1. We have audited the attached Balance Sheet of JUBILANT ORGANOSYS
LIMITED as at 31st March, 2010 the related Profit and Loss Account for
the year ended on that date annexed thereto, and the Cash Flow
Statement of the Company for the period ended on that date, which we
have signed under reference to this report. These financial statements
are the responsibility of the Companys management. Our responsibility
is to express an opinion on these financial statements based on our
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 required by the Companies (Auditors Report) Order, 2003 issued
by the Central Government in terms of Section 227 (4A) of the Companies
Act, 1956, and on the basis of such checks as considered appropriate
and according to the information and explanation given to us during the
course of our audit, we enclose in the Annexure hereto a statement on
the matters specified in paragraphs 4 and 5 of the said Order.
4. Further to our comments mentioned in the Annexure referred to in
above paragraph 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
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 the books
of the Company.
c) The Balance Sheet, Profit and Loss Account and the Cash Flow
Statement dealt with by the report are in agreement with the Books of
Account of the Company.
d) In our opinion, the Profit & Loss Account, Balance Sheet and Cash
Flow Statement comply with the mandatory Accounting Standards referred
to in Sub-Section 3 (c) of Section 211 of the Companies Act, 1956.
e) According to the information and explanation given to us and on the
basis of written representations received from the Directors as on 31st
March, 2010 of the Company and taken on record by the Board of
Directors, we report that none of the Directors is disqualified as on
31st March, 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) The Company has received proper returns from branches not visited by
g) In our opinion and to the best of our information and according to
the explanations given to us, the said Accounts, and read together with
the notes and Significant Accounting Policies there on 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 the case of the Balance Sheet, of the state of affairs of the
Company as at 31st March, 2010.
(ii) In the case of the Profit and Loss Account, of the Profit 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.
ANNEXURE TO THE AUDITORS REPORT
Referred to in paragraph 3 of our report of even date on the accounts
of the year ended 31st March, 2010.
i) (a) The Company has maintained proper records showing full
particulars including quantitative details and situation of fixed
(b) In our opinion, physical verification of fixed assets has been
carried out in terms of the phased programme of verification of its
fixed assets adopted by the Company and no material discrepancies were
noticed on such verification. In our opinion the frequency of
verification is reasonable, having regard to the size of the Company
and nature of its business.
(c) During the year the Company has not disposed off any substantial/
major part of fixed assets.
ii) (a) The inventories have been physically verified during the year
by the management at reasonable intervals.
(b) In our opinion and according to the information and explanations
given to us, the procedures of physical verification of inventory
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. In our
opinion, discrepancies noticed on physical verification of stocks were
not material in relation to the operations of the Company.
iii) (a) There are only two companies covered in the register
maintained under Section 301 of the Companies Act, 1956 to which the
Company has granted loan. The maximum amount involved during the year
was ` 3,803.33 million (including the opening balance) and the year end
total balance of loans granted to such parties was ` 1,361.80 million.
(b) In our opinion the rate of interest and other terms and condition
on which loan were granted to the said Companies listed in register
maintained under Section 301 of the Companies Act, 1956 are not prima
facie, prejudicial to the interest of the Company.
(c) One of the said parties have repaid principal amounts on demand and
the parties were regular in the matter of payment of interest.
(d) There is no overdue amount of loan granted to the said Company.
(e) The Company had not taken any loan from any Company covered in the
register maintained under section 301 of the Companies Act, 1956.
Accordingly, paragraph 4 (iii) (e), (f) & (g) of the Order are not
iv) In our opinion and according to the information and explanations
given to us, there are adequate internal control systems commensurate
with the size of the Company and the nature of its business with regard
to purchase of inventory and fixed assets and for the sale of goods and
services. During the course of our audit, we have not observed any
continuing failure to correct major weakness in internal control
v) (a) Based on the audit procedures applied by us and according to the
information and explanations provided by the management, we are of the
opinion that the transactions that need to be entered into the register
maintained under Section 301 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 under Section 301 have been made
at prices which are reasonable having regard to prevailing market
prices, wherever comparable prices are available, at the relevant time.
vi) In the case of public deposits received by the Company, the
directives issued by the Reserve Bank of India and the provisions of
Section 58A, 58AA or any other relevant provisions of the Companies
Act, 1956 and the Companies (Acceptance of Deposit) Rules, 1975 have
been Compiled with. No order has been passed by the Company Law Board
or National Company Law Tribunal or Reserve Bank of India or any Court
or any other Tribunal.
vii) In our opinion, the Company has an internal audit system
commensurate with the size of the Company and the nature of its
viii) The Central Government has prescribed maintenance of the Cost
Records under Section 209(1) (d) of the Companies Act, 1956 in respect
to the Companies certain products. We have broadly reviewed the books
of account maintained by the Company pursuant to the Order made by the
Central Government for the maintenance of the cost records for certain
products of the Company and are of the opinion that prima facie the
prescribed accounts and records have been maintained. We are, however,
not required to and have not carried out any detailed examination of
such accounts and records.
ix) (a) According to the records examined by us, the Company is regular
in depositing with appropriate authorities undisputed statutory dues
including provident fund, investors education and protection fund,
employees state insurance, income tax, sales tax, wealth tax, service
tax, custom duty, excise duty, cess and other statutory dues wherever
applicable. According to the information and explanations given to us,
no undisputed arrears of statutory dues were outstanding as at 31st
March, 2010 for a period of more than six months from the date they
(b) According to the records of the Company, the dues of sale tax,
income tax, custom duty, wealth tax, service tax, excise duty, cess
which have not been deposited on account of disputes and the forum
where the dispute is pending are as under:
Name of the Statute Nature of Amount
the Dues `/million
1 Central Excise Act, 1944 Excise Duty 1.26
Excise Duty 3.70
Excise Duty 0.42
Excise Duty 1.27
Excise - EOU 0.31
Excise Penalty 0.01
2. Customs Act, 1962 Custom Duty + Interest 82.26
Custom Duty + Interest 11.64
Custom Duty + Interest 3.03
3. Service Tax, Finance Service Tax 0.35
Act, 1994 Service Tax 29.24
4 Central Sales Tax Sales Tax Penalty 0.24
Act, 1956 and Sales Tax Sales Tax Demand 0.97
Acts of Various States Sales Tax Penalties 0.10
Sales Tax Penalties 0.12
Period to which Forum Where
name of the Statte the amount relates dispute is pending
1 Central Excise April 2001- March 2002 Joint Commissioner, Pune
April 2004 to July 2005 Additional Commissioner,
March 1997 Additional Commissioner,
February 2003 to
September 2004 Commissioner, Meerut
April 2007 to
November 2007 Deputy Commissioner,
April 2003 to
March 2005 Tribunal, New Delhi.
(Appeal being file
April 2006 Govt. of India
March 2003 to
March 2007 Excise Tribunal,
Act, 1962 April 2002 to
October 2005 A. C. Custom ICD,
February 2002 to
February 2010 A.C,Customs, Kandla
August 2004 to
February 2009 A.C. Customs, Mumbai
3. Service Tax, April 2003-March
Finance 2004 Asstt. Commissioner,
April 2004 to May 2006 Commissioner, Noida
1983-1984 Supreme Court
1996-2001 Cuttack Tribunal
2009-10 D.C., Hasanpur
2008-09 Trade Tax Tribunal,
x) There are no accumulated losses of the Company as at 31st March,
2010. The Company has not incurred any cash losses during the financial
year covered by our audit and in the immediately preceding financial
xi) Based on our audit procedures and the information given by the
management, we are of the opinion that the Company has not defaulted in
repayment of dues to any financial institution, bank or debenture
xii) Based on our examination of the records and the information and
explanations given to us, the Company has not granted any loans and/ or
advances on the basis of security by way of pledge of shares,
debentures and other securities.
xiii) The provisions of any special statute as specified under
paragraph (xiii) of the Order are not applicable to the Company.
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 (Auditors Report)
Order, 2003 are not applicable to the Company. However, all investments
have been held by it in its own name or nominees.
xv) According to the information and explanations given to us, Company
has given guarantees for loans taken by others (by the step down
subsidiary companies) from Banks and the terms of such guarantees are
not prejudicial to the interest of the Company.
xvi) According to the information and explanations given to us, the
term loans raised during the year have been applied (including for
investments) for the purpose for which they were raised.
xvii) According to the information & explanation 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
xviii) The Company has not made any preferential allotment of shares
during the year to parties/companies covered in the register maintained
under Section 301 of the Companies Act, 1956.
xix) During the year covered by our audit report the Company has not
issued secured debentures.
xx) The Company has not raised any money by Public Issue during the
xxi) Based upon the audit procedures performed and as per the
information and explanations given to us by the management, we report
that no fraud on or by the Company has been noticed or reported during
the course of our audit.
For K. N. Gutgutia & Company
Firm Registration Number : 304153E
B. R. Goyal
Membership No. 12172
Place : Noida
Date : 10th May, 2010