1. We have audited the attached Balance Sheet of KERALA AYURVEDA
LIMITED as at 31st March 2009, the Profit and Loss Account and the Cash
Flow Statement for the year ended on that date both annexed there to.
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.
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 the management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable
basis for our opinion.
3. As required by the Companies (Auditors Report) Order, 2003 (as
amended by companies (Auditors 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 a statement
on the matters specified in paragraph 4 and 5 of the said order to the
4. Further to our comments in the Annexure referred to in paragraph
(3) 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 purpose 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
c) The Balance Sheet, the Profit and Loss Account and Cash Flow
Statement dealt with by this report are in agreement with the books of
d) In our opinion, the Balance Sheet, the Profit and Loss Account and
the Cash Flow Statement dealt with by this report are in compliance
with the Accounting Standards referred to in sub-section 3(C) of
section.211 of the Companies Act, 1956;
e) On the basis of written representations received from the directors,
as on 31st March 2009 and taken on record by the Board of Directors, we
report that none of the directors is disqualified as on 31st March 2009
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
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 the case of the Balance Sheet, of the state of the companys
affairs as at 31st March, 2009;
ii) In the case of the Profit and Loss Account, of the Loss of the
Company for the year ended on that date,
iii) In the case of the Cash Flow Statement, of the cash flows for the
year ended on that date.
ANNEXURE TO THE AUDITORS REPORT
(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 assets.
b) All the fixed assets have not been physically verified by the
management during the year but the Company has 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 such verification.
c) In our opinion the fixed assets disposed off during the year were
not material so as to affect the going concern status of the company.
II a) The management has conducted physical verification of inventory
at reasonable intervals.
b) In our opinion, 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) On the basis of our examination of the records of inventory, we are
of the opinion that the company is maintaining proper records of
inventory. The discrepancies noticed on verification between the
physical stocks and book records were not material and have been
properly dealt with in the books of account.
III In respect of the loans, secured or unsecured granted or taken by
the company to/from companies, firms or other parties covered in the
register maintained under section 301 of the Companies Act 1956.
a) During the year the Company has given unsecured loan to subsidiary
company. In respect of the said loan the maximum amount outstanding at
any time during the year is Rs.9,76,02,806/- and the balance
outstanding is Rs.1,66,43,678/-. In our opinion and according to the
information and explanation given to us the loan is interest free,
repayable on demand and terms and conditions are not prejudicial to the
interests of the company.
b) During the year the Company has taken additional loans from one
existing party. In respect of the said loans maximum amount outstanding
at any time during the year is Rs.28,09,20,709/- and balance
outstanding is Rs.27,69,75,437/-. In our opinion and according to the
information and explanations given to us the loan is interest free,
repayable on demand and terms and conditions are not prejudicial to the
interests of the company.
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 for the purchase of inventory, fixed assets and for the sale
of goods. During the course of our audit, we have not observed any
continuing failure to correct major weaknesses in internal control
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) According to the information and explanations given to us, the
transactions made in pursuance of contracts or arrangements entered in
the registers maintained under section 301 and exceeding the value of
five lakhs rupees 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 time.
VI In our opinion and according to the information and explanations
given to us the company has not accepted deposits from the public
during the year. Therefore the provisions of clause 4 (vi) of the order
are not applicable to the company.
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 maintained by the
company in respect of manufacture of Ayurvedic products pursuant to the
order made by the Central Government for maintenance of cost records
prescribed under section 209 (1) (d) of the Companies Act, 1956 and are
of the opinion that prima-facie, the prescribed accounts and records
have been made and maintained. We have not however made a detailed
examination of the records with a view to determine whether they are
accurate or complete.
IX According to the records of the company the company, was regular in
depositing the Provident Fund dues and Employees State Insurance dues
with the appropriate authorities except in a few cases where there were
delays. Based on our audit procedures and according to the information
and explanations given to us there are no arrears of statutory dues
including Provident Fund, Employees State Insurance, Investor
Education and Protection Fund, Income Tax, Sales Tax, Wealth Tax,
Custom Duty, Excise Duty Service tax, Cess and other statutory dues
applicable to it which have been remained outstanding as at 31st March,
2009 for a period of more than six months from the date they become
X The companys accumulated loss at the end of the financial year is
less than 50% of its net worth. The company has incurred cash loss
during the year covered by our audit and during the immediately
preceding financial year.
XI The company has not defaulted in repayment of dues to financial
institution or bank. The company has no debenture holders.
XII The company has not granted any loans and advances on the basis of
security by way of pledge of shares, debentures and other securities.
XIII 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 are not applicable to the company.
XIV The company is not dealing 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.
XV In our opinion and according to the information and explanations
given to us the terms and conditions on which the company has given
guarantee for loans taken by subsidiary company from banks are not
prima-facie prejudicial to the interest of the company.
XVI According to the information and explanation given to us term loans
taken during the year were applied for the purpose for which the loans
XVII According to the information and explanations given to us the
funds raised on short-term basis during the year have not been used for
XVIII The company has not made any preferential allotment of shares
during the year to parties and companies covered in the Register
maintained under section 301 of the Companies Act, 1956.
XIX The company has not issued any debentures and therefore the
provisions of clause 4 (xix) of the Companies (Auditors Report) Order,
2003 are not applicable to the company.
XX During the period covered by our audit report, the company has not
raised any money by public issue.
XXI Based upon the audit procedures performed and according to the
information and explanations given and representations made by the
management, we report that no fraud on or by the company has been
noticed or reported during the year.
For Maharaj Rajan & Mathew,
Place : Kochi Mathew Joseph,
Date : 29.06.2009 Partner