To the Members of Cipla Limited
Report on the Standalone Financial Statements
1. We have audited the accompanying standalone financial statements of Cipla Limited(the Company') which comprise the Balance Sheet As at 31st March 2017 theStatement of Profit and Loss (including Other Comprehensive Income) the Cash FlowStatement and the Statement of Changes in Equity for the year then ended and a summary ofthe significant accounting policies and other explanatory information.
Management's Responsibility for the Standalone Financial Statements
2. 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 state ofa3airs (financial position) profit or loss (financial performance including othercomprehensive income) cash flows and changes in equity of the Company in accordance withthe accounting principles generally accepted in India including the Indian AccountingStandards (Ind AS') specified under Section 133 of the Act. This responsibility alsoincludes maintenance of adequate accounting records in accordance with the provisions ofthe Act for safeguarding the assets of the Company and for preventing and detecting fraudsand other irregularities; selection and application of appropriate accounting policies;making judgments and estimates that are reasonable and prudent; and design implementationand maintenance of adequate internal financial controls that were operating effect ivelyfor ensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the standalone financial statements that give a true andfair view and are free from material misstatement whether due to fraud or error.
3. Our responsibility is to express an opinion on these standalone financial statementsbased on our audit.
4. 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.
5. 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 whetherthese standalone financial statements are free from material misstatement.
6. An audit involves performing procedures to obtain audit evidence about the amountsand the disclosures in the financial statements. The procedures selected depend on theauditor's judgment including the assessment of the risks of material misstatement of thefinancial statements whether due to fraud or error. In making those risk assessments theauditor considers internal financial controls relevant to the Company's preparation of thefinancial statements that give a true and fair view in order to design audit proceduresthat are appropriate in the circumstances. An audit also includes evaluating theappropriateness of the accounting policies used and the reasonableness of the accountingestimates made by the Company's Directors as well as evaluating the overall presentationof the financial statements.
7. We believe that the audit evidence we have obtained is su3cient and appropriate toprovide a basis for our audit opinion on these standalone financial statements.
8. 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 including Ind AS specified under Section133 of the Act of the state of a3airs (financial position) of the Company As at 31stMarch 2017 and its profit (financial performance including other comprehensive income)its cash flows and the changes in equity for the year ended on that date.
9. The comparative financial information for the year ended As at 31st March 2016 andthe transition date opening balance sheet as at 1st April 2015 prepared in accordancewith Ind AS included in these standalone financial statements are based on the previouslyissued statutory financial statements for the year ended As at 31st March 2016 and As at31st March 2015 respectively prepared in accordance with Accounting Standards prescribedunder Section 133 of the Act read with Rule 7 of the Companies (Accounts) Rules 2014 (asamended) which were audited by the predecessor auditor whose reports dated 24th May 2016and 29th May 2015 respectively expressed unmodified opinion on those standalone financialstatements and have been adjusted for the Differences in the accounting principlesadopted by the Company on transition to Ind AS which have been audited by us. Our opinionis not modified in respect of this matter.
Report on Other Legal and Regulatory Requirements
10. As required by the Companies (Auditor's Report) Order 2016 (the Order')issued by the Central Government of India in terms of Section 143(11) of the Act we givein the Annexure I a statement on the matters specified in paragraphs 3 and 4 of theOrder. 11. Further to our comments in Annexure I as required by Section 143(3) of theAct 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 purpose 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 standalone financial statements dealt with by this report are in agreement withthe books of account;
d) In our opinion the aforesaid standalone financial statements comply with Ind ASspecified under Section 133 of the Act;
e) On the basis of the written representations received from the directors and taken onrecord by the Board of Directors none of the directors is disqualified as on As at 31stMarch 2017 from being appointed as a director in terms of Section 164(2) of the Act;
f) We have also audited the internal financial controls over financial reporting(IFCoFR) of the Company as on As at 31st March 2017 in conjunction with our audit of thestandalone financial statements of the Company for the year ended on that date and ourreport dated 25th May 2017 as per Annexure II expressed unmodified opinion;
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 (as amended) inour opinion and to the best of our information and according to the explanations given tous:
i. The Company as detailed in note 43 to the standalone financial statements hasdisclosed the impact of pending litigations on its financial position;
ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses;
iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company;
iv. The Company as detailed in note 54 to the standalone financial statements hasmade requisite disclosures in these standalone financial statements as to holdings as wellas dealings in Specified Bank Notes during the period from 8th November 2016 to 30thDecember 2016. Based on the audit procedures performed and taking into consideration theinformation and explanations given to us in our opinion these are in accordance with thebooks of account maintained by the Company.
For Walker Chandiok & Co LLP
Firm's Registration No.: 001076N/N500013
per Ashish Gupta
Membership No.: 504662
Place: New Delhi
Date: 25th May 2017
Based on the audit procedures performed for the purpose of reporting a true and fairview on the standalone financial statements of the Company and taking into considerationthe information and explanations given to us and the books of account and other recordsexamined by us in the normal course of audit and to the best of our knowledge and beliefwe report that: (i) (a) The Company has maintained proper records showing fullparticulars including quantitative details and situation of property plant andequipment.
(b) The Company has a regular program of physical verification of its fixed assetsunder which fixed assets are verified in a phased manner over a period of three yearswhich in our opinion is reasonable having regard to the size of the Company and thenature of its assets. In accordance with this program certain fixed assets were verifiedduring the year and no material discrepancies were noticed on such verification. (c) Thetitle deeds of all the immovable properties (which are included under the headProperty plant and equipment') are held in the name of the Company.
(ii) In our opinion management has conducted physical verification of inventory atreasonable intervals during the year and no material discrepancies between physicalinventory and book records were noticed on physical verification.
(iii) The Company has granted interest free unsecured loan to one company and interestbearing unsecured loan to one company which are covered in register maintained undersection 189 of the Companies Act 2013. With respect to these loans: (a) In our opinionthe terms and conditions of grant of such loans are not prejudicial to the company'sinterest.
(b) The schedule and repayment of principal for interest free loan and non-interestfree loan are stipulated. The borrowers have been regular in the payment of principal andinterest as stipulated.
(c) There are no overdue loans in respect of loans granted. (iv) In our opinion theCompany has complied with the provisions of Sections 185 and 186 of the Act with respectto loans given investments made and guarantees and securities given.
(v) In our opinion the Company has not accepted any deposits within the meaning ofSections 73 to 76 of the Act and the Companies (Acceptance of Deposits) Rules 2014 (asamended). Accordingly the provisions of clause 3(v) of the Order are not applicable.
(vi) We have broadly reviewed the books of account maintained by the Company pursuantto the Rules made by the Central Government for the maintenance of cost records undersub-section (1) of Section 148 of the Act in respect of Company's products and are of theopinion that prima facie the prescribed accounts and records have been made andmaintained. However we have not made a detailed examination of the cost records with aview to determine whether they are accurate or complete. (vii) (a) The Company is regularin depositing 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 as applicable to the appropriateauthorities. Further no undisputed amounts payable in respect thereof were outstanding atthe year end for a period of more than six months from the date they become payable.
(b) There are no dues in respect of duty of customs and Cess that have not beendeposited with the appropriate authorities on account of any dispute.
The particulars of dues outstanding in respect of income tax sales tax service taxvalue added tax (VAT') and duty of excise that have not been deposited on account ofany dispute As at 31st March 2017 and forum where these disputes are pending are asfollows:
|Statement of Disputed Dues Name of the statute ||Nature of dues ||Amount (` in crore) ||Amount paid under Protest (` in crore) ||Period to which the amount relates ||Forum where dispute is pending |
|The Central Excise Act 1944 ||Excise Duty ||64.67 ||1.9 ||2008-09 -2015-16 ||CESTAT (Karnataka) |
| || ||6.70 ||1.44 ||2011-12 -2013-14 ||CESTAT (Kolkata) |
| || ||40.61 ||2 ||2006-07 -2015-16 ||CESTAT (Mumbai) |
| || ||2.36 ||0.08 ||2005-06 -2015-16 ||Commissioner Appeals Pune |
| || ||2.54 ||0.13 ||2008-09 -2014-15 ||Commissioner Appeals Bangalore |
| || ||0.02 ||0.01 ||2001-02 -2006-07 ||High Court Mumbai |
|Maharashtra Vat Act 2002 ||VAT ||0.04 ||- ||2002-03 ||Jt. Commissioner of Sales Nagpur |
| || ||0.41 ||- ||2006-07 -2007-08 ||Dy. Commissioner of Sales |
| || || || || ||Tax - LTU |
|Goa VAT Act 2005 ||VAT ||0.49 ||- ||2005-06 ||Directorate of Commercial |
| || || || || ||Taxes Govt. of Goa |
|Tamil Nadu Vat Act 2006 ||VAT ||0.26 ||- ||2011-12 ||Offce of Joint |
| || || || || ||Commissioner -Chennai |
|Gujarat Vat Act 2005 ||VAT ||0.40 ||- ||2012-13 ||Assessing Offcer |
|Uttar Pradesh Vat Act 2008 ||VAT ||0.14 ||- ||2007-08 ||Appeal Court |
|West Bengal Vat Act 2003 ||VAT ||0.71 ||0.02 ||2001-02 ||Tribunal |
|Income Tax Act 1961 ||Income Tax ||64.81 ||64.81 ||2011-14 ||CIT Appeals |
| || ||32.04 ||32.04 ||1995-96 to 2010-11 ||High Court |
| || ||3.44 ||3.44 ||1994-95 to 2009-10 ||Various |
(viii) The Company has not defaulted in repayment of loans or borrowings to anyfinancial institution or a bank.
(ix) The Company did not raise moneys by way of initial public offcer or further publicoffcer (including debt instruments) and did not have any term loans outstanding during theyear. Accordingly the provisions of clause 3(ix) of the Order are not applicable.
(x) According to the information and explanations given to us no fraud by the Companyor on the Company by its Offcers or employees has been noticed or reported during theperiod covered by our audit.
(xi) Managerial remuneration has been paid and provided by the Company in accordancewith the requisite approvals mandated by the provisions of Section 197 of the Act readwith Schedule V to the Act.
(xii) In our opinion the Company is not a Nidhi Company. Accordingly provisions ofclause 3(xii) of the Order are not applicable.
(xiii) In our opinion all transactions with the related parties are in compliance withSections 177 and 188 of Act where applicable and the requisite details have beendisclosed in the financial statements etc. as required by the applicable Ind AS.
(xiv) During the year the Company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures. Accordingly provisions ofclause 3(xiv) of the Order are not applicable.
(xv) In our opinion the Company has not entered into any non-cash transactions withthe directors or persons connected with them covered under Section 192 of the Act.
(xvi) The Company is not required to be registered under Section 45-IA of the ReserveBank of India Act 1934.
For Walker Chandiok & Co LLP
Firm's Registration No.: 001076N/N500013
per Ashish Gupta
Membership No.: 504662
Place: New Delhi
Date: 25th May 2017
Independent Auditor's report on the Internal Financial Controls under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 ("the Act")
1. In conjunction with our audit of the financial statements of Cipla Limited("the Company") as at and for the year ended As at 31st March 2017 we haveaudited the Internal Financial Controls over Financial Reporting (IFCoFR) of the companyof as at that date.
Management's Responsibility for Internal Financial Controls
2. The Company's Board of Directors is responsible for establishing and maintaininginternal financial controls based on 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 Financial Reporting (the"Guidance Note") issued by the Institute of Chartered Accountants of India(ICAI). These responsibilities include the design implementation and maintenance ofadequate internal financial controls that were operating effect ively for ensuring theorderly and e3cient conduct of the company's business including adherence to company'spolicies the safeguarding of its assets the prevention and detection of frauds anderrors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Act.
3. Our responsibility is to express an opinion on the Company's IFCoFR based on ouraudit. We conducted our audit in accordance with the Standards on Auditing issued by theInstitute of Chartered Accountants of India (ICAI) and deemed to be prescribed undersection 143(10) of the Act to the extent applicable to an audit of IFCoFR and theGuidance Note on Audit of Internal Financial Controls Over Financial Reporting (the"Guidance Note") issued by the ICAI. Those Standards and the Guidance Noterequire that we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether adequate IFCoFR were established and maintained and ifsuch controls operated effect ively in all material respects.
4. Our audit involves performing procedures to obtain audit evidence about the adequacyof the IFCoFR and their operating effect iveness. Our audit of IFCoFR included obtainingan understanding of IFCoFR assessing the risk that a material weakness exists andtesting and evaluating the design and operating effect iveness of internal control basedon the assessed risk. The procedures selected depend on the auditor's judgement includingthe assessment of the risks of material misstatement of the financial statements whetherdue to fraud or error.
5. We believe that the audit evidence we have obtained is su3cient and appropriate toprovide a basis for our audit opinion on the Company's IFCoFR.
Meaning of Internal Financial Controls over Financial Reporting
6. A company's IFCoFR is a process designed to provide reasonable assurance regardingthe reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles. A company'sIFCoFR 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
7. Because of the inherent limitations of IFCoFR including the possibility ofcollusion or improper management override of controls material misstatements due to erroror fraud may occur and not be detected. Also projections of any evaluation of the IFCoFRto future periods are subject to the risk that IFCoFR may become inadequate because ofchanges in conditions or that the degree of compliance with the policies or proceduresmay deteriorate.
8. In our opinion the Company has in all material respects adequate internalfinancial controls over financial reporting and such internal financial controls overfinancial reporting were operating effect ively As at 31st 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 Walker Chandiok & Co LLP |
|Chartered Accountants |
|Firm's Registration No.: 001076N/N500013 |
|per Ashish Gupta |
|Membership No.: 504662 |
|Place: New Delhi |
|Date: 25th May 2017 |