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Twilight Litaka Pharma Ltd.

BSE: 506985 Sector: Health care
NSE: TWILITAKA ISIN Code: INE783B01029
BSE 05:30 | 01 Jan Twilight Litaka Pharma Ltd
NSE 05:30 | 01 Jan Twilight Litaka Pharma Ltd

Twilight Litaka Pharma Ltd. (TWILITAKA) - Auditors Report

Company auditors report

INDEPENDENT AUDITOR

To the Members of Twilight Litaka Pharma Ltd. Report on the Financial Statements

We have audited the accompanying financial statements of Twilight Litaka Pharma Ltd.(the Company) which comprise the Balance Sheet as at June 30th 2014 and the Statementof Profit and Loss and the cash flow statement for the year ended on that date and asummary of significant accounting policies and other explanatory information.

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 of the Company inaccordance with the Accounting Standards referred to in sub-section (3C) of section 211 ofthe Companies Act 1956 (the Act). This responsibility includes the design implementationand maintenance of internal control relevant to the preparation and presentation of thefinancial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.

Auditor's 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 presentation of thefinancial statements that give a true and fair view in order to design audit proceduresthat are appropriate in the circumstances but not for the purpose of expressing anopinion on the effectiveness of the Company's internal control. An audit also includesevaluating the appropriateness of accounting policies used and the reasonableness of theaccounting estimates made by management as well as evaluating the overall presentation ofthe financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion.

Basis for Adverse Opinion

(i) As explained in note 32 provisional liquidator has been appointed by the HonorableBombay High Court to take charge of the Company's movable and immovable assets andproperties books of account and passed other restraints on the Directors. Company'sapplication against the aforesaid order is pending.

(ii) As explained in note 33 Company has filed application to BIFR for being classifiedas a sick undertaking and the matter is pending.

(iii) As explained in note 31 secured lenders have issued notice under section 13 ofthe SARFAESI Act and further majority of the lenders have assigned their receivables infavor of Asset Reconstruction Company.

(iv) As explained in note 35 & 37 the company is negotiating with unsecuredlenders and creditors for waiver of interest and grant of time for repayment of dues. Dueto ongoing one time settlement negotiations with secured lenders the management is of theview that the provision for interest in books of account along with principle outstandingis adequate to meet proposed settlement. We are informed by the company that due toongoing negotiation bank balances are subject to confirmation and reconciliation.

(v) As explained in note 34 Company is in the process of filing recovery suits againstdebtors aggregating to Rs 195 Crs. These are considered good by the management and noprovision is made in respect thereof in the accounts.

(vi) As stated in Note 30 of notes to financial statements disputed sales tax ofinterest of Rs. 544297 and Income tax demand of Rs. 92 Crores that are pending in appealare considered by the management as contingent in nature.

(vii) We are unable to express any opinion on recoverability of loans & advancesand statutory dues.

(viii) The company has neither obtained a valuation report regarding accrued employeeretirement benefits from approved Actuary nor has provided for these benefits underAccounting Standards - 15.

The above are significant to the overall financial statements and these wouldmaterially affect the preparation and presentation of financial statements.

Adverse Opinion

The significance of the matter described in the Basis for Adverse Opinion paragraphindicate the existence of a material uncertainty that may cast doubt about the company'sability to continue as a going concern and in our opinion the financial statements do notgive a true and fair view in conformity with the accounting principles generally acceptedin India:

(a) in the case of the Balance Sheet of the state of affairs of the Company as at June30 2014;

(b) in the case of the Statement of Profit and Loss of the loss for the year ended onthat date: and

(c) in the case of the Cash Flow Statement of the cash flows for the year ended onthat date.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order 2003 ("the Order")issued by the Central Government of India in terms of sub-section (4A) of section 227 ofthe Act we give in the Annexure a statement on the matters specified in paragraphs 4 and5 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 Statement of Profit and Loss and Cash Flow Statement dealt withby this Report are in agreement with the books of account

d. in our opinion except for matters described in basis for adverse opinion paragraphthe Balance Sheet Statement of Profit and Loss and Cash Flow Statement comply with theAccounting Standards referred to in subsection (3C) of section 211 of the Companies Act1956;

e. on the basis of written representations received from the directors as on June 302014 and taken on record by the Board of Directors none of the directors is disqualifiedas on June 30 2014 from being appointed as a director in terms of clause (g) ofsub-section (1) of section 274 of the Companies Act 1956.

f. Since the Central Government has not issued any notification as to the rate at whichthe cess is to be paid under section 441A of the Companies Act 1956 nor has it issued anyRules under the said section prescribing the manner in which such cess is to be paid nocess is due and payable by the Company.

For V. Sankar Aiyar & Co.
Chartered Accountants
Firm Regn No: 109208W
V Mohan
Place : Mumbai Partner
Date : 29th August 2014 Membership No.: 17748

ANNEXURE TO THE AUDITORS' REPORT

Referred to in Paragraph 1 of "Report on Other Legal and RegulatoryRequirements" section of our Independent auditors Report of even date for the periodended 30th June 2014:

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

(b) According to the information and explanations given to us the Company hasformulated a regular program of verification by which all assets of the company shall beverified in phased manner which in our opinion is reasonable having regard to the sizeof the Company and nature of its assets. To the best of our knowledge no materialdiscrepancies were noticed on verification conducted during the period as compared withthe book records.

(c) There was no disposal of a substantial part of fixed assets.

2) (a) The stock of finished goods and raw material has been physically verified duringthe period by the Management. The Company has a perpetual inventory system in respect ofstores and spare parts. In our opinion the frequency of verification is reasonable. Inthe case of material lying with the third parties certificates confirming stocks havebeen received in respect of a substantial portion of the stocks held.

(b) In our opinion and according to the information and explanations given to us theprocedures of physical verification of inventories followed by the Management werereasonable and adequate in relation to the size of the Company and nature of its business.

(c) In our opinion and according to the information and explanations given to us theCompany is maintaining proper records of inventory. The discrepancies noticed onverification between the physical stocks and the book records were not material havingregard to the size of the operations of the Company.

3 During the period the company has neither taken nor granted any loans secured orunsecured from/to companies firms or other parties covered in the register maintainedunder section 301 of the Companies Act 1956.

4) In our opinion and according to the information and explanation given to us havingregard to the explanations that some of the items purchased are of special nature andsuitable alternative sources do not exist for obtaining comparable quotations there areadequate internal control procedures commensurate with the size of the company and thenature of its business with regard to purchases of inventories and fixed assets and withregard to the sale of goods. During the course of our audit we have not observed anymajor weakness in the internal controls.

5 (a) In our opinion and according to the information and explanations given to us thetransactions that need to be entered into the register maintained under Section 301 of theCompanies Act 1956 have been so entered.

(b) Transaction made in pursuance of such contracts or arrangements have been made atprices which are reasonable having regard to the prevailing market prices at the relevanttime.

6 In our opinion and according to the information and explanations given to us theCompany has not accepted deposits from the public during the period. Therefore theprovisions of clause 4(vi) of the Companies (Auditor's Report) Order 2003 are notapplicable to the Company.

7) In our opinion the Company has an internal audit system commensurate with the sizeand nature of its business.

8) According to the information and explanations given to us the Central Governmenthas prescribed under Section 209(1)(d) of the Companies Act 1956 the maintenance of costrecords in respect of certain products. We have broadly reviewed the books of accountmaintained and in our opinion the prescribed accounts and records have prima facie beenmade and maintained by the Company. We have not however made a detailed examination ofthe records with a view to determine whether they are accurate or complete.

9) (a) There have been delays in depositing with appropriate authorities undisputedstatutory dues including Provident Fund Employees State Insurance Income Tax Sales TaxTDS Service Tax Excise Duty and other statutory dues during the period. At the end ofthe Financial Period arrears of outstanding statutory dues for a period of more than 6months from the date they become payable is as under:

Nature of Dues Amount Period Due Date Date of Payment
Advance tax 158369999 FY 2009-10 15th of last month Not Paid
under Income FY 2010-11 in each quarter
Tax Act 1961
Advance tax 3122730 FY 2011-12 Upto September Not Paid
under Income 2012
Tax Act 1961
TDS under 9389496 Up to FY 07th Of Not Paid
Income Tax 2011-12 Every Month
Act 1961 4250770 FY 2012-13
1067120 FY 2013-14
Employees State 4077851 Upto FY 15th Of Every Not Paid
Insurance 2011-12 Month
1299343 FY 2012-13
Provident Fund 6785394 Upto FY 15th Of Every Not Paid
2011-12 Month
6547863 FY 2012-13
1893674 FY 2013-14
Sales Tax 31082255 Upto FY 21st Of Every Not Paid
2011-12 Month
12036105 FY 2012-13
1976097 FY 2013-14

(b) Based on the information and explanation given to us there are no dues towardsIncome Tax Customs Duty Wealth Tax Service Tax Excise Duty or Cess which are disputedand not deposited.

Disputed dues on account of sales tax not deposited with appropriate authorities aregiven below.

Name of the Statute Nature of the Dues Amount (Rs.) Period to which the amount relates Forum where dispute pending
Sales Tax Interest 544297 2003-04 Sales Tax Tribunal Mumbai
Income Tax Demand 928900000 From AY 06-07 to AY 12-13 CIT (A) Pune

10) The Accumulated losses of the company as on balance sheet date are not more thanfifty percent of its net worth. Company has incurred cash losses during the financialperiod covered by our audit however it has not incurred cash losses in the immediatelypreceding financial year.

11) The Company has defaulted in repayment of loan and interest as on 30th June 2014.According to the information and explanation given to us the Company is negotiating forone time settlement for several lenders which are pending finalization.

12) Based on our examination of the records and the information and explanations givento us the Company has not granted any loans and advances on the basis of security by wayof pledge of shares debentures and other securities.

13) 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.

14) In our opinion and according to the information and explanation given to us theCompany is not dealing in shares securities and debentures and other investments.Therefore the provisions of clause 4(xiv) of the Companies (Auditor's Report) Order 2003are not applicable to the Company.

15) The Company has not given corporate guarantee for loan taken by others.

16) In our opinion and according to the information and explanation given to us theterm loans have been applied for the purpose for which they were raised.

17) In our opinion and according to the information and explanation given to us and onan overall examination of the Balance Sheet of the Company we report that no funds raisedon the short-term basis have been utilized for long-term investment.

18) According to the information and explanations given to us the company has not madeany preferential allotment of shares to parties and companies covered in the registermaintained under Section 301 of the Companies Act 1956.

19) In our opinion and according to the information and explanation given to us thecompany has not issued any secured debentures during the period covered by our report.Accordingly the provisions of clause (xix) of the Companies (Auditor's Report) Order2003 are not applicable to the Company.

20) As informed to us during the period covered by our Audit report the Company hasnot raised any money by public issue.

21) To the best of our knowledge and belief and according to the information andexplanations given to us no material fraud on or by the company has been noticed orreported during the course of our Audit.

For V. Sankar Aiyar & Co.
Chartered Accountants
Firm Regn No: 109208W
V Mohan
Place : Mumbai Partner
Date : 29th August 2014 Membership No. 17748