M/s Laurel Oroanics Limited
i) Report on the Financial Statements
We have audited the accompanying financial statements of LAUREL ORGANICS LIMITED("the Company") Which comprise the Balance Sheet as at March 312015. theStatement of Profit and Loss and the Cash Flow Statement for the year ended March 312015and a summary of significant accounting policies and other explanatory information whichwe have signed under reference to this report.
ii) Management's Responsibility for the Financial Statements
The Company's board of directors is responsible for the matters stated in section134(5) of the Companies Act2013 ("the Act) with respect to the preparation ofthese financial statements that give a true and fair view of the financial positionfinancial performance and cash flows of the Company in accordance with the Accountingprinciples generally accepted in India including the Accounting Standards specified undersection 133 of the Act read with rule 7 of the Companies (Accounts) rules2014. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding the assets of the Company and for preventingand detecting frauds and other irregularities: selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; anddesign implementation and maintenance of internal financial controls that were operatingeffectively for ensuring the accuracy of the accounting records relevant to thepreparation and presentation of the financial statements that give a true and fair viewand are free from material misstatement whether due to fraud or error.
iii) Auditor's Responsibility
Our responsibility is to express an opinion on these financial statements based on ouraudit.
We have taken into account the provisions of the Act the accounting and auditingstandards and matters which are required to be included in the audit report under theprovisions of the Act and the Rules made thereunder.
We conducted our audit in accordance with the Standards on Auditing specified undersection 143(10) of the Act.Those Standards require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetherthe financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures in the financial statements. The procedures selected depend on the auditor'sjudgment including the assessment of the risks of material misstatement of the financialstatements whether due to fraud or error. In making those risk assessments the auditorconsiders internal financial control relevant to the Company's preparation of thefinancial statements that give a true and fair view in order to design audit proceduresthat are appropriate in the circumstances but not for the purpose of expressing anopinion on whether the Company has in place and adequate internal financial controlssystem over financial reporting and the operating effectiveness of such controls. An auditalso includes evaluating the appropriateness of the accounting policies used and thereasonableness of the accounting estimates made by the Company's directors as well asevaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the financial statements.
iv) Basis of qualified opinion
The Company has eroded almost completely its equity during the year. Business of theCompany remained suspended for major part of the financial year Company was unable todischarge statutory liabilities employee dues and current liabilities including creditorsand it was incurring cash losses during the year as well as past year affecting seriouslythe going concern assumption. The appropriateness of the assumption of 'going concern'is dependent upon Companies ability to raise required resources/ generate cash flows infuture to meet its obligations. Management of the Company has though expressed positivehope in this regard.
v) Qualified Opinion
Subject to the basis of our qualified opinion and impact of the same on the financialstatement referred to here-in in our opinion and to the best of our information andaccording to the explanations given to us the aforesaid financial statements give theinformation required by the Act in the manner so required and give a true and fair view inconformity 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 March31 2015;
b) In the case of the Statement of Profit and Loss of the Loss for the year endedMarch 312015; and
c) In the case of the Cash Flow Statement of the cash flows for the year ended March312015.
vi) Report on Other Legal and Regulatory Requirements
1. As required by 'the Companies (Auditor's Report) Order 2015' ('The Order")issued by the Central Government of India in terms of sub-section (11) of Section 143 ofthe Companies Act 2013 and on the basis of such checks of the books and records of theCompany as we considered appropriate and according to the information and explanationsgiven to us we enclose in the Annexure a statement on the matters specified in paragraphs3 and 4 of the said Order.
2. As required by section 143(3) of the Act we report that:
a) We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purpose of our audit;
b) In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books;
c) The Balance Sheet Statement of Profit and Loss and Cash Flow Statement dealt withby this Report are in agreement with the books of account;
d) In our opinion the aforesaid financial statements comply with the AccountingStandards specified under section 133 of the Act read with Rule 7 of the Companies(Accounts) Rules2014;
e) On the basis of written representations received from the directors as on March 312015taken on record by the Board of Directors none of the directors is disqualified ason March 312015 from being appointed as a director in terms of Section 164(2) of theAct;
f) With respect to the other matters to be included in the Auditors' Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules2014 in our opinionand to the best of our information and according to the explanations given to us:
i. the Company has disclosed the impact of pending litigations if any on itsfinancial position in its financial statements Refer note 25(i)(xii)(xiii)(xxx);
ii. the Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses; and
iii. there were no amounts which were required to be transferred to the investoreducation and protection fund by the Company.
| ||For A K Jalan & Associates |
| ||Chartered Accountants |
|Place: New Delhi-5 ||(FRN 500107N) |
|Date : 20/08/2015 ||Sd/- |
| ||(CA A K Jalan FCA). Partner |
| ||Membership No.052776 |
Annexure to the Auditors' Report
Referred to in sub-paragraph 1 of paragraph (vi) 'Report on other Legal and RegulatoryRequirements" section of the Independent Auditors' Report of even date to the membersof Laurel Organics Limited on the Financial Statements as of and for the year ended 31stMarch 2015)
01. In respect of its Fixed Assets:
(a) The company has maintained records showing particulars including quantitativedetails and situation of its Fixed Assets on computer assisted system.
(b) As per Information and explanations given to us the Fixed Assets of the Companyhave been physically verified by the management during the year and it seems that theprocedure of physical verification employed was reasonable having regard to the size ofthe Company and the nature of its assets. No material discrepancies were found on suchverification.
(c) In our opinion and according to the information and explanation given to us asubstantial part of the fixed assets has not been disposed off by the Company during theyear excepting certain machinery for a valuable consideration;
02. In respect of its inventories:
(a) The inventory (own inventory and stock of inventory belonging to principalmanufacturer) have been physically verified by the management during the year. In ouropinion the frequency of verification is reasonable.
(b) In our opinion the procedures of physical verification of inventory followed bythe management are reasonable and adequate in relation to the size of the company andnature of its business.
(c) On the basis of our examination of the inventory recordsin our opinion theCompany is maintaining proper records of inventory. The discrepancies noticed on physicalverification of inventory were not material as compared to the book records in relation tothe operation of the Company.
03. Loans taken/Advanced by the Company:
Based on the audit procedures applied and according to the information and explanationsgiven to us the company has neither granted nor taken loans in the nature of loanssecured or unsecured to/from Companies Firms or other parties covered in the registermaintained u/s 189 of the Companies Act2013.Therefore paragraph 3(iii) of the Order isnot applicable;.
04. Internal Control Procedures:
In our opinion and according to the information and explanation given to us there areadequate internal control system commensurate with the size of the Company and the natureof its business for purchase/procurement of inventory and fixed assets and for the saleof goods and services. Further on the basis of our examination of the books and recordsof the Company and according to the information and explanations given to us we haveneither come across nor have we been informed of any continuing failure to correct majorweaknesses in the aforesaid internal control system.
05. Acceptance of Deposits:
In our opinion and according to the information and explanations given to us thecompany has not accepted any deposits from the public and accordingly paragraph 3 (v) ofthe Order is not applicable.
06. Maintenance of Cost Records:
The Central Govt has prescribed Rules for the maintenance of the cost records u/s148(1) of the Companies Act 2013. Company has appointed Cost Audit for the Financial Year2014-15. As per explanations received and records broadly reviewed the Company has beenengaged in processing of drug intermediates for other major pharmaceutical Company on JobCharges basis. The cost data for major component of drugs manufactured is not availabletherefore could not be verified.
07. In respect of Statutory Dues:
(a) According to the information and explanation given to us and on the basis of ourexamination of records of the Company the Company has delayed deposit of the undisputedstatutory dues relating to Income Tax Deducted at Source PF ESI Labor Welfare Fundcontribution Service Tax and sales tax amounts which have not been paid in time due tovarious reasons including financial sickness. However in other cases the Company isgenerally regular in depositing the undisputed statutory dues as applicable withappropriate authorities in India.The delay in deposit was more than six months in severalcases details are as below:
(i) EPF dues : Delay for more than 6 months Rs.695723/- (Total dues as on 31/03/2015Rs.1037809/- paid on 19/05/2015 )
(ii) ESI dues : Delay for more than 6 months i.e. FY 2013-14 Rs.561759/- forFY2014-15 Rs.429627/- (Total dues Rs.1604968/- not paid as yet)
(iii) TDS dues : Delay for More than 6 months as below:
Section 194 C of the Income Tax Act 1961 Rs. 7434/- Section 194 I of the Income TaxAct 1961 Rs. 44158/- Section 194 J of the Income Tax Actl 961 Rs. 40063/- Section 194A of the Income Tax Act1961 Rs. 18189/-
(iv) Labour welfare fund dues: Delay for more than 6 months Rs.23800/-
(b) According to the information and explanation given to us and the records of theCompany examined by us no disputed statutory dues were outstanding for payments beforeany forum for relief or otherwise.
(c) According to the information and explanations given to us the Company did not haveany dues on account of investor education and protection fund.
08. Cash Losses:
The accumulated losses as at March 312015 of the Company stand at Rs. 721.12 lacs(Last year Rs.550.84 lacs) which is 97.64 % of the Company's net worth as at the end ofthe Financial year. The Company has also incurred cash losses of Rs.126.18 lacs in thecurrent financial year and in the immediately preceding financial year of Rs. 34.50 lacs.
09. Company has not raised any term loans from Banks/Financial Institutions during theyear under audit.In our opinion and according to the information and explanations given tous the Company has not defaulted in repayment of dues to its bankers.
10. In our opinion and according to the information and explanations given to us theCompany has not given any guarantee for loans taken by others from banks or financialinstitutions during the year except the undertaking given for personal loan raised byemployee against salary/terminal benefits from Corporation Bank.
11. Based on the information and explanations given to us and on an overall examinationof the Balance Sheet of the Company in our opinion there are no funds raised on shortterm basis which have been used for long term investment and vice versa.
12. According to the information and explanations given to us and based on the auditprocedures performed and representation obtained from the management we report that nofraud on or by the Company having material misstatement on the financial statements hasbeen noticed or reported during the year under audit.
| ||For A K Jalan & Associates |
|Place: New Delhi-5 ||Chartered Accountants |
|Date : 20/08/2015 ||(FRN 500107N) |
| ||Sd/- |
| ||(CA A K JalanFCA)Partner |
| ||Membreship No.052776 |