We have audited the attached Balance Sheet of ARCH PHARMALABS LIMITED
(the Company) as at March 31, 2010, the Profit and Loss account and
the Cash Flow Statement for the year ended on that date annexed
thereto. These financial statements are the responsibility of the
Companys management. Our responsibility is to express an opinion on
these financial statements based on our audit.
1. We have 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.
2. As required by the Companies (Auditors Report) Order 2003 (as
amended) issued by the Central Government of India in terms of
sub-section (4A) of Section 227 of the Companies Act, 1956, we enclose
in the Annexure a statement on the matters specified in paragraphs 4
and 5 of the said Order.
3. Further to our comments in the Annexure referred to 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 purposes of our
audit;
b) In our opinion, proper books of account as required by law have been
kept by the Company so far as appears from our examination of those
books;
c) The Balance Sheet, the Profit and Loss Account 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, the Profit and Loss Account and
the Cash Flow statement dealt with by this report comply with the
mandatory Accounting Standards referred to in sub-section (3C) of
section 211 of the Companies Act, 1956;
e) On the basis of written representations received from the Directors
as on March 31, 2010 and taken on record by the Board of Directors, we
report that none of the Directors is disqualified as on March 31, 2010
from being appointed as a director in terms of clause (g) of
sub-section (1) of Section 274 of the Companies Act, 1956;
f) In our opinion and to the best of our information and according to
the explanations given to us, the said accounts read together with the
significant accounting policies and other notes thereon in particular
Note 10 of Schedule 14 regarding Initial Engagement - opening
balances gives 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 the Balance Sheet, of the state of affairs of the
Company as at March 31,2010;
ii) in the case of the Profit and Loss Account, of the profit for the
year ended on that date; and
iii) in the case of the Cash Flow Statement, of the cash flows for the
year ended on that date.
ANNEXURE TO AUDITORS REPORT
ANNEXURE REFERRED TO IN PARAGRAPH 2 OF OUR REPORT OF EVEN DATE RE: ARCH
PHARMALABS LIMITED (THE COMPANY)
1) In respect of its Fixed Assets:
a) The Company is still in the process of compiling records to show
full particulars including quantitative details and situation of fixed
assets.
b) As explained to us, the fixed assets have been physically verified
by the Management during the year in a phased periodical manner, which
in our opinion is reasonable, having regard to the size of the Company
and nature of its assets. Any discrepancies , if any, will be evident
only after the records are compiled.
c) In our opinion, the Company has not disposed of substantial part of
fixed assets during the year and the going concern status of the
Company is not affected.
2) In respect of its inventories:
a) As explained to us, the inventory has been physically verified by
the management at regular intervals. In our opinion, the frequency of
the physical verification is reasonable.
b) In our opinion and according to the information and explanations
given to us, the procedures of physical verification of inventories
followed by the Management are reasonable and adequate in relation to
the size of the Company and the nature of its business.
c) The Company has maintained proper records of inventory. As explained
to us, there was no material discrepancies noticed on physical
verification of inventory as compared to the book records.
3) In respect of loans, secured or unsecured, granted or taken by the
company to / from companies, firms or parties covered in the register
maintained under Section 301 of the Companies Act, 1956: -
a) The Company has given loan to a wholly owned subsidiary of the
Company. In respect of the said loan, the maximum amount outstanding at
any time during the year is Rs. 13.79 Crores and the year end balance
is Rs. 13.49 Crores.
b) In our opinion and according to information and explanation given to
us, the loans given to wholly owned subsidiary is interest free and the
other terms and conditions on which loan has been given is not, prima
facie prejudicial to the interest of the Company.
c) In respect of loan given to wholly owned subsidiary, the loan is
interest free and repayable on demand. Accordingly the provisions of
Clauses 4(iii) (c) and (d) of the Companies (Auditors Report) Order,
2003 are not applicable.
d) The Company has taken unsecured loan from two companies. In respect
of the said loans, the maximum amount outstanding at any time during
the year is Rs. 80.00 Crores and the year end balance is Rs. 10.00
Crores.
e) According to the information and explanations given to us, the rate
of interest and terms and conditions of such loan are not prima facie
prejudicial to the interest of the Company.
f) The payment of the principal amount and interest are regular.
4) In our opinion and according to the information and explanations
given to us, there is an adequate internal control system commensurate
with the size of the Company and the nature of its business for the
purchase of inventory and fixed assets and also for the sale of goods
and services. During the course of our audit, no major weakness has
been noticed in the internal control system in respect of these areas.
5) In respect of transactions covered under Section 301 of the
Companies Act, 1956:
a) In our opinion and according to the information and explanations
given to us, the transactions made in pursuance of contracts or
arrangements, that needed to be entered in the register maintained
under Section 301 of the Companies Act, 1956 have been so entered.
b) In our opinion and according to the information and explanation
given to us, the transactions made in pursuance of such contract or
arrangements are unique and of specialized nature and in absence of
any comparable prices, we are unable to comment if same have been made
at prices which are reasonable having regard to the prevailing market
prices at the relevant time.
6) The Company has not accepted any deposit from the public.
Accordingly the provisions of Clauses 4(vi) of the Companies (Auditors
Report) Order, 2003 are not applicable.
7) In our opinion, the company has an internal audit system
commensurate with the size and nature of its business.
8) To the best of our knowledge and as explained to us, the Central
Government has not prescribed the maintenance of cost records under
Section 209 (1) (d) of the Companies Act, 1956.
9) In respect of Statutory dues:
a) According to the records of the Company, the Company is generally
regular in depositing with appropriate authorities undisputed statutory
dues including provident fund, investor education and protection fund,
employees state insurance, income-tax, sales-tax, service tax, customs
duty, cess and other statutory dues applicable to it. According to the
information and explanations given to us, no undisputed amounts payable
in respect of provident fund, investor education and protection fund,
employees state insurance, income-tax, service tax, sales-tax, customs
duty, cess and other undisputed statutory dues were outstanding, as at
March 31, 2010 for a period of more than six months from the date they
became payable.
b) The disputed statutory due amounting to Rs. 0.2111 Crores, that have
not been deposited on account of disputed matters pending before
appropriate authorities are as under:
10) The Company does not have accumulated losses at the end of the
financial year. The Company has not incurred cash losses during the
financial year covered by the audit and in the immediately preceding
financial year.
11) Based on our audit procedures and according to the information and
explanations given to us, we are of the opinion that the Company has
not defaulted in repayment of dues to banks, financial institutions and
debenture holders during the year under audit.
12) In our opinion and according to the explanations given to us and
based on the information available, no loans and advances have been
granted on the basis of security by way of pledge of shares, debentures
and other securities.
13) In our opinion, the Company is not a chit fund or a nidhi / mutual
benefit fund / society. Therefore, the provisions of clause 4 (xiii) of
the Companies (Auditors Report) Order 2003, (as amended) are not
applicable to the Company.
14) The Company has maintained proper records of transactions and
contracts in respect of dealing and trading in shares, securities,
debentures and other investments and timely entries have been made
therein. All the shares, securities, debentures and other investments
have been held by the Company in its own name.
15) According to information and explanation given to us, the Company
has given guarantee for loans taken by its subsidiary from a bank, the
terms and conditions whereof in our opinion are not prima facie
prejudicial to the interest of the Company.
16) The Company has raised new terms loans during the year. The term
loans outstanding at the beginning of the year and those raised during
the year have been applied for the purposes for which they were raised.
Name of the Statute Nature of Dues Amount Period to
which the
(Rs. in
Crores) amount
relates
Central Excise Act,1944 Excise Duty 0.0122 1994-95
Central Excise Act, 1944 Excise Duty 0.0464 1995-96
Central Excise Act, 1944 Excise Duty 0.0549 1996-97
Customs Act, 1962 Custom Duty 0.0976 1995-96
Name of the Statute Forum where dispute is pending
Central Excise Act,1944 Asst. Comm. of Central Excise
Central Excise Act, 1944 Asst. Comm. of Central Excise
Central Excise Act, 1944 Asst. Comm.of Central Excise
Customs Act, 1962 Commissioner of Customs, Chennai
17) 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 there are no funds raised on short term basis that have
been used for long-term investment.
18) The Company has not made any preferential allotment of shares to
parties and companies covered under Register maintained under Section
301 of the Companies Act, 1956.
19) The Company has issued unsecured debentures during the year under
audit, accordingly the provisions of Clauses 4 (xix) of the Companies
(Auditors Report) Order, 2003 are not applicable.
20) The Company has not raised any monies by way of public issues
during the year.
21) Based upon the audit procedures performed for the purpose of
reporting the true and fair view of the financial statements and as per
the information and explanations given by the management, we have not
come across any instance of material fraud on or by the Company, noted
or reported during the course of our audit.
For M/s. CHATURVEDI & SHAH For M/s. NAYAK & RANE
Chartered Accountants Chartered Accountants
Sd/- Sd/-
AMIT CHATURVEDI KISHORE RANE
Partner Partner
Membership No. 103141 Membership No. 100788
FRN:101720W FRN:117249W
Place: Mumbai
Date: 29.07.2010
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