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Panjon Ltd.

BSE: 526345 Sector: Health care
NSE: N.A. ISIN Code: INE744D01019
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Panjon Ltd. (PANJON) - Auditors Report

Company auditors report

TO THE MEMBERS OF PANJON LIMITED

REPORT ON THE FINANCIAL STATEMENTS

We have audited the accompanying financial statements of Panjon Limited (the Company)which comprise the Balance Sheet as at March 31 2014 the Statement of Profit and Lossand Cash Flow Statement for the year then ended and a summary of significant accountingpolicies and other explanatory information.

MANAGEMENT'S RESPONSIBILITY FOR THE FINANCIAL STATEMENTS

The Company's Management is responsible for the preparation of these financialstatements that give a true and fair view of the financial position financial performanceand cash flows of the Company in accordance with the Accounting Standards notified underthe Companies Act 1956 (the Act) read with the General Circular 15/2013 dated 13thSeptember 2013 of the Ministry of Corporate Affairs in respect of Section 133 of theCompanies Act 2013 and in accordance with the accounting principles generally accepted inIndia. This responsibility includes the design implementation and maintenance of internalcontrol relevant to the preparation and presentation of the financial statements that givea true and fair view and are free from material misstatement whether due to fraud orerror.

AUDITORS' RESPONSIBILITY

Our responsibility is to express an opinion on these financial statements based on ouraudit. We conducted our audit in accordance with the Standards on Auditing issued by theInstitute of Chartered Accountants of India. Those Standards require that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance aboutwhether the 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 control relevant to the Company's preparation and fair presentation ofthe financial statements in order to design audit procedures that are appropriate in thecircumstances but not for the purpose of expressing an opinion on the effectiveness ofthe Company's internal control. An audit also includes evaluating the appropriateness ofaccounting policies used and the reasonableness of the accounting estimates made bymanagement as well as evaluating the overall presentation of the financial statements. Webelieve that the audit evidence we have obtained is sufficient and appropriate to providea basis for our audit opinion.

BASIS FOR QUALIFIED OPINION

Inventories : The company's inventories lying at branches etc. could neither beverified nor their net realisable is acertainable. It was observed by the management thatthe stocks lying at the branches were not in saleable condition and the same was expired /damaged due to improper storage / moisture / pilferge etc. Same stock has been appearingin the books since previous years. The value of such stocks in books is Rs. 30856189/-.management has not stated the inventorries at lower of cost and net realisable valuewhich constitutes a departure from the Accounting Standards referred to in subsection (3C)of Sec 211 of the Act. The company's records indicate that had the management stated theinventories at the lower of cost and net realisable value since it isnot realisable theentire value needs to be written off an amount of Rs. 30856189/- would have beenrequired to write the inventories down to their net realisable value. Accordingly cost ofsales would have been increased by Rs. 30856189 and profit for the year shareholdersvalue and inventories would have decreased by Rs. 30856189/- (profit would have turnedinto loss) income tax would have reduced by Rs. 149000/-.

Patent and copyright : The management had to write off Rs. 9792507/- every year onpatents and copyrights for 5 years and thus total depreciation of Rs. 48962536/- wouldhave been written off in a period of 5 years. So far management has not written off anyamount on patents and copyright of Rs. 48962536/- which is a departure from theAccounting Standards referred to in subsection (3C) of Sec 211 of the Act. The company'srecords indicate that had management written off patents and copyrights then intangiblefixed assets net profit for the year and shareholders funds would have been lower by Rs.48962536/- or loss would have increased.

Deferred revenue Expenses : The management has not written off Deferred RevenueExpenses of Rs. 15495605/- which is a departure from the Accounting Standards referredto in subsection (3C) of Sec. 211 of the Act. The company's records indicate that if themanagement had written off these deferred revenue expenses the profit for the yearshareholders funds would have been lower by Rs. 15495605/- or loss would haveincreased.

QUALIFIED OPINION

In our opinion and to the best of our information and according to the explanationsgiven to us except for the effects of the matter described in the Basis for Qualifiedopinion paragraph the aforesaid financial statements give the information required by theAct in the manner so required and give a true and fair view and are in conformity with theaccounting principles generally accepted in India:

(a) In the case of the Balance Sheet of the state of affairs of the Company as atMarch 31st 2014;

(b) In the case of the Statement of Profit and Loss of the profit of the Company forthe year ended on that date; and

(c) In the case of the Cash Flow Statement of the cash flows of the Company forthe year ended on that date.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

1. As required by the Companies (Auditor's Report) Order 2003 (the Order) issued bythe

Central Government of India in terms of Section 227(4A) of the Act we give in theAnnexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

2. As required by Section 227(3) of the Act we report that:

a. We have obtained all the information and explanations which to the best of ourknowledge 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 appears from our examination of those books.

c. The Balance Sheet the Statement of Profit and Loss and the Cash Flow Statementdealt with by this Report are in agreement with the books of account.

d. Except for the effects of the matters described inbasis for qualified opinionparagraph in our opinion the Balance Sheet the Statement of Profit and Loss and theCash Flow Statement comply with Accounting Standards notified under the Act read with theGeneral Circular 15/2013 dated 13th September 2013 of the Ministry of Corporate Affairsin respect of Section 133 of the Companies Act 2013.

e. On the basis of the written representations received from the directors as on March31 2014 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2014 from being appointed as a director in terms of Section 274(1)(g) ofthe Act.

For Trilok Jain & Co.
CHARTERED ACCOUNTANTS
Firm Registration No: 00341C
Place: Indore (T C Jain)
Date: 22nd September 2014 Partner
Membership No: 012712

On the basis of such checks as we considered appropriate and in terms of theinformation and explanation given to us we state that:-

In terms of the information and explanations given to us and the books and recordsexamined by us in the normal course of audit and to the best of our knowledge and beliefwe state that

(i) (a) The company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.

(b) As explained to us the fixed assets have been physically verified by themanagement during the year. There is a regular program of verification which in ouropinion is reasonable having regard to the size of the company and the nature of itsassets. No material discrepancies were noticed on such verification.

(c) In our opinion the company has not disposed of substantial parts of fixed assetsduring the year and the going concern status of the company is not affected.

(ii) (a) The inventory has not been physically verified during the year by themanagement and were not made available for verification. In our opinion the frequency ofverification is not reasonable. Quantity value and location of brought forward / carriedforward stock has not been verified by us and it is not verifiable and not properlymaintained. Also nature of the goods is expirable and cannot be consumed after lapse ofcertain time or if not stored properly company has not taken stock quantity and valuefrom that perspective and hence exact amount cannot be ascertained.

(b) The procedures of physical verification of inventories followed by the managementare not reasonable and inadequate in relation to the size of the company and the nature ofits business.

(c) The company is not maintaining proper records of inventory. As informed to us thediscrepancies noticed on verification between the physical stocks and the book recordswere material and not dealt with in the books of account.

(iii) (a) The Company has received Unsecured Loans and Trade Deposits from partieslisted in the Register required to be maintained under section 301 which are treated asunsecured loan. The total No. of parties (directors and relative) are two and amountoutstanding as on 31.03.14 is Rs. 105.54 lacs (Previous year R804.61) and maximumoutstanding is Rs. 270.04 lacs. According to the information and explanation given to usthe rate of interest and other terms and conditions of the loan are prima-facie notprejudicial to the interest of the company. The Company is regular in repayment ofdeposits and there are no overdue.

(b) The company has not granted unsecured loans advances to the Companies Firms andParties listed in the Register required to be maintained under section 301. The Total No.Of Parties are nil and amount outstanding as on 31.03.2014 is Rs. nil (Previous year Rs.7.61 lacs) and maximum outstanding is Rs. nil. According to the information andexplanations given to us the rate of interest and other terms and conditions of the loanare prima-facie prejudicial to the interest of the Company.

(c) The debtors are not regular in repaying the principal amounts as stipulated andalso irregular in payment of interest.

(d) In our opinion the company has not taken reasonable steps to recover the loanamount. (iv) In our opinion and according to the information and explanations given to usthe internal control is not adequate commensurate with the size of the company and thenature of its business with regard to purchases of inventory fixed assets and with regardto the sale of goods and services. During the course of our audit we have observedcontinuing failure to correct major weaknesses in internal controls.

(v) (A) According to the information and explanations given to us we are of theopinion that the transactions that need to be entered into the register maintained undersection 301 of the Companies Act 1956 have been so entered.

(b) In our opinion and according to the information and explanations given to us thetransactions made in pursuance of contracts of arrangements entered in the registermaintained under section 301 of the Companies Act 1956 and exceeding the value of rupeesfive lacs in respect of any party during the year have been made but the reasonability ofthe prices having regard to prevailing market prices at that time cannot be ascertained.

(vi) In our opinion and according to the information and explanations given to us thecompany has not accepted deposits hence provisions of section 58A and 58AA of theCompanies Act are not applicable to company except Business deposits and from directors.

(vii) In our opinion the company does not have Internal audit system commensurate withthe size and nature of its business

(viii) As informed and explained to us the Central Government has ordered formaintenance of cost records under section 209(1)(d) of the companies Act vide order dated16/03/2006 of the Central Government but the cost audit has not been completed till date.

(ix) (a) The company is generally irregular in depositing with appropriate authoritiesundisputed statutory dues including provident fund investor education protection fundESIC sales tax income-tax TDS service tax cess and other material statutory duesapplicable to it. Exact amount of dues is not known as relevant records could not beproduced.

(b) According to the information and explanations given to us and records of theCompany examined by us the particulars of dues as at 31/3/2014 which have not beendeposited on account of a dispute are as follows.

Name of the Statute Nature of the Dues Amount under dispute not yet deposited Forum where dispute is pending
Excise Duty 2002-03 167530/- Stayed from High Court
Income Tax FY 1993-1994 142130/- Rectification filed
(A.Y. 1994-95)

(x) The company does not have accumulated loss as at the end of year the company morethan fifty percent of its net worth subject to qualifications in the audit report. Thecompany has not incurred any cash losses during the financial year covered by our audit orin the immediately preceding financial year.

(xi) In our opinion and according to the information and explanations given to us thecompany is not in default of repayment of dues to financial institution/Bank as at31.03.2014.

(xii) We are of the opinion that the company has not granted loans and advances on thebasis of security by way of pledge of shares debentures and other securities.

(xiii) In our opinion the company is not a chit fund or a nidhi / mutual benefitfund/society. Therefore the provisions of clause 4(xiii) of the Companies (Auditor'sReport) Order 2003 are not applicable to the company.

(xiv) In our opinion the company is not dealing in or trading in shares securitiesdebentures and other investments. Accordingly the provisions of clause 4(xiii) of theCompanies (Auditor's Report) Order 2003 are not applicable to the company.

(xv) As informed and explained to us the company has not given guarantees for loanstaken by others from banks or financial institutions.

(xvi) The Company has not raised any term loan during the year under review.

(xvii) According to the information and explanations given to us and on an overallexamination of the balance sheet of the company we report that the no funds raised onshort-term basis have been used for long-term investment.

(xviii) According to the information and explanations given to us the company has madepreferential allotment of 10000000 eq. shares of Rs. 10/- each for cash at par out ofwhich 6500000 equity shares of Rs. 10/- each for cash at par have been issued to partiesand companies covered in the register required to be maintained under section 301 of theAct.

(xix) According to the information and explanations given to us during the periodcovered by our audit report the company had not issued any debenture.

(xx) The company has not made any Public issue of shares during the year.

(xxi) According to the information and explanations given to us no fraud on or by thecompany has been noticed or reported during the year.

PLACE:INDORE For Trilok Jain & Co.
DATE:22nd September 2014 Chartered Accountants
FRN 00341C
(T.C. Jain)
Partner
M.No. 012712