1. We have audited the attached Balance Sheet of M/s.VENKAT PHARMA
LIMITED, as at 31st March 2011 and the profit and loss account and also
the cash flow statement for the period 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 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 management, as well as evaluating the overall
financial statement presentation.
3. As required by the Companies (Auditor''s Report) Order, 2003 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 3 a
statement of the matters specified in paragraphs 4 and 5 of the said
4. Further to our comments in the Annexure referred to above, we report
(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
(ii) In our opinion, proper books of accounts as required by law have
been kept by the company as far as appear from our examination of those
(iii) The balance sheet, profit and loss account and cash flow
statement dealt with by this report are in agreement with the books of
(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 3(C) of section 211 of the
Companies Act, 1956;
(v) On the basis of written representation received from the directors,
as at 31st March 2011 and taken or 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 direct in terms of clause(g) of sub
section(1)of section 274 of the Companies Act,1956;
5. Reference invited to the following notes on accounts under
(i) Note No.8 regarding accounting of retirement benefits on cash
basis, which is contrarytoAS-15
(ii) Note No.4 regarding confirmation of various balances for which no
provision has been made on non realizable portion if any.
(iii) Investments are stated at cost less any diminution in their
value, which is other than temporary.
(iv) Current tax is determined as the amount of tax payable in respect
of taxable income for the period, deferred tax is recognized subject to
consideration of '' prudence, in timing differences, being the
difference between taxable income and accounting income that original
in one period and is capable of reversal in one or more subsequent
6. 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 the 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 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 that date.
Referred to in paragraph 3 of our report of even date.
(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 programmed 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 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
(b) In that contest no opinion is expression on inventory valuation by
(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. Sub clauses
(b), (c) and (d) of Clauses (iii) of this Order not applicable as the
company has not granted or taken 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
(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 of
(b) In view of the 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 items 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) (a) 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
2011 for a period of more than six months from the date they became
payable except in respect of sales tax for which the details are as
Statute Nature Amount Period Amount Pending Before
APGSTACT Sales Tax 23,36,091 1995-96 5,84,023 STAT
-Do- -Do- 17,59,702 1996-97 4,39,926 STAT
-Do- -Do- 34,84,643 1997-98 8,72,911 STAT
-Do -Do- 9,38,702 1998-99 2,34,676 STAT
-Do- -Do- 2,98,21,084 2001-02 NIL STAT
-Do- -Do- 3,22,92,841 2003-04 NIL High Court
CSTACT -Do- 6,70,863 1995-96 1,67,716 STAT
-Do- -Do- 3,77,049 1996-97 94,262 STAT
-Do- -Do- 2,18,812 1997-98 218812 STAT
Tax Act Income 11,34,288 2003-04 NIL Appeal Pending
Tax Act Income 1,68,68,408 2004-05 NIL In the process
Tax Appeal before
The above amounts under column 5 were deposited with Commercial Tax
Authorities and matter is still pending at respective judicial
(x) The Company has accumulated losses. The company has incurred cash
losses during the financial year covered 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
(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
(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 under section 301
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
(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.VIREDNDER& SRIRAM