A K Kocchar & Associates Chartered Accountants

Due Diligence Report of Thyrocare Laboratories Ltd.

No.A K Kocchar & Associates Chartered Accountants INDEX Page 2 of 16 Sr. I II II III IV V VI VII Objective Contents Page No. 3 4 5 6 8 10 12 13 15 Executive Summary Company Background Income Statement Analysis Balance Sheet Analysis Tax Matters Other Matters Caveats Appendix A – Engagement Letter Due Diligence Report of Thyrocare Laboratories Ltd. .

e. . Starting from 01/04/2002 to 31/03/2010 so as to evaluate all advantages and disadvantages of the said transaction and revelation of all possible risk i. Due Diligence Report of Thyrocare Laboratories Ltd.e. financial / tax / any other risk connected to purchase of the company.A K Kocchar & Associates Chartered Accountants Page 3 of 16 I-OBJECTIVE Our objective of preparing this Due Diligence Report is to elucidate the findings of our comprehensive inspection / audit of lawfulness and commercial attractiveness of Thyrocare Laboratories Limited (“TLL”) for the last eight years (i.

98 % 100 % It has also been noted that the shares of the company are very thinly traded on the stock exchange. Mr. Mr.02 % 27.98 % 100 % As on 31/03/2009 72.02 % 27. . Auditors of TLL are S D khanolkar & Co. V Sumathi (Non-Executive Director). the main source of income for TLL during the last eight years have been only by way of interest income / Income from investments in shares and securities and there had been no kind of trading activities carried on by TLL during the period under due diligence. A Sundararaju (Chairman & Non-Executive Director). G S Hegde (Non-Executive Director).A K Kocchar & Associates Chartered Accountants II – E X E C U T I V E S U M M A R Y Page 4 of 16 TLL is a Public Limited Company listed on Bombay Stock Exchange (“BSE”) and incorporated in the State of Maharashtra. Rao Rajgopal J K (Non-Executive Director). TLL does not have any business transaction for the last eight years. Bankers of TLL are Axis bank. Mrs. Type of Shareholder Promoter & Promoter’s Group Public – non Institutional Total As on 31/03/2010 72. Share Holding Pattern of Thyrocare Laboratories Limited for the last two years is as given below. Due Diligence Report of Thyrocare Laboratories Ltd. The Key Management Personnel of TLL are: • • • • Mr. TLL is in healthcare industry and expertising in the diagnostics division of healthcare industry.

Post Take over the name of GUL was changed to TLL on 20 th May 2003 also the state of incorporation was changed from West Bengal to Maharashtra and the main objects of the company were altered accordingly.A K Kocchar & Associates Chartered Accountants Page 5 of 16 III – C O M P A N Y B A C K G R O U N D Thyrocare Laboratories Limited (TLL) was formerly known as Ganapati Udyog Limited (“GUL”) which was initially incorporated in State of West Bengal on 09 March 1983. GUL was listed at Calcutta Stock Exchange (CSE). Due Diligence Report of Thyrocare Laboratories Ltd. Uttar Pradesh Stock Exchange (UPSE) and Bombay Stock Exchange (BSE). . main objects GUL was trading in fabric and electrodes.

00. we documentation Due Diligence Report of Thyrocare Laboratories Ltd.271/1. We have been provided with the documentation as regards compensation received.729/- For the year ended 31/03/2010 the company has received compensation of Rs.15.971/76.which was outstanding in the books of the company as on 31/03/2003.37.755/10.70. the only source of income for the company is Interest Income and Income from Investments.00.107/Year Ended 31/03/2009 Nil 3.651/- From the above Income statement it may be noted that the company does not have any Income from its operating Business.059/3.551/Nil 2.530/4.787/73.501/Year Ended 31/03/2007 Nil 12.020/1. It has also been noticed that though the company does not have any income from operating business every year there is some amount of money spent towards advertising expenses.93.717/Year Ended 31/03/2008 Nil 9. Particulars Operating Income Add : Income From Other Sources Less : Total Expenses Profit Before Taxes Less : Prior Period Items and Extraordinary Items Less : Taxes Including Deferred Tax Profit After Taxes Year Ended 31/03/2006 Nil 10.149/82. .840/10.000/.A K Kocchar & Associates Chartered Accountants Page 6 of 16 IV – I N C O M E S T A T E M E N T A N A L Y S I S We have set out the below audited income statement for the period under review. However.03. and 2008-2009 TLL had traded in shares and securities apart from receiving Interest on loan.71.557/Nil 52.00.200)/2.against property was repaid back during 2004-2005 for which the company received compensation during 2009-2010.33.towards advance against property of Rs.000/1.03.000/. 2007-2008.444/6. The advance of Rs.228/6. 50.38. 3.58. We further set out unaudited income statements for the year ended 31/03/2010: Particulars Operating Income Income From Other Sources Less : Total Expenses Profit Before Taxes Year Ended 31/03/2010 Nil 3.312/1.533/87.41.55. hence the reasons for incomparable revenues in March 2009.48. 50.049/2.00.87.831/(10. During Assessment Years 2006-2007.000/.34.43.86.598/9.76.

A K Kocchar & Associates Chartered Accountants Page 7 of 16 for advance given of Rs. .000/. 50. Note: The audited figures given above are taken from the audited financials of the company.00.towards purchase of property has been requested for from the Management which is yet to be received. Due Diligence Report of Thyrocare Laboratories Ltd.

000/3.994/9.96. .65.50.757/- The above balance sheet as on 31/03/2010 is unaudited as produced before us.515/2.773/2.89.83. Expenses Deferred tax Asset Source of Funds Share Capital Retained Earnings Sundry creditors Provision For Taxes As On 31/03/2006 46.402/33.25. Due Diligence Report of Thyrocare Laboratories Ltd.800/4.550/As On 31/03/2009 48.83. We further set out unaudited Balance Sheet as on 31/03/2010: Particulars Application of Funds Cash & Bank Balances Advance recoverable in cash or kind Income Tax Deferred tax Asset Source of Funds Share Capital Retained Earnings Sundry creditors Provision For Taxes As On 31/03/2010 35.000/48. There are no investments seen in the Balance sheet as the investments made by the company were disposed of before 31st March of every year to be precise the company had made only short term investments. we are not able to comment on the true and fair nature of the same.38. 42.50.A K Kocchar & Associates Chartered Accountants Page 8 of 16 IV – B A L A N C E S H E E T A N A L Y S I S We have set out the below audited balance sheet for the period under review.805/6.000/51.530/- 24.757/- Advance receivable in cash and kind refers to amount given as loans & advances to certain parties on which interest was charged by TLL.000/42. in all other years the company had never deposited any amount in fixed deposit.059/67.00.50.38.550/- 24.306/-.081/4.25.000/31.50.754/9.38640.42.50.25.770/As On 31/03/2008 31.500/2.95.000/49.770/As On 31/03/2007 20.200/41.805/Nil 6.70.02.800/41.60.117/1.33.428/26. Particulars Application of Funds Cash & Bank Balances Advance recoverable in cash or kind Income Tax Misc.71.276/2.550/- 24.879/81.103/14.927/2.91.334/2.275/2.38.50.44.16.000/2.484/1.594/- 24.91.64.71.370/- 24.48. Cash & Bank Balance as on 31/03/2009 also includes Fixed Deposit of Rs.600/6.426/41.761/40.

. Due Diligence Report of Thyrocare Laboratories Ltd.A K Kocchar & Associates Chartered Accountants Page 9 of 16 We further like to bring to notice that the company had not received any interest on loans and advances during March 2010 unlike interest received in the previous financial years.

894/16/11/2006 30/11/2006 No No 1. TLL has filed its Income Tax returns till 31/03/2009. . sales tax returns till 31/03/2010.05. In A Y 2010-2011 TLL had received compensations of Rs. any tax liability for A Y 2010-2011 shall be the burden of TLL’s old management.529/47.178/27.066/2.269/Nil 25/09/2008 30/09/2008 Yes No 65.624/24/09/2009 30/09/2009 No No Nil We would like to bring to notice that the earliest last scrutiny assessment by income tax department on TLL was for the Assessment Year 2002-2003.00. Income Tax We set out various Income Tax details of TLL. TLL has not yet filed its income tax returns for 31st march 2010 i.438/31/03/2008 No Yes 93.438/31/03/2007 No Yes 1.203/Nil 27/10/2007 15/11/2007 No No 1.025/1.which the management is treating as Business Income inspite of the same not being in line Due Diligence Report of Thyrocare Laboratories Ltd.000/.24.22. It is also recommended that TLL recovers all its refund dues from Income Tax department before take over transaction is executed.17.A K Kocchar & Associates Chartered Accountants V–TAX MATTERS Background & Organizational Tax history Page 10 of 16 TLL came into existence on 20/05/2003 under tax records (Please note before that it was known as GUL).036/31/03/2009 No No Nil 2. The case had gone till ITAT stages ultimately after which the case was disposed of in TLL’s favour.82.82. A Y 2010– 2011. Particulars Applicability of Tax Audit Whether MAT Applicable Amount of MAT Payable Total MAT Credit Available Refund Due Date of Filing Tax returns Due Date of Filing Tax returns Whether Refund Orde/143(1) Received Was there assessment Carry Forward Loss any of scrutiny Business 31/03/2006 No No Nil 2.e. 3.

A K Kocchar & Associates Chartered Accountants Page 11 of 16 with the main object clause of TLL’s MOA as TLL is neither a investment company nor a real estate company the same can be treated Income From Other Sources by Income tax Department creating a point of litigation in future which may lead to a reasonable amount of tax liability. . we would like to bring to light that TLL had never actually done any operating business and hence there has actually no sales tax liability on TLL. Sales Tax TLL has filed all its sales tax returns on time till date. Due Diligence Report of Thyrocare Laboratories Ltd.

IT Policy We understand that the Company does not have formal/ documented IT policy in place. Operational decisions are concentrated only in the hands of promoters. remuneration committee and investor committee. Internal Audit The Company does not have an internal audit system in place. Authorization Matrix All documents are authorized by one of the promoters.A K Kocchar & Associates Chartered Accountants Page 12 of 16 VI – O T H E R M A T T E R S Software Package The company is currently using Tally. 2010. Contingent Liabilities Management states that. . Management states that.ERP9 for maintenance of its books of accounts. there are no contingent liabilities outstanding as at March 31. Due Diligence Report of Thyrocare Laboratories Ltd. Human Resource Manuals & Policies The Company does not have an documented HR manual and policies in place. Committee The Company does not have audit committee. no IT related fraud or theft had taken place during the period under review.

The scope of our work has been limited both in terms of the areas of the business and operations which we have reviewed and the extent to which we have reviewed them. There may be matters.A K Kocchar & Associates Chartered Accountants Page 13 of 16 VI – C A V E A T S Source of Information The information contained in this Report has been obtained primarily from reviewed financial statements of the Company for year ended March 31. 51 New marine Lines. . 210. Mumbai – 400 020. Churchgate. we visited the office of S D Khanolkar & Co. We have relied on explanations and source information provided by the Management of the Company. 2. Our report is based on the discussion and information received from Mr Sadashiv Khanolkar – Chartered Accountant (Auditor of Company). Consequently. 2010. For purposes of our due diligence fieldwork. The books of account and other records of the Company as made available to us during our field visit. and unaudited books of accounts for the year ended March 31. Opp Nirmala Niketan. 2009. we do not express an opinion on the figures included in this Report. Discussions with the relevant personnel of the Company and third party discussions. Chartered Accountants. 2003 to March 31. other than those noted in this Report. Scope of Work Our review of the affairs of the Company and its books and accounts does not constitute an audit in accordance with Auditing Standards and no verification work has been carried out by us. jolly Bhawan No. Due Diligence Report of Thyrocare Laboratories Ltd. which might be relevant in the context of the transaction and which a wider scope might uncover.

. costs and expenses.) even if we have been advised of their possible existence. opportunity costs. unless required by law. special. directors. etc. losses. The Company also agrees to hold harmless A K Kocchar & Associates and its employees against all actions. whether in contract. damage or expense (including without limitation. claims. This provision shall apply even after termination of our assignment. proceedings. Confidential A K Kocchar & Associates shall hold in strict confidence all information provided to us by the management. incidental or punitive loss. or in connection with. This provision shall apply even after the termination of the engagement for any reason. This provision shall apply even after completion of our assignment. whatsoever and howsoever caused. Due Diligence Report of Thyrocare Laboratories Ltd. employees and advisors of Thyrocare Laboratories Limited shall not divulge the same to anyone. sustained or arising from. without the express or written consent of the Company. damages.A K Kocchar & Associates Chartered Accountants Page 14 of 16 Limitation of Liability Our maximum liability relating to services rendered under this assignment (regardless of form of action. In no event shall we be liable for consequential. the provision of services. lost profits. incurred. negligence or otherwise) shall be limited to the fees paid to us for the portion of our services or work products giving rise to the liability.

specifically covering revenue recognition. . Review of the operational management structure. • • • • • • • Review on the appropriateness of TLL’s insurance arrangements. Review of employment contracts. statutory auditors’ management letters and significant issues or weaknesses identified for the period under review. currently applied by the target to understand whether these policies are in accordance with relevant GAAP . depreciation. Other assets and liabilities • • • • Review of fixed assets. The scope of work for the accounting and financial due diligence review of the Company for the period would be limited to: General • Review significant accounting policies. • Review internal audit reports. Understand the credit policies and credit control measures adopted.A K Kocchar & Associates Chartered Accountants Page 15 of 16 APPENDIX A–ENGAGEMENT LETTER Our work and summary of procedures to be performed in connection with the limited scope accounting and financial due diligence review on Thyrocare Laboratories Limited (‘TLL’) is set out below. Financial information will be reviewed for the latest period for which audited accounts are available (‘period’). but our report will not necessarily cover all of those matters because in the interests of clearer reporting. Review of ownership documents for fixed assets and financial commitments attached to the assets. We will cover the matters set out below. Review on major operational agreements / arrangements with third parties. Due Diligence Report of Thyrocare Laboratories Ltd. write-downs. 2010. Review and comment on the financial statements of the TLL for the 8 years ended March 31. Review on the nature of the target’s pension arrangements. research and development expenditure. audit committee reports. Understand TLL’s general terms of business with major customers. Review on intra-group transactions and agreements / arrangements. provisions and any other notable policies. we will not report on matters that we do not believe to be significant.

interest.A K Kocchar & Associates Chartered Accountants • • • • • • Page 16 of 16 Review ageing and composition of accounts receivable as at March 31. 2010. advances made there against and any claims for damages. 108245 Mumbai. We acknowledge that this Due Diligence Report has been made by us so as to evaluate all advantages and disadvantages of the said transaction and revelation of all possible risk i. Review current liabilities/provisions including employee related liabilities as at March 31. 2010 Due Diligence Report of Thyrocare Laboratories Ltd.e. 2010. For A K Kocchar & Associates Chartered Accountants Arun Kocchar Partner Membership No. 2010. 2010. 27th August. Review the provisioning policy of the target Review of contracts remaining to be executed on capital account and not provided for as at March 31. penalty. financial / tax / any other risk connected to purchase of the company and the same may not be relied upon by any other person for any other purpose nor it be quoted in any public document. . Review adequacy of reserve for doubtful debts considering historical ageing trends and known exposures. Review significant loans and advances and other current assets as at March 31.

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