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Omega Laboratories Ltd.

BSE: 524406 Sector: Health care
NSE: N.A. ISIN Code: INE006E01011
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Omega Laboratories Ltd. (OMEGALABS) - Auditors Report

Company auditors report

OMEGA LABORATORIES LIMITED ANNUAL REPORT 2006-2007 AUDITORS' REPORT TO THE MEMBERS OF OMEGA LABORATORIES LIMITED We have audited the attached Balance Sheet of M/s Omega Laboratories Limited as at 31st March 2007 and the Profit and Loss Account 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. We conducted our audit in accordance with the Auditing Standards generally accepted in India except for provision for interest accrued not provided on borrowings from bank/ institution and loans given. Those standards require that we plan and perform the audit to obtain reasonable assurance about the financial statement are free of material misstatements. As audit includes examining, on a test basis, evidence supporting the amounts and disclosures in financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the management, as well as evaluating the over all financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In accordance with the provisions of section 227 of the Companies Act 1956, we report that: 1. As required by the Companies (Auditor's Report) Order 2003 issued by the Central Govt. of India in terms of section 227 (4A) of the Companies Act 1956, we enclose in the annexure a statement of the matters specified in paragraphs 4 and 5 of the said order. 2. Further to our comments in the annexure referred to above, we report that: a) We have obtained all the information and explanation which to the best of our knowledge and belief were necessary for the purpose of our audit. b) In our opinion, the company as required by law, has kept proper books of accounts so far as appears from our examination of the books. c) The balance sheet and other related accounts dealt with by this report are in agreement with the books of accounts. d) In our opinion, the Profit and Loss account and Balance Sheet comply with the mandatory accounting standard referred to in sub section (3C) of section 211 of The Companies Act 1956 to the extent of such standard have been made applicable by The Institute of Chartered Accountants of India. e) On the basis of written representation received from the directors as at 31st March 2007 and taken on record by the board of directors, we report that non of the directors is disqualified as at 31st March 2007 from being appointed as directors 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 financial statements read together with the significant accounting policies and other notes thereon give the information required by the Companies Act 1956 in the manner so required and present 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 2007 and ii) In the case of the Profit and Loss account of the loss of the company for the year ended on that date and iii) In case of Cash Flow Statement of the cash flow for the year ended on that date. For R.K. Varshney & Co. Chartered Accountants Dated: 27th July 2007 (R.K. Varshney) Place: Delhi Proprietor ANNEXURE REFERRED TO IN PARAGRAPH 3 OF THE AUDITOR'S REPORT ON THE ACCOUNTS OF THE COMPANY 1. (a) The company has maintained proper records showing full particulars including quantitative details and situation of fixed assets at factory, offices and branches on the basis of information available. (b) According to the information and explanation given to us, the management has physically verified these fixed assets under a programme designed to cover all the fixed assets over a period of three years which in our opinion is reasonable having regard to the size of the company and the nature of its assets. Discrepancies noticed on such verification were not material and have been dealt within the books of account. However, we have not physically verified the assets as the units are leased out and in the possession of the lessee. We have audited on the basis of the information provided by the management to carried out the audit. (c) In our opinion and according to the information and explanations given to us, the company has not disposed of any substantial part of the fixed assets during the year. This is also based on the information provided by the management and books of accounts. In absence of physical verification by us, we have relied on the facts and details provided by the management. 2. (a) As explained to us, the management at regular intervals has physically verified the stock of stores, spare parts, inventories of finished goods and raw material during the year except for stock lying with third parties for which certificates/ confirmation of the stocks held by them have been obtained in most of the cases. (b) In our opinion and according to the information given to us, the procedure of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the company and nature of the business. (c) In our opinion and according to information and explanation given to us, the company has maintained proper record of its inventories. Discrepancies noticed on physical verification of inventories were not material and have been properly dealt with the books of accounts. 3. In respect of the loans secured or unsecured granted or taken by the company to/ from Companies, Firm or other parties listed in the register maintained under section 301 of the Companies Act 1956: (a) The company has granted loans to companies/ firm under the section mentioned above. The maximum amount involved during the year was Rs.15,027,480/- and the year end balance of loan given to companies was Rs.15,006,110/- (b) In our opinion and according to the information and explanation given to us, the rate of interest and other terms and conditions of such loans are, prima facie, prejudicial to the interest of the company as no interest on the loans has been charged. (c) The company has not been regular in repaying the interest and principal amount as stipulated on the loans taken from banks/ institutions. (d) There is overdue amount of such loans taken from the aforesaid Bank/ Institutions and interest thereon. 4. In our opinion and according to information and explanations given to us, there are adequate internal control procedures commensurate to the size of the company and nature of its business with regard to purchase of fixed assets, raw material including components & stores and for the safe of goods. 5. (a) According to the information and explanation given to us, we are of the opinion that the transaction 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 explanation given to us, the transaction 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 Rs.5.00 lakhs in respect of any party during the year have been made at prices which are reasonable having regard to the prevailing market price at relevant time except for items stated to be of a specialised nature where no comparison is possible. 6. In our opinion and according to the information and explanation given to us, the company has not taken loans/ deposits for which the provisions of section 58A and 58AA of the Companies Act 1956 and Companies (acceptance of deposit) rules 1975 framed there under with regards to the deposits from the public apply. 7. In our opinion, the company has an adequate internal audit system commensurate with the size and nature of its business. 8. We have broadly reviewed the books of accounts maintained by the company pursuant to the Rule made by the Central Govt. for the maintenance of cost records under section 209 (1)(d) of the Companies Act 1956 in respect of formulation of the medicine and are of the opinion that prima facie the prescribed accounts have been made and maintained. We have however not made a detailed examination of the record with a view to determine whether they are accurate and complete. 9. (a) The company is regular in depositing with appropriate authorities undisputed statutory dues including Provident Fund, Income Tax, Sales Tax, Custom Duty, Excise Duty and other statutory dues applicable to it. According to the information and explanation given to us, no undisputed amount payable in respect of provident fund, Income Tax, Sales Tax, Custom Duty, Excise Duty were in arrears as at 31at March 2007 for a period of more than 6 months from the date they become payable except for the matter of Income Tax Raid for which the liability of Rs. 15.86 crores was imposed. (b) According to the information and explanation given to us, there are no disputed statutory dues which are pending. (c) The demand raised by Income Tax for Rs. 15.86 crores was challenged and reduced to Rs. 35.79 lakhs in the appeal before commissioner (appeal). Against this, the company has paid Rs.55.02 lakhs including over due interest upto date. However, Income Tax Department has appealed before Tribunal against the decision of Commissioner (Appeal), Delhi for Rs. 15.86 crores, interest and penalties which is pending before tribunal. 10. The company has accumulated losses and has earned cash profit (by not taking into the effect of interest on loans taken from banks/ institutions because of dispute otherwise it shall incurred cash losses) during the financial year covered by our audit or in the immediately preceding financial year. 11. In our opinion and according to the information and explanation given to us, the company has defaulted in repayment of dues to a financial institution or bank. 12. According to the information and explanation given to us, the company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities. 13. In our opinion, the company is not a chit fund or a nidhi/ mutual benefit fund and society. Therefore, the provisions of clause (xiv) of paragraph 4 of the order are not applicable to the company. 14. In our opinion the company is not dealing or trading in shares, securities, debentures and other investment. Accordingly the provisions of clause (xiv) of paragraph 4 of the order are not applicable to the company. 15. In our opinion and according to the information and explanation given to us, the terms and condition on which the company has given guarantee for loans taken by others, from bank/ institutions are not prima facie prejudicial to the interest of the company. 16. To the best of our knowledge and belief and according to the information and explanation given to us, the term loan availed by the company was applied for the purpose for which the loan was obtained. However, during the relevant current year, no loans were taken. 17. According to the information and explanation given to us and an overall examination of the balance sheet of the company, that no funds raised on short-term basis has been used for long-term investment. No long-term funds have been used to finance the short-term assets. 18. According to the information and explanation given to us, the company has made no preferential allotment during the year. 19. The company has not issued any debentures during the year. Therefore, the provisions of clause (xix) of paragraph 4 of the order are not applicable to the company. 20. The company has not raised any money by the public issue during the year. 21. To the best of our knowledge and belief and according to the information and explanations given to us, no fraud on or by the company has been noticed or reported during the year. For R.K. Varshney & Co. Chartered Accountants Dated: 27th July, 2007 (R.K. Varshney) Place: Delhi Proprietor