To the Members of STERLING BIOTECH LIMITED
Report on the Financial Statements
I have audited the accompanying financial statements of Sterling Biotech Limited(the "Company") which comprise the Balance Sheet as at December 31 2014 andthe Statement of Profit & Loss and Cash Flow Statement for the year then ended and asummary of significant accounting policies and other explanatory information which I havesigned under reference to this report.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation of these financial statements that give atrue and fair view of the financial position financial performance and cash flows of thecompany in accordance with accounting principles generally accepted in India includingthe Accounting Standards notified under the Companies Act 1956 read with General Circular15/2013 dated 13 September 2013 issued by the Ministry or Corporate Affairs in respectof Section 133 of the Companies Act 2013. This responsibility includes the designimplementation and maintenance of internal control relevant to the preparation andpresentation of the financial statements that give a true and fair view and are free frommaterial misstatement whether due to fraud or error.
My responsibility is to express an opinion on these financial statements based on myaudit. I conducted audit in accordance with the Standards on Auditing issued by theInstitute of Chartered Accountants of India. Those Standards require that I comply withethical requirements and plan and perform the audit to obtain reasonable assurance aboutwhether the financial statements are free from material misstatements.
An audit involves performing procedures to obtain audit evidence about the amounts anddisclosure 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. An audit also includes evaluating the appropriateness of accountingpolicies used and the reasonableness of the accounting estimates made by management aswell as evaluating the overall presentation of the financial statements.
I believe that the audit evidence I have obtained is sufficient and appropriate toprovide a basis for my audit opinion.
In my opinion and to the best of my information and according to the explanations givento me the aforesaid financial statements give the information required by the Act in themanner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India:
a) In the case of the Balance Sheet of the state of affairs of the company as atDecember 31 2014;
b) In the case of the Statement of Profit & Loss of the Loss of the company forthe year ended on that date; and
c) In the case of the Cash Flow Statement of the cash flows for the year ended on thatdate.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor's Report) order 2003' as amended by theCompanies (Auditor's Report) (Amendment) Order 2004 issued by the Central Government ofIndia in terms of sub-section (4A) of section 227 of the Act (hereinafter referred to asthe "Order") and on the basis of such checks of the books and records of thecompany as I considered appropriate and according to the information and explanation givento me I give in the Annexure a statement on the matters specified in paragraphs 4 and 5of the order.
2. As required by section 227(3) of the Act I report that:
a) I have obtained all the information and explanations which to the best of myknowledge and belief were necessary for the purposes of my Audit;
b) In my opinion proper books of account as required by law have been kept by thecompany so far as appears from my examination of those books;
c) The Balance Sheet Statement of Profit & Loss and Cash Flow Statement dealt withby this report are in agreement with the books of account;
d) In my opinion the Balance Sheet the Statement of Profit & Loss and Cash FlowStatement comply with the Accounting Standards notified under the Act read with GeneralCircular 15/2013 dated 13 September 2013 issued by the Ministry of Corporate Affairs inrespect of Section 133 of the Companies Act 2013;
e) On the basis of the written representations received from the Directors as onDecember 31 2014 and taken on record by the Board of Directors I report that none of theDirectors of the company are disqualified as on December 31 2014 from being appointed asa Director in terms of Clause (g) of the sub-section (1) of section 274 of the CompaniesAct 1956.
For and on behalf of
For H. S. HATHI & CO.
Firm Regn. No. 103596W
HEMANT S. HATHI
Membership No. 037109
Place : Mumbai
Dated : 28 February 2015
Annexure referred to in paragraph 1 under the heading "Report on Other Legal andRegulatory Requirements" of my report of even date.
(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
(b) Fixed assets have been physically verified by the management based on a phasedprogram of verification of all the assets during the year which in my opinion isreasonable having regard to the size of the company and the nature of its business. Nomaterial discrepancies were noticed on such verification.
(c) As per the information and explanations given to me during the year the companyhas not disposed off any substantial part of fixed assets that would affect the goingconcern.
(ii) (a) As explained to me inventories have been physically verified by the managementat reasonable intervals during the year.
(b) In my opinion and according to information and explanations given to me theprocedure of physical verification of inventories followed by the management is reasonableand adequate in relation to the size of the company and the nature of its business.
(c) On the basis of my examinations of records of inventories I am of the opinion thatthe company is maintaining proper records of the inventory. As explained to me nomaterial discrepancies have been noticed on physical verification of inventories ascompared to Books records.
(iii) (a) The Company has granted unsecured loan to companies covered in the registermaintained under section 301 of the companies Act 1956. The Maximum amount involvedduring the year was Rs. 83.68 crores and the year end balance of loans granted to suchparties was Rs. 0.06 crores. The company has not taken any unsecured loan from companiesfirms and other parties covered in the Register maintained under section 301 of theCompanies Act 1956.
(b) In my opinion terms and conditions on which loans granted to companies listed inthe register maintained under section 301 of the Companies Act 1956 are not primafacie prejudicial to the interest of the company.
(c) The parties have repaid the principal amounts as stipulated.
(d) There are no overdue amounts of Loans granted to companies listed in the registermaintained under Section 301 of the Companies Act 1956.
(iv) According to information and explanations given to me there are adequate internalcontrol procedures commensurate with the size of the company and nature of its businessfor the purchase of inventory and fixed assets and sales of Goods and service. Further onthe basis of our examination of the books and records of the Company and according to theinformation and explanations given to me I have neither come across nor have beeninformed of any continuing failure to correct major weaknesses in the aforesaid internalcontrol system.
(v) (a) According to the information and explanations given to me I am of the opinionthat the particulars of contracts or arrangements that need to be entered in to theregister maintained under section 301 of the Companies Act 1956 have been so entered.
(b) In my opinion and according to the information and explanations given to me thereare no transactions of purchase of Goods and materials and sales of Goods material &services made in pursuance of contracts or arrangements required to be entered in theregister maintained under section 301 of the Companies Act 1956 aggregating during theyear to Rs. 500000/- or more in respect of each party.
(vi) The Company has not accepted any deposits from the public within the meaning ofSections 58A and 58AA of the Act and the rules framed there under.
(vii) In my opinion the Company has an internal audit System commensurate with thesize and nature of its business.
(viii) I have broadly reviewed the books of accounts maintained by the company pursuantto the rules made by the Central Government for the maintenance of cost records undersection 209(1)(d) of the companies Act 1956 and are of the opinion that prima faciethe prescribed accounts and records have been made and maintained.
(ix) (a) According to the records of the company the company has been regular indepositing with appropriate authorities Undisputed statutory dues including ProvidentFund Income tax Sales Tax / VAT Wealth tax Service Tax Custom duty Cess and otherstatutory dues.
(b) According to the information and explanations given to me no undisputed amountspayable in respect of such statutory dues were outstanding as at the 31st December 2014for a period of more than six months from the date they became payable .
(c) According to the information and explanations given to me there are no suchstatutory dues which have not been deposited on account of any dispute.
(x) In my opinion the accumulated losses of the company are not more than fiftypercent of its net worth. The company has incurred cash losses during the year and in theimmediately preceding financial year.
(xi) According to the information and explanations given to me by the management andon the basis of records examined by me the company has defaulted in the repayment of thedues to financial institutions or banks or debenture holders. The amount outstanding andoverdue for less than 60 days is Rs. 226.85 crores and for more than 60 days is Rs.1337.83 crores.
(xii) According to the information and explanations given to me and based on thedocuments and records produced to me the Company has not granted loans and advances onthe basis of security by way of pledge of shares debentures and other securities.
(xiii) In my opinion the Company is not a chit fund a nidhi or a mutual benefit fundsociety. Therefore the provisions of clause 4(xiii) of the companies (Auditor's Report)Order 2003 are not applicable to the company.
(xiv) In my opinion the company is maintaining proper record and making timely entriesin respect of shares securities debentures and other investments. Further all theinvestments made by the company are held in its own name. (xv) In my opinion the termsand conditions on which the company has given guarantees for loans taken by others frombanks or financial institutions are not prejudicial to the interest of the company.
(xvi) According to the information and explanations given to me by the management theterm loans were applied for the purpose for which the loans were obtained.
(xvii) According to the information and explanations given to me and on an overallexamination of the balance sheet of the company I report that no funds raised on shortterm basis have been used for long term investments.
(xviii) According to the information and explanations given to me the Company has madepreferential allotment of shares to companies covered in the register maintained undersection 301 of the companies Act 1956. In my opinion the price at which shares have beenissued is not prejudicial to the interest of the company.
(xix) During the period covered by my report the company has not issued any debenturesand hence clause 4(XIX) of the companies (Auditor's Report) Order 2003 is not applicableto the company.
(xx) During the period covered by my report the company has not raised any money byway of public issue.
(xxi) During the course of my examination of the books and records of the Companycarried out in accordance with the generally accepted auditing practices in India andaccording to the information and explanations given to me I have neither come across anyinstance of material fraud on or by the Company noticed or reported during the year norhave I been informed of any such case by the Management.
For H. S. HATHI & CO.
Firm Regn No. 103596W
HEMANT S. HATHI
Membership No. 037109
Place : Mumbai
Dated : 28th February 2015