system does not arise.

(viii) As per the information and explanations furnished to us there are no books prescribed for the I terns of cost pursuant to the Rules made by the Central Government for the maintenance of cost records under section 209 (1) (d) of the Companies Act, 1956.

(ix) According to the information and explanations given to us, no undisputed amounts payable in respect of income tax, wealth tax, customs duty, excise duty and cess were in arrears, as at 31st March 2013 for a period of more than six months from the date they became payable except in respect of sales tax and Income Tax for which the details are as follows.

The above amounts under column 5 were deposited with Commercial Tax Authorities and matter is still pending at respective judicial departments.

(x) The Company has accumulated losses. The company has incurred cash losses during the financial yearcovered by our audit.

(xi) We are of the opinion that the company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xii) In our opinion, the company is not a chit fund or a nidh /mutual benefit fund/society. Therefore, the provisions of clause 4 (xiii) of the Companies (Auditor''s Report) Order, 2003 are not applicable to the company.

(xiii) In our opinion, the company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4 (xiv) of the Companies (Auditors Report) order, 2003 are not applicable to the company.

(xiv) In our opinion the terms and conditions on which the company has given guarantees for loans taken by others from banks or financial institutions are not prejudicial to the interest of the company.

(xv) In our opinion, during the year the company has not raised any term loans.

(xvi) According to the information and explanations given to us and on overall examinations of the balance sheet of the company, we report that the no fresh loan has been availed by the company.

(xvii) According to the information and explanations given to us, the company has not made ( preferential allotment of shares to parties and companies covered in the register maintained undersection301 of the Act.

(xviii) According to the information and explanations given to us, during the period covered by our audit report, the company has not issued debentures. The provisions relating to relation of security in respect of debentures issued are not applicable to the company.

(xix) The company has not raised any money by public issue during the year.

(xx) 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 MAHESH,VIRENDER & SRIRAM

Chartered Accountants

Firm Reg No: F0019395

Sd/-

R.V.CHALAM

(PARTNER)

ICAI M.N0.21423

Place: HYDERABAD

Date : 27.05.2013

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