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Alkem Laboratories Ltd.

BSE: 539523 Sector: Health care
NSE: ALKEM ISIN Code: INE540L01014
BSE LIVE 15:40 | 02 Dec 1681.25 8.45
(0.51%)
OPEN

1680.00

HIGH

1712.60

LOW

1670.60

NSE LIVE 15:30 | 02 Dec 1679.70 0.60
(0.04%)
OPEN

1705.00

HIGH

1710.00

LOW

1671.00

OPEN 1680.00
PREVIOUS CLOSE 1672.80
VOLUME 3511
52-Week high 1852.95
52-Week low 1175.00
P/E 26.20
Mkt Cap.(Rs cr) 20099.34
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 1680.00
CLOSE 1672.80
VOLUME 3511
52-Week high 1852.95
52-Week low 1175.00
P/E 26.20
Mkt Cap.(Rs cr) 20099.34
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Alkem Laboratories Ltd. (ALKEM) - Auditors Report

Company auditors report

The Members of

Alkem Laboratories Limited

REPORT ON THE STANDALONE FINANCIAL STATEMENTS

We have audited the accompanying standalone financial statements of AlkemLaboratories Limited ("the Company") which comprise the Balance Sheet as at31 March 2016 the Statement of Profit and Loss the Cash Flow Statement for the year thenended and a summary of the significant accounting policies and other explanatoryinformation.

MANAGEMENT’S RESPONSIBILITY FOR THE STANDALONE FINANCIAL STATEMENTS

The Company’s Board of Directors is responsible for the matters stated in Section134(5) of the Companies Act 2013 ("the Act") with respect to the preparation ofthese standalone financial statements that give a true and fair view of the financialposition financial performance and cash flows of the Company in accordance with theaccounting principles generally accepted in India including the Accounting Standardsspecified under Section 133 of the Act read with Rule 7 of the Companies (Accounts)Rules 2014. This responsibility also includes maintenance of adequate accounting recordsin accordance with the provisions of the Act for safeguarding the assets of the Companyand for preventing and detecting frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; and design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe financial 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 standalone financial statementsbased on our audit.

We have taken into account the provisions of the Act the accounting and auditingstandards and matters which are required to be included in the audit report under theprovisions of the Act and the Rules made thereunder.

We conducted our audit in accordance with the Standards on Auditing specified underSection 143(10) of the Act. Those Standards require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetherthe financial statements arefree and from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the financial statements. The procedures selected depend on theauditor’s judgment including the assessment of the risks of material misstatement ofthe financial statements whether due to fraud or error. In making those risk assessmentsthe auditor considers internal financial control relevant to the Company’spreparation of the financial statements that give a true and fair view in order to designaudit procedures that are appropriate in the circumstances. An audit also includesevaluating the appropriateness of the accounting policies used and the reasonableness ofthe accounting estimates made by the Company’s Directors as well as evaluating theoverall presentation of the financial statements.

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

OPINION

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone financial statements give the information requiredby the Act in the manner so required and give a true and fair view in conformity with theaccounting principles generally accepted in India of the state of affairs of the Companyas at 31 March 2016 and its profit and cash flows for the year ended on that date.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

1. As required by the Companies (Auditor’s Report) Order 2016 ("theOrder") issued by the Central Government of India in terms of sub-section (11) ofSection 143 of the Act we give in the "Annexure A" a statement on the mattersspecified in paragraphs 3 and 4 of the Order to the extent applicable.

2. As required by Section 143 (3) of the Act we report that:

(a) We have sought and obtained all the information and explanations which to the bestof 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 theCompany so far as it appears from our examination of those books.

(c) The Balance Sheet the Statement of Profit Loss and the Cash Flow Statement dealtwith by this Report are in agreement with the books of account.

(d) In our opinion the aforesaid standalone financial statements comply with theAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014.

(e) On the basis of the written representations received from the directors as on 31March 2016 taken on record by the Board of Directors none of the directors isdisqualified as on 31 March 2016 from being appointed as a director in terms of Section164 (2) of the Act.

(f) With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate Report in "Annexure B".

(g) With respect to the other matters to be included in the Auditor’s Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations on its financialposition in its financial statements Refer Note 2.27(a) (1) to the standalone financialstatements;

ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses.

iii. There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company during the year ended 31 March 2016.

For B S R & Co. LLP
Chartered Accountants
Firm’s Registration No: 101248W/W-100022
Sadashiv Shetty
Mumbai Partner
27 May 2016 Membership No: 048648

Annexure - A to the Independent Auditors’ Report 31 March 2016

(Referred to in our report of even date)

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

(b) The Company has a regular programme of physical of its fixed assets by which fixedassets verification are verified in a phased manner over a period of three years. Inaccordance with this programme certain fixed assets were verified during the and nomaterial discrepancies were noticed on such verification. In our opinion this periodicityof physical verification is reasonable having regard to the size of the Company and thenature of its assets.

(c) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the title deeds of immovable properties asdisclosed in Note 2.10 to the financial statements are held in the name of the Companyexcept for the following:

Particulars Freehold Land Building
Number of cases 2 5
Gross block as at 31 March 2016 (Rs. In million) 22.2 705.9
Net block as at 31 March 2016 (Rs. In million) 22.2 604.7

(ii) The inventory except goods-in-transit has been physically verified by themanagement during the year. For inventory lying with third parties at the year-endwritten confirmations have been obtained. In our opinion thefrequencyofsuchverificationis reasonable. The discrepancies noticed on verificationbetween the physical stocks and the book records were not material.

(iii) According to the information and explanations given to us the Company has notgranted any loans secured or unsecured to companies firms limited liabilitypartnerships or other parties covered in the register maintained under Section 189 of theAct. Accordingly paragraphs 3 (iii) (a) (b) and (c) of the Order are not applicable tothe Company.

(iv) In our opinion and according to the information and explanations given to us theCompany has not granted any loans or provided any guarantees or security to the partiescovered under Section 185 of the Act during the year. The Company has complied with theprovisions of Section 186 of the Act with respect to the investments made and securitiesgiven in respect of loan taken by the subsidiaries.

(v) According to the information and explanations given to us the Company has notaccepted any deposits from the public. Accordingly paragraph 3(v) of the Order is notapplicable to the Company.

(vi) We have broadly reviewed the records maintained by the Company pursuant to therules prescribed by the Central Government for maintenance of cost records undersub-section 1 of section 148 of the Act and are of the opinion that prima facie theprescribed accounts and records have been made and maintained. However we have not made adetailed examination of the records.

(vii) (a) According to the information and explanations given to us and on the basis ofour examination of the records of the Company amounts deducted/ accrued in the books ofaccount in respect of undisputed statutory dues including provident fund employees’state insurance income-tax sales-tax service tax duty of customs duty of excisevalue added tax cess and other material statutory dues have been generally regularlydeposited during the year by the Company with the appropriate authorities.

According to the information and explanations given to us no undisputed amountspayable in respect of provident fund employees’ state insurance income- taxsales-tax service tax duty of customs duty of excise value added tax cess and othermaterial statutory dues were in arrears as at 31 March 2016 for a period of more than sixmonths from the date they became payable.

(b) According to the information and explanations given to us there are no dues ofincome-tax sales tax service tax duty of customs duty of excise and value added tax asat 31 March 2016 which have not been deposited with the appropriate authorities on accountof any dispute other than those mentioned in Enclosure I to this report.

(viii) In our opinion and according to the information and explanations given to usthe Company has not defaulted in repayment of dues to its bankers. The Company does nothave any loans or borrowings from financial institutions or Government nor has it issuedany debentures during the year.

(ix) The Company has completed the Initial Public Offering (IPO) through an offer forsale of equity share by the existing shareholders during the year. Accordingly the Companyhas not raised any money by way of initial public offer or further public offer (includingdebt instruments) and term loans during the year. And therefore paragraph 3(ix) of theOrder is not applicable to the Company.

(x) According to the information and explanations given to us no material fraud by theCompany or on the Company by its officers or employees has been noticed or reported duringthe course of our audit.

(xi) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has paid/provided for managerialremuneration in accordance with the requisite approvals mandated by the provisions ofSection 197 read with Schedule V to the Act.

(xii) In our opinion and according to the information and explanations given to us theCompany is not a Nidhi company. Accordingly paragraph 3(xii) of the Order is notapplicable to the Company.

(xiii) According to the information and explanations given to us and based on ourexamination of the records of the Company transactions with the related parties are incompliance with the provisions of Sections 177 and 188 of the Act where applicable. Thedetails of such related party transactions have been disclosed in the financial statementsas required under Accounting Standard (AS) 18 Related Party Disclosures specified underSection 133 of the Act read with Rule 7 of the Companies (Accounts) Rules 2014.

(xiv) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year. Accordingly paragraph 3(xiv) of the Order is not applicable to the Company.

(xv) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not entered into any non-cashtransactions with directors or persons connected with them. Accordingly paragraph 3(xv)of the Order is not applicable to the Company.

(xvi) In our opinion and according to the information and explanations given to us theCompany is not required to be registered under Section 45-IA of the Reserve Bank of IndiaAct 1934. Accordingly paragraph 3(xvi) of the Order is not applicable to the Company.

For B S R & Co. LLP
Chartered Accountants
Firm’s Registration No: 101248W/W-100022
Sadashiv Shetty
Mumbai Partner
27 May 2016 Membership No: 048648

Enclosure I to Annexure A to the Independent Auditors’ Report – 31 March 2016

Name of the Statute Nature of dues Amount under dispute (Rs. in millions) Amount paid under protest (Rs. in millions) Financial year / year (s) Forum where dispute is pending
Central Excise Act 1944 Excise Duty and Penalty 60.2 14.5 2003-2014 CESTAT
Central Excise Act 1944 Excise Duty and Penalty 2.2 0.2 2010-2016 Commissioner of Central Excise (Appeals)
Maharashtra VAT Act 2002 Value Added Tax 6.4 3.5 2003-2005 Appellate Tribunal
Maharashtra VAT Act 2002 Value Added Tax 283.2 4.1 2005-2011 Joint Commissioner of Sales Tax (Appeals)
West Bengal VAT Act 2003 Value Added Tax 9.0 1.3 2010-2013 Senior Joint Commissioner of Commercial Tax
Bihar VAT Act 2005 Value Added Tax 71.0 14.8 2010-2012 Joint commissioner Commercial Taxes (Appeals)
Uttar Pradesh VAT Act 2008 Value Added Tax 1.7 0.4 2012-2013 Commercial Tax Tribunal Lucknow
Odisha VAT Act 2004 Value Added Tax 0.5 0.0 * 2012-2014 Commissioner of Commercial Taxes
Gujarat VAT Act 2003 Value Added Tax 0.1 - 2006-2007 Deputy Commissioner of Commercial Tax (Appeal)
Odisha Entry Tax Act 1999 Entry Tax 0.2 0.0 ** 2012-2014 Commissioner of Commercial Taxes
Central Sales Tax Act 1956 Central Sales Tax 349.7 0.1 2009-2011 Joint Commissioner of Sales Tax (Appeals)
Central Sales Tax Act 1956 Central Sales Tax 372.5 55.9 2012-2013 Senior Joint Commissioner of Commercial Tax
Central Sales Tax Act 1956 Central Sales Tax 0.4 0.0 *** 2012-2014 Commissioner of Commercial Taxes
Income Tax Act 1961 Income Tax 6.1 - 2001-2012 Commissioner of Income Tax (Appeal)

* Rs. 34961

** Rs. 10130

*** Rs. 25254

Annexure - B

To the Independent Auditor’s Report – 31 March 2016 on Standalone FinancialStatements

REPORT ON THE INTERNAL FINANCIAL CONTROLS UNDER CLAUSE (i) OF SUB-SECTION 3 OF SECTION143 OF THE COMPANIES ACT 2013 ("THE ACT")

We have audited the internal financial controls over financial reporting of AlkemLaboratories Limited ("the Company") as of March 31 2016 in conjunction withour audit of the standalone financial statements of the Company for the year ended on thatdate.

MANAGEMENT’S RESPONSIBILITY FOR INTERNAL FINANCIAL CONTROLS

The Company’s management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the "Guidance Note on Audit of Internal Financial Controls Over FinancialReporting issued by the Institute of Chartered Accountants of India". Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to company’s policies the safeguardingof its assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the Companies Act 2013.

AUDITORS’ RESPONSIBILITY

Our responsibility is to express an opinion on the Company’s internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting(the "Guidance Note") and the Standards on Auditing issued by ICAI and deemedto be prescribed under Section 143(10) of the Companies Act 2013 to the extentapplicable to an audit of internal financial controls both applicable to an audit ofInternal Financial Controls and both issued by the Institute of Chartered Accountants ofIndia. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls over financial reporting was established andmaintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor’s judgement including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company’s internal financial controlssystem over financial reporting.

MEANING OF INTERNAL FINANCIAL CONTROLS OVER FINANCIAL REPORTING

A company’s internal financial control over financial reporting is a processdesigned to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance withgenerally accepted accounting principles. A company’s internal financial control overfinancial reporting includes those policies and procedures that (1) pertain to themaintenance of records that in reasonable detail accurately and fairly reflect thetransactions and dispositions of the assets of the company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of financialstatements in accordance with generally accepted accounting principles and that receiptsand expenditures of the company are being made only in accordance with authorisations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised acquisition use or disposition of thecompany’s assets that could have a material effect on the financial statements.

INHERENT LIMITATIONS OF INTERNAL FINANCIAL CONTROLS OVER FINANCIAL REPORTING

Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.

OPINION

In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at 31 March 2016 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.

For B S R & Co. LLP
Chartered Accountants
Firm’s Registration No: 101248W/W-100022
Sadashiv Shetty
Mumbai Partner
27 May 2016 Membership No: 048648

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