1. We have audited the attached Balance Sheet of ORTIN LABORATORIES
LIMITED, as at 31st March, 2011 the Profit and Loss account and also
the cash flow statement 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. An audit also includes
assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for
3. As stated in Note 2, Schedule – S Notes on Accounts, Vineet
Laboratories Pvt. Ltd. (VLPL) was amalgamated with Ortin Laboratories
Ltd. with effect from October 1, 2010, in accordance with a Scheme of
Amalgamation sanctioned on June 29, 2011, by the Honourable High Court
of Andhra Pradesh. The opening balances of the erstwhile VLPL as on
October 01, 2010 have been adopted as per the amalgamation scheme.
4. Without qualifying our opinion attention is drawn to Note 2,
Schedule – S Notes on Accounts regarding the scheme of amalgamation
approved by the Honorable High Court of Andhra Pradesh whereby the
Assets and Liabilities of the erstwhile Vineet Laboratories Private
Limited have been taken over and recorded at their book values as on
01st October, 2010 as per the audited financial statements. The share
capital of the erstwhile VLPL (Transferor Company) before amalgamation
was Rs. 720.00 lacs. According to the scheme of amalgamation, the
Equity Share Capital to be allotted to the Shareholders of VLPL is Rs.
1,224.00 lacs. The difference of Rs. 504.00 lacs between the Equity
Share Capital to be allotted to the Shareholders of VLPL the Transferor
Company and its Equity Share Capital prior to Amalgamation has been
adjusted against Share Premium to the extent of Rs. 168.90 Lacs and the
balance of Rs. 335.10 Lacs against Profit & Loss Account as per the
5. As required by the Companies (Auditors'' Report) order, 2003, as
amended by Companies (Auditor''s Report) (Amendment) Order, 2004, 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
hereto a statement on the matters specified in paragraphs 4 and 5 of
the said order, to extent applicable to the Company.
6. Further to our comments in the Annexure referred to above, we
report that: (i) 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; (ii) 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 (iii) The Balance Sheet, Profit and Loss
account and cash flow statement dealt with by this report are in
agreement with the books of account
(iv) 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
Companies Act, 1956.
(v) On the basis of written representations received from the
directors, as on 01st September, 2011 and taken on record by the Board
of Directors, we report that none of the directors is disqualified as
on 31st March, 2011 from being appointed as a directors in terms of
clause (g) of sub-section (1) of section 274 of the Companies Act,
(vi) In our opinion and to the best of our information and according to
the explanations given to us, the said accounts 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;
(a) in the case of Balance Sheet, of the state of affairs of the
company, as at 31st March, 2011.
(b) in the case of the Profit and Loss Account, of the profit, 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.
Re: ORTIN LABORATORIES 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
(b) All the assets have been physically verified by the management
during the year and 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
(c) During the year, the company has not disposed off a major part of
the plant and machinery.
(ii) (a) The inventory has been physically verified during the year by
the management. In our opinion, the frequency of verification is
(b) 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 is maintaining proper records of inventory. The
discrepancies noticed on verification between the physical stocks and
the book records were not material.
(iii) (a) The company has not taken loans from the parties covered in
the register maintained under section 301 of the Companies Act, 1956.
(b) The company has granted loan during the previous year to one
company covered in the register maintained under section 301 of the
Companies Act, 1956 and an amount of Rs. 1,11,000/- is outstanding as
on 31st March, 2011.
(c) In our opinion, the rate of interest and other terms and conditions
on which loans have been taken/granted from the parties listed in the
register maintained under section 301 of the Companies Act are not,
prima facie, prejudicial to the interest of the company.
(d) The company is regular in repaying/recovering the principal amounts
as stipulated and has been regular in the payment/receiving of
(e) There was no overdue amount of loans taken from or granted to
companies, firms or other parties listed in the register maintained
under section 301 of the Companies Act, 1956.
(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
(v) (a) According to the information and explanations given to us, we
are of the opinion that the transactions that need to be entered into
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 explanations
given to us, the transactions made in pursuance of contracts or
arrangements entered in the register maintained under section 301 of
the Companies Act, 1956 and exceeding the value of rupees five lakhs in
respect of any party during the year have been made at prices which are
reasonable having regard to prevailing market prices at the relevant
(vi) In our opinion and according to the information and explanations
given to us, 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 relating to
materials, labour and other items of cost maintained by the company
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 and we are of the opinion that prima facie the prescribed
accounts and records have been made and maintained.
(ix) (a) The company is regular in depositing with appropriate
authorities undisputed statutory dues including provident fund, ESI,
income tax, sales tax, excise duty and other material statutory dues
applicable to it.
(b) According to the information and explanations given to us, no
undisputed amounts payable in respect of income tax, sales tax and
excise duty were in arrears, as at 31st March, 2011 for a period of
more than six months from the date they became payable.
(c) According to the information and explanation given to us, there are
no dues of sales tax, income tax and excise duty which have not been
deposited on account of any dispute. (x) In our opinion, the company
did not have the accumulated loss as on 31st March, 2011.
The Company has not incurred cash losses during the financial year
covered by our audit and the immediately preceding financial year.
(xi) In our opinion and according to the information and explanations
given to us, the company has not defaulted in repayment of dues to a
financial institution and banks.
(xii) 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. Hence no need to maintain the said
(xiii) 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 (Auditor''s Report) Order, 2003 are not applicable to the
(xiv) 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 (Auditor''s Report) Order,
2003 are not applicable to the company.
(xv) In our opinion, the company has not given guarantees for loans
taken by others from banks or financial institutions.
(xvi) In our opinion, the term loans have been applied for the purpose
for which they were raised.
(xvii) According to the information and explanations given to us and on
an overall examination of the balance sheet of the company, we report
that the 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) According to the information and explanations given to us, the
company has not raised any fresh share capital by way of public issue
or by any other mode during the financial year. Hence, the question of
preferential allotment of shares to parties and companies covered in
the register maintained under section 301 of the Act does not arise.
(xix) According to the information and explanations given to us, the
company has not issued any debentures in the history of the company.
Hence the creation of securities does not arise.
(xx) During the year the company has not raised money by way of public
issues, hence the verification of end use of money does not arise.
(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 MATHESH & RAMANA
Place: Hyderabad Sd/-
Dated: 01.09.2011 B.V. RAMANA REDDY
PARTNER Membership No. 026967
Firm Reg. No. 002020S