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INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF M/s.KREBS BIOCHEMICALS & INDUSTRIES LIMITED,
Report on the Financial Statements :
We have audited the accompanying financial statements of M/s. Krebs Biochemicals & Industries Ltd, which comprise the Balance Sheet as at March 31, 2015, the Statement of Profit and Loss and Cash Flow Statement for the period from 1st October, 2014 to 31st March, 2015 and a summary of significant accounting policies and other explanatory information.
Management's Responsibility for the Financial Statements
The management and Board of Directors of the company are responsible for the matters stated in section 134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility includes maintenance of adequate accounting records in accordance with the provision of the Act for safeguarding of the assets of the Company and for preventing and detecting the frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial control, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
Our responsibility is to express an opinion on these financial statements based on our audit. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made there under. We conducted our audit in accordance with the Standards on Auditing specified under section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company's preparation of the financial statements, that give true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on whether the company has in place an adequate internal financial controls system over financial reporting and the operating effectiveness of such controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by Company's management and Board of Directors, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Basis for Qualified Opinion
(1) Reference is invited to Note 15 of the financial statements, The Company's Non Current Assets consist of Long Term Trade Receivables of Rs.2,169.80 lacs. We are unable to ascertain whether such balances as at balance sheet date are fully recoverable. Accordingly, we are unable to ascertain the impact, if any, that may arise in case any of these receivables are subsequently determined to be doubtful of recovery. Had the Company provided provision for the same, the loss of the period would have been higher by the said amount.
In our opinion and to the best of our information and according to the explanations given to us, except for the possible effects of the matters described in the Basis for Qualified Opinion paragraph, the financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:
a) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2015;
b) In the case of the Statement of Profit and Loss, of the loss for the period from 1st October, 2014 to 31st March, 2015; and
c) In the case of the Cash Flow Statement, of the cash flows for the six months period ended on that date.
Report on Other Legal and Regulatory Requirements :
1. As required by the Companies (Auditor's Report) Order, 2015 ("the Order") issued by the Central Government of India in terms of sub–section (11) of section 143 of the Companies Act 2013, we give in the Annexure a statement on the matters specified in paragraphs 3 and 4 of the Order to the extent applicable.
2 As required by section 143(3) of the Act, we further report that:
a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit;
b) In our opinion proper books of account as required by law have been kept by the Company so far as appears from our examination of those books;
c) The Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement dealt with by this Report are in agreement with the books of account;
d) In our opinion, the aforesaid financial statements comply with the applicable accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014;
e) On the basis of written representations received from the directors as on March 31, 2015, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2015, from being appointed as a director in terms of Section 164(2) of the Act;
f) In our opinion and to the best of our information and according to the explanations given to us, we report as under with respect to other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014:
(i) The Company has pending litigations which would impact its financial position.
(ii) The Company did not have any long–term contracts including derivative contracts; as such the question of commenting on any material foreseeable losses thereon does not arise.
(iii) There have been no occasions in case of the company during the year under report to transfer any sums to the Investor Education and Protection Fund.
ANNEXURE TO AUDITORS' REPORT
On the basis of such checks as we considered appropriate and according to the information and explanations given to us during the course of our audit, we report that:
(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed asset;
(b) The company has a regular programme of physical verification of its fixed assets by which fixed assets are verified in a phased manner. In accordance with this programme, certain fixed assets were verified during the period and no material discrepancies were noticed on such verification. In our opinion, this periodicity of physical verification is reasonable having regards to the size of the company and the nature of its assets;
(ii) (a) The inventories have not been physically verified by the management during the period due to closure of plants.
(b) Since the inventories have not been physically verified by the management during period, the point relating to reasonableness of physical verification procedures is not applicable to the company.
(c) The company has maintained proper records of inventories and the discrepancies noticed on physical verification of inventories as compared to book records were not material.
(iii) In our opinion, the Company has neither granted nor taken any loans to/from companies, firms or other parties covered in the register maintained under section 189 of thecompanies Act, 2013.
(iv) In our opinion and according to the information and explanations given to us, there is adequate internal control system commensurate with the size of the company and the nature of its business, for the purchase of fixed assets and for the sale of services. Further, on the basis of our examination of the books and records of the company and according to the information and explanations given to us, no major weakness has been noticed or reported.
(v) In our opinion and according to the information and explanation given to us, the company has not accepted any deposits from the public covered under section 73 to 76 of the Companies Act, 2013.
(vi) In our opinion and according to the information and explanation given to us, the Central Government has not prescribed the maintenance of cost records under sub–section (1) of Section 148 of the Companies Act, 2013.
(vii) (a) According to the information and explanations given to us and on the basis of our examination of the records of the company, amounts deducted/accrued in the books of account in respect of undisputed statutory duesincluding Provident Fund, Income Tax, Sales Tax, Wealth Tax, Service Tax, Duty of Customs, Valueadded tax, cess and other material statutory dues have been regularly deposited during the year by the company with the appropriate authorities.
According to the information and explanations given to us, there are no undisputed amounts payable in respect of Provident Fund, Income Tax, Wealth tax, Service Tax, Sales Tax, Duty of Customs, Excise Duty, Value added tax and Other material statutory as at March 31, 2015 for a period of more than six months from the date they became payable except ESI for Rs. 75,587/–.
(b) According to the information and explanations given to us, the following are disputed dues relating to Wealth tax, Duty of Customs and Cess which have not been deposited with the appropriate authorities on account of any dispute.
(c) According to the information and explanations given to us the amounts which were required to be transferred to the Investor Education and Protection Fund in accordance with the relevant provisions of the Companies Act, 2013and rules there under have been transferred to such fund within time.
(viii)The Company's accumulated losses during at the end of the financial year are more than fifty per cent of its net worth. Also it has incurred cash loss during the 6 months period covered by our audit and has incurred cash loss in the immediately preceding accounting period.
(ix) In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of its dues to banks and financial institution including interest and principal as on 31st March 2015.
(x) According to the information and explanations given to us, the company has not given any guarantee for loans taken by others from banks, and financial institutions
(xi) In our opinion, the term loans have been applied for the purpose for which they were raised.
(xii) According to the information and explanations given to us, no material fraud on or by the company has been noticed or reported during the course of our audit.
For PAVULURI & Co.
Chartered Accountants Firm Reg. No:012194S
Sd/– (CA N. RAJESH)
M.No : 223169
Place : Hyderabad
Date : 23/05/2015