1. We have audited the attached Balance Sheet of M/s Granules India
Limited, Hyderabad as on March 31,2012 and the Profit and Loss Account
and Cash Flow Statement of the Company for the year ended on that date,
annexed thereto. These financial statements are the responsibility of
the Company''s management. Our responsibility is to express an opinion
on these financial statements based on our audit.
2. We conducted our audit in accordance with auditing standards
generally accepted in India. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining on a test basis, evidence supporting the amounts and
disclosures in the financial statements. 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
3. As required by the Companies (Auditor''s Report) Order, 2003 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 paragraphs 4 and 5 of the said Order.
4. Further to our comments in the Annexure referred to in paragraph
(3) & (4) above:
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
b) In our opinion, proper books of account as required by the Law have
been kept by the Company so far as it appears from our examination of
c) The Balance Sheet, Profit and Loss Account and Cash Flow Statement
referred to in 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 comply with the requirements of the Accounting Standards
referred to in sub-section (3C) of Section 211 of the Companies Act,
e) On the basis of the written representations received from the
directors, and taken on record by the Board of Directors, we report
that none of the Directors are disqualified as on March 31, 2012, from
being appointed as directors 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 Balance Sheet, Profit & Loss
Account and Cash Flow Statement read together with the significant
accounting policies and notes thereon, 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 so far as it relates to the Balance Sheet, of the state of
affairs of the Company as on March 31, 2012.
ii) in so far as it relates to the Profit & Loss Account, of the Profit
of the Company for the year ended on that date
iii) in case of the Cash Flow Statement, of the cash flows for the year
ended on that date.
I) Fixed Assets
a) The Company is maintaining proper records showing full particulars
including quantitative details and situation of fixed assets of the
b) The Physical verification of fixed assets is being carried out as
per the program drawn up and to the extent the physical verification is
carried out, no material discrepancies were noticed on such
c) There was no disposal of a substantial part of fixed assets during
a) The stocks of raw materials, consumables, stores, work-in-progress
and finished goods have been physically verified during the year at
regular intervals by the management.
b) The procedures of physical verification of stocks followed by the
management are reasonable and adequate in relation to the size of the
Company and the nature of its business. In respect of finished goods
lying with the consignees, the certificate given by the management is
c) The discrepancies noticed on verification of stocks as compared to
books were not material and it has been properly dealt with in the
books of account.
III) Loans taken / granted
According to the information and explanations given to us, the Company
has neither taken for granted any loans, secured or unsecured to/from
companies, firms or other parties covered in the register maintained
under sec.301 of the Companies Act, 1956.
IV) Internal control
a) In our opinion and according to the information and explanations
given to us, the internal control procedures are being strengthened on
a continuous basis so as to be commensurate with the size of the
Company and the nature of its business for the purchase of inventory
keeping in view of the expansion.
b) There are no major weaknesses in the internal control procedures.
V) Section 301
Necessary entries were made in the register maintained under sec. 301
of the Companies Act, 1956.
VI) Public deposits
The Company has not accepted any deposits from the public.
VII) Internal audit
The Company has an internal audit system so as to be commensurate with
its size and the nature of its business.
VIII) Cost records
The Central Government has prescribed maintenance of cost records in
respect of manufacture of API products and formulations. The Company
has made and maintained account and records of such activities.
IX) Statutory dues
a. The Company is regular in depositing with appropriate authorities
undisputed statutory dues including Provident Fund, Employees State
Insurance, Income tax. Customs Duty, Wealth Tax, Sales Tax, Excise
Duty, Cess and other applicable statutory dues with the appropriate
authorities. According to the information and explanations given to us
no undisputed amounts payable in respect of outstanding statutory dues
as at the last day of the year ending 31.03.2012 for period exceeding 6
months from the date they became payable.
b. According to the records of the Company, the dues outstanding of
Income tax. Customs Duty, Wealth Tax, Sales Tax, Excise Duty, Cess on
account of any dispute, are as follows:
Name of the
statute Nature of
dues Rs in Lakhs Period for
which Forum where
relate is pending
Act, 1962 Duty demand
Linder DEEC 32.57 1993-94 High Court,
Act, 1962 Duty demand
obligations 10.9 1993-94 CESTAT,
Service Tax Penalty on
Matters 89.37 2008-09 CESTAT,
1944 Duty and
105.78 2006-10 CESTAT,
Tax Act, 1961 Tax demand
matters 466.77 2006-07 ITAT,
Tax Act, 1961 Tax demand
matters 1,303.21 2007-08 DRP,
X) Accumulated losses / cash losses
The Company has no accumulated losses as on 31st March, 2012.
XI) Repayment of dues
According to the records of the Company examined by us and the
information and explanations given to us, the Company has not defaulted
in repayment of dues to any financial institution or bank as at the
Balance Sheet date.
XII) Loans & advances
The Company has not granted loans and advances on the basis of security
by way of pledge of shares, debentures and other securities.
XIII) Chit- Fund companies/ Nidhi/Mutual benefit societies The
provisions of special statute relating to chit fund companies and the
provisions of Nidhi or mutual benefit fund/ societies are not
applicable to the Company.
XIV) Financing companies
The Company is not dealing or trading in shares, securities and other
XV) Guarantee for loans
The Company has not given any guarantee for loans taken by others to
banks or financial institutions.
XVI) Term loans
In our opinion and according to the information and explanations given
to us, the term loans are applied for the purpose for which the loans
XVII) Usage of funds
According to the information and explanations given to us and on an
overall examination of Balance Sheet of the Company, we report that no
funds raised on short- term basis have been used for long-term
investment. No long-term funds have been used to finance short- term
assets except permanent working capital.
XVIII) Preferential allotments
The Company has not made any preferential allotment of shares to
parties and companies covered in the register maintained under sec. 301
of the Companies Act, 1956.
XIX) Creation of securities
The Company has not issued any debentures during the year; hence, the
question of creation of securities does not arise.
XX) Public issue
The Company has not raised any money through Public Issue.
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 M/s KUMAR &GIRI
Firm Reg No: 001584S
J. Bhadra Kumar
Place: Hyderabad Partner
Date: April 24, 2012 Membership No. 25480