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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
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