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Alkem Laboratories Ltd.

BSE: 539523 Sector: Health care
NSE: ALKEM ISIN Code: INE540L01014
BSE LIVE 15:49 | 21 Nov 1954.45 -15.35
(-0.78%)
OPEN

1968.60

HIGH

1975.00

LOW

1950.00

NSE 15:46 | 21 Nov 1954.05 -23.55
(-1.19%)
OPEN

1978.00

HIGH

1978.00

LOW

1950.00

OPEN 1968.60
PREVIOUS CLOSE 1969.80
VOLUME 2039
52-Week high 2238.00
52-Week low 1535.00
P/E 29.98
Mkt Cap.(Rs cr) 23,365
Buy Price 0.00
Buy Qty 0.00
Sell Price 1954.45
Sell Qty 74.00
OPEN 1968.60
CLOSE 1969.80
VOLUME 2039
52-Week high 2238.00
52-Week low 1535.00
P/E 29.98
Mkt Cap.(Rs cr) 23,365
Buy Price 0.00
Buy Qty 0.00
Sell Price 1954.45
Sell Qty 74.00

Alkem Laboratories Ltd. (ALKEM) - Auditors Report

Company auditors report

To the Members of

Alkem Laboratories Limited

Report on the Standalone Ind AS Financial Statements

We have audited the accompanying standalone Ind AS financial statements of AlkemLaboratories Limited ("the Company") which comprise the Balance Sheet as at 31March 2017 the Statement of Profit and Loss (including Other Comprehensive Income) theStatement of Cash Flows and the Statement of Changes in Equity for the year then endedand a summary of the significant accounting policies and other explanatory information(herein after referred to as "standalone Ind AS financial statements").

Management's Responsibility for the Standalone Ind AS 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 Ind AS financial statements that give a true and fair view of thefinancial position financial performance including other comprehensive income cash flowsand changes in equity of the Company in accordance with the accounting principlesgenerally accepted in India including the Indian Accounting Standards (Ind AS) prescribedunder Section 133 of the Act read with relevant rules issued thereunder.

This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding the assets of the Company andfor preventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; and design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the accuracy and completeness ofthe accounting records relevant to the preparation and presentation of the standalone IndAS 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 Ind AS financialstatements based 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 are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the standalone Ind AS financial statements. The procedures selecteddepend on the auditor's judgment including the assessment of the risks of materialmisstatement of the standalone Ind AS financial statements whether due to fraud or error.In making those risk assessments the auditor considers internal financial controlrelevant to the Company's preparation of the standalone Ind AS financial statements thatgive a true and fair view in order to design audit procedures that are appropriate in thecircumstances. An audit also includes evaluating the appropriateness of the accountingpolicies used and the reasonableness of the accounting estimates made by the Company'sDirectors as well as evaluating the overall presentation of the standalone Ind ASfinancial statements.

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

Opinion

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone Ind AS financial statements give the informationrequired by the Act in the manner so required and give a true and fair view in conformitywith the accounting principles generally accepted in India including the Ind AS of thefinancial position of the Company as at 31 March 2017 and its financial performanceincluding other comprehensive income its cash flows and the changes in equity for theyear ended on that date.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government of India in terms of sub-section (11) of Section 143 ofthe Act we give in the "Annexure A" a statement on the matters specified inparagraphs 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 and Loss (including Other ComprehensiveIncome) the Cash Flow Statement and the Statement of Changes in Equity dealt with by thisReport are in agreement with the books of account.

(d) In our opinion the aforesaid standalone Ind AS financial statements comply withthe Accounting Standards specified under Section 133 of the Act read with Rule 3 of theCompanies (Indian Accounting Standards) Rules 2015.

(e) On the basis of the written representations received from the directors as on 31March 2017 taken on record by the Board of Directors none of the directors isdisqualified as on 31 March 2017 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. TheCompany has disclosed the impact of pending litigations on its financial position in itsstandalone Ind AS financial statements;

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 2017;

iv. The Company has provided requisite disclosures in its standalone Ind AS financialstatements as to holdings as well as dealings in Specified Bank Notes during the periodfrom 8 November 2016 to 30 December 2016 and these are in accordance with the books ofaccounts maintained by the Company. Refer Note 3.43 to the standalone Ind AS financialstatements.

ANNEXURE A

to the Independent Auditors' Report – 31 March 2017

(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 verification of its fixed assets bywhich fixed assets are verified in a phased manner over a period of three years. Inaccordance with this programme a portion of the fixed assets have been physicallyverified by the management during the year and no material discrepancies were noticed onsuch verification. In our opinion this periodicity of physical verification is reasonablehaving regard to the size of the Company and the nature 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 3.1 to the standalone Ind AS financial statements are held in the nameof the Company

(ii) The inventory except goods-in-transit and stocks lying with third parties hasbeen physically verified by the management during the year. In respect of inventory lyingwith third parties at the year-end written confirmations have been obtained. In ouropinion the frequency of such verification is reasonable. The discrepancies noticed onverification between 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 is 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 loansguarantees given to subsidiaries and securities given in respect of loan taken by thesubsidiaries.

(v) In our opinion and according to the information and explanations given to us theCompany has not accepted any deposit from the public during the year in terms of theprovisions of Sections 73 to 76 or any other relevant provisions of the Act and the rulesframed there under. Accordingly paragraph 3(v) of the Order is not applicable to theCompany.

(vi) We have broadly reviewed the records maintained by the Company pursuant to therules prescribed by the Central Government for maintenance of cost records undersubsection 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' stateinsurance income-tax sales-tax service tax duty of customs duty of excise valueadded tax cess and other material statutory dues have been generally regularly depositedduring 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-tax sales-taxservice tax duty of customs duty of excise value added tax cess and other materialstatutory dues were in arrears as at 31 March 2017 for a period of more than six monthsfrom 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 2017 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 did not raise any money by way of initial public offer or furtherpublic offer (including debt instruments) and term loans during the year. Accordinglyparagraph 3 (ix) of the Order is not applicable.

(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 standalone Ind ASfinancial statements as required under Accounting Standard (AS) 18 Related PartyDisclosures specified under Section 133 of the Act read with Rule 3 of the Companies(Indian Accounting Standards) Rules 2015.

(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.

Enclosure I to Annexure A to the Independent Auditors' Report – 31 March 2017

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 173.2 14.3 2003-2014 CESTAT
Central Excise Act 1944 Excise Duty and Penalty 3.5 2.2 2012-2017 Commissioner of Central Excise (Appeals)
Maharashtra VAT Act 2002 Value Added Tax 6.4 3.5 2003-2005 Appeallate Tribunal
Maharashtra VAT Act 2002 Value Added Tax 296.8 8.3 2008-2011 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 13.4 3.2 2010-2012 Joint commissioner Commercial Taxes (Appeals)
Bihar VAT Act 2005 Value Added Tax 66.5 13.3 2009-13 Deputy Commissioner Special Circle
Uttar Pradesh VAT Act 2008 Value Added Tax 3.6 1.8 2012-2013 Joint commissioner of Commercial taxes -Circle -I
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 Commissioner of Commercial Taxes Gujarat
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 # 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 2017 on Standalone Ind AS 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 31 March 2017 in conjunction with ouraudit of the standalone Ind AS financial statements of the Company for the year ended onthat date.

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 safeguarding ofits 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 controls systemover financial reporting.

Meaning of Internal Financial Controls Over Financial Reporting

A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedures that (1) pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures 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 2017 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
26 May 2017 Membership No: 048648