VYSALI PHARMACEUTICALS LIMITED
ANNUAL REPORT 2006-2007
We have audited the attached Balance Sheet of Mls. VYSALI PHARMACEUTICALS
LIMITED, CIVIL LINES ROAD, PALARIVATTOM, COCHIN - 682 025 as at 30th June
2007, the Profit and Loss Account for the period ended on that date annexed
thereto and the Cash Flow Statement for the period ended on that date.
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.
1) We conducted our audit in accordance with auditing standards generally
accepted in India. These standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements
are free from material misstatement. An Audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by the Management, as well as evaluating the
overall presentation of the financial statements. We believe that our audit
provides a reasonable basis for our opinion.
2) As required by the Companies (Auditors' Report) order,2003 issued by the
Central Government of India in terms of sub-section(4A) of Section 227 of
the Companies Act,1956 we enclose in the annexure a statement on the
matters specified in paragraph 4 and 5 of the said Order.
3) Further to our comments in the Annexure referred to above, we state
a) We have obtained all the information and explanations, which to the best
of our knowledge and belief, were necessary for the purpose of our audit.
b) In our opinion, proper books of accounts, as required by Law, have been
kept by the company so far as appears from our examination of such books.
c) The Balance Sheet and Profit and Loss account and Cash Flow Statement
referred to in the Report are in agreement with the books of accounts.
d) In our opinion, the Balance Sheet, Profit and Loss account and the Cash
Flow Statement dealt with by this Report comply with the Accounting
Standards, referred to in Sub Section (3C) of Section 211 of the Companies
e) On the basis of written representations received from the Directors, as
on June 30, 2007 and taken on record by the Board of Directors, we report
that none of the Director is disqualified from being appointed as a
Director of the Company in terms of Clause(g) of Sub Section(1) of Section
274 of the Companies Act, 1956.
4) Attention is invited to the following notes contained in Schedule 19
forming part of the accounts:
a) Note No. 9 regarding non-obtaining of permission from Central Government
for related party transaction u/s.297 of the Companies Act, 1956.
b) Note No. 12 regarding non-provision of interest on loans from KSIDC.
c) Note No. 14 regarding non reconciliation and confirmations of Sundry
Debtors, Sundry Creditors, Loans & Advances.
d) Note No. 15 regarding non-transfer of unclaimed dividend to Investor
Education and Protection Fund.
e) Note No, 17 regarding Closing Stock.
f) Note No. 18 regarding obsolete stock.
g) Note No. 19 regarding non-disclosure of information regarding SSI Units.
5) Additional information pursuant to provisions of paragraphs 3 & 4 of
Schedule VI to the Companies Act, 1956 are prepared and certified by the
management. We have relied on their certificate.
6) In our opinion and to the best of our information and according to the
explanations given to us, the accounts read together with the significant
accounting policies and other notes thereon give the information required
by the Companies Act, in the manner so required and give a true and fair
view in conformity with the accounting principles generally accepted in
a) In so far as it relates to the Balance Sheet of the Affairs of the
company as at 30th June 2007;
b) In so far as it relates to the Profit and Loss account, of the Loss of
the Company for the period ended on that date; and
c) In so far as it relates to the Cash Flow Statement, of the Cash Flows
for the period ended on that date.
For WARRIER & WARRIER
K. CHITHRABHANU. B.Com. FCA,
MEMBERSHIP NO : 15682
Place: Cochin - 682 016
Date : 21.09.2007
ANNEXURE TO THE AUDITORS REPORT:
i) a) The Company has not updated Fixed Asset Register showing particulars
of Fixed Assets including quantitative details and situation of Fixed
b) We are informed that major items of Fixed Assets have been physically
verified by the Management at the end of the year. We are unable to comment
on reasonability having regard to the size of the company and nature of its
assets and discrepancies on such verification.
c) In our opinion and according to the information and explanations given
to us, the company has not made any substantial disposal of the Fixed
Assets during the year.
ii) a) All the inventories are stated to have been physically verified by
the Management at the end of the year. Since we are relying on the
confirmation of the Management, we are not in position to comment on the
reasonableness of verification,
b) We are informed that the procedure followed by the Management for
physical verification are reasonable and adequate in relation to the size
of the company and the nature of its business.
c) The company is maintaining proper records for inventory of raw material
and packing materials. Obsolete stock found on physical verification of Raw
Materials has been written off during the year.
iii) in respect of loans secured or unsecured taken by the company front
directors covered in the register maintained u/s.301 of the Companies Act
1956, according to the information and explanation given to us:
a) The company has taken. loans during the period aggregating to
b) The company has not given interest for such loans.
c) The company has repaid Rs. 1,94,100/- during the year towards such loan,
iv) In our opinion and according to the information and explanation given
to us Internal Control procedures for the purchase of inventory, fixed
assets and sale of goods is to be strengthened.
v) a) According to the information and explanations given to us,
transaction that needed to be entered into the register U/s.301 of
Companies Act, 1956 have been entered.
b) In our opinion and according to the explanations given to us, the
transactions made in pursuance of contracts or arrangements with parties
referred in (a) above exceeding the value of Rs.5 lakhs in respect of each
of these transactions have been made at price which are reasonable having
regard to the prevailing market price at the relevant time.
vi) The company has not accepted deposits from the public during the year
except interest free loans from directors.
vii) The company does not have Infernal Audit System.
viii) The Company has not maintained cost records u/s.209 (1) (d) of the
Companies Act, 1956 which has been prescribed by the Central Government.
ix) (a) There is a delay in payment of Provident Fund and ESI dues during
the period and the balance of dues to be remitted as on 30.06.2007 is
Rs.40,41,924/- PF and Rs. 5,30,835/- ESI. There is also delay in remittance
of Income-tax deducted of source. The amount to be remitted as on 30th June
2007 is Rs. 58,543/-.
b. According to the information and explanations given to us the following
are the details of the disputed dues that were not paid to concerned
Nature of the Nature of Amount Period to Forum where dispute
Statute Dues (Rs. in which pending
Kerala General Sales Tax 26.21 1990-2000 Deputy Commissioner
Sales Tax Act (Appeals) remanded
the case to
Kerala General Penalty 9.75 2003-2004 Deputy Commissioner
Sales Tax Act (Appeals)
x) The company has incurred losses more than 50% of its net worth and it
has incurred cash losses during the financial year covered by our audit and
also in the immediately preceding financial year.
xi) The Company has defaulted repayment to the following Financial
Institutions and Banks.
Name of Financial Institution/Banks Amount (Rs. in Lacs) Remarks
Kerala State Industrial Development 84.33 Interest
xii) The company has not given any loans or advances in the nature of loans
on the basis of security by way of pledge of shares and debentures and
xiii) The nature of the company's business activities during the year have
been such that clauses xiii and xiv of Paragraph 4 of the Companies
(Auditors Report) Order 2003 are not applicable to the company.
xiv) According to the information and explanations given to us and based on
the records of the company examined by us, the company has not given any
guarantee for loans taken by others from banks or financial institutions.
xv) The Term Loans availed by the Company were utilized for the purpose for
which the loans were obtained.
xvi) According to the information and explanations given to us and based on
the records of the company examined by us, the company has not raised funds
on short term basis during the period.
xvii) The company has not made any preferential allotment of shares to
parties and companies requiring to be entered in the Register pursuant to
Section 301 of the Companies Act, 1956.
xviii) The company has not issued any debentures during the year.
xix) The company has not raised money by public issue during the year.
xx) According to the information and explanations given to us and based on
the records of the company examined by us, no fraud either on or by the
company, has been noticed or reported during the year.
For WARRIER & WARRIER
K. CHITHRABHANU. B.Com. FCA
MEMBERSHIP NO : 15682
Place: Cochin - 682 016
Date : 21.09.2007