To the members of GlaxoSmithKline Consumer Healthcare Limited
Report on the Indian Accounting Standards (Ind AS) Financial
1. We have audited the accompanying financial statements of GlaxoSmithKline ConsumerHealthcare Limited ("the Company") which comprise the Balance Sheet as at March31 2017 the Statement of Profit and Loss (including Other Comprehensive Income) the CashFlow Statement and the Statement of Changes in Equity for the year then ended and asummary of the significant accounting policies and other explanatory information.
Management's Responsibility for the Ind AS 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 Ind AS financial statements to give a true and fair view of the financial positionfinancial performance (including other comprehensive income) cash flows and changes inequity of the Company in accordance with the accounting principles generally accepted inIndia including the Indian Accounting Standards specified in the Companies (IndianAccounting Standards) Rules 2015 (as amended) under Section 133 of the Act. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding of the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; anddesign implementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the Ind AS financial statementsthat give a true and fair view and are free from material misstatement whether due tofraud or error.
3. Our responsibility is to express an opinion on these Ind AS financial statementsbased on our audit.
4. We have taken into account the provisions of the Act and the Rules made thereunderincluding the accounting and auditing standards and matters which are required to beincluded in the audit report under the provisions of the Act and the Rules madethereunder.
5. We conducted our audit of the Ind AS financial statements in accordance with theStandards on Auditing specified under Section 143(10) of the Act and other applicableauthoritative pronouncements issued by the Institute of Chartered Accountants of India.Those Standards and pronouncements require that we comply with ethical requirements andplan and perform the audit to obtain reasonable assurance about whether the Ind ASfinancial statements are free from material misstatement.
6. An audit involves performing procedures to obtain audit evidence about the amountsand the disclosures in the Ind AS financial statements. The procedures selected depend onthe auditors' judgment including the assessment of the risks of material misstatement ofthe Ind AS financial statements whether due to fraud or error. In making those riskassessments the auditor considers internal financial control relevant to the Company'spreparation of the Ind AS financial statements that give a true and fair view in order todesign audit 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 Ind AS financial statements.
7. We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Ind AS financial statements.
8. In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid Ind AS financial statements give the information required bythe 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 March 31 2017 and its profit (including other comprehensive income) its cashflows and the changes in equity for the year ended on that date.
9. The financial information of the Company for the year ended March 31 2016 and thetransition date opening balance sheet as at April 1 2015 included in these Ind ASfinancial statements are based on the previously issued statutory financial statementsfor the years ended March 31 2016 and March 31 2015 prepared in accordance with theCompanies (Accounting Standards) Rules 2006 (as amended) which were audited by us onwhich we expressed an unmodified opinion dated May 17 2016 and May 8 2015 respectively.The adjustments to those financial statements for the differences in accounting principlesadopted by the Company on transition to the Ind AS have been audited by us.
Our opinion is not qualified in respect of this matter.
Report on Other Legal and Regulatory Requirements
10. As required by the Companies (Auditor's Report) Order 2016 issued by the CentralGovernment of India in terms of sub-section (11) of section 143 of the Act ("theOrder") and on the basis of such checks of the books and records of the Company aswe considered appropriate and according to the information and explanations given to uswe give in the Annexure B a statement on the matters specified in paragraphs 3 and 4 ofthe Order.
11. 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 Ind AS financial statements comply with the IndianAccounting Standards specified under Section 133 of the Act.
(e) On the basis of the written representations received from the directors as on March31 2017 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2017 from being appointed as a director in terms of Section 164 (2) of theAct.
(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 A.
(g) With respect to the other matters to be included in the Auditors' Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our knowledge and belief and according to the information andexplanations given to us:
i The Company has disclosed the impact if any of pending litigations as at March 312017 on its financial position in its Ind AS financial statements -Refer Note 13 and Note29;
ii The Company has made provision as at March 31 2017 as required under theapplicable law or accounting standards for material foreseeable losses if any onlong-term contracts -Refer Note 12(c). The Company did not have any derivative contractsas at March 312017;
iii During the year ended March 31 2017 there has been a delay in transferringunclaimed equity final dividend for the financial year ended 2008 amounting to Rs.8.87lacs required to be transferred to the Investor Education and Protection Fund by theCompany. The due date of deposit was June 29 2016 whereas the actual date of deposit wasJuly 08 2016.
iv The Company did not have any holdings or dealings in Specified Bank Notes during theperiod from November 08 2016 to December 30 2016. Refer Note 32 to the IndAS financialstatements.
For Price Waterhouse Firm Registration
| ||Pramit Agrawal |
|Place: Gurugram ||Partner |
|Dated: May 11 2017 ||Membership Number: 099903 |
Annexure A to Independent Auditors' Report
Referred to in paragraph 11(f) of the Independent Auditors' Report of even date to themembers of GlaxoSmithKline Consumer Healthcare Limited on the financial statements for theyear ended March 31 2017
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Act
1. We have audited the internal financial controls over financial reporting ofGlaxoSmithKline Consumer Healthcare Limited ("the Company") as of March 312017in conjunction with our audit of the financial statements of the Company for the yearended on that date.
Management's Responsibility for Internal Financial Controls
2. 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 Financial Reportingissued by the Institute of Chartered Accountants of India (ICAI). These responsibilitiesinclude the design implementation and maintenance of adequate internal financial controlsthat were operating effectively for ensuring the orderly and efficient conduct of itsbusiness including adherence to company's policies the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the Act.
3. 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 deemed to be prescribedunder section 143(10) of the Act to the extent applicable to an audit of internalfinancial controls both applicable to an audit of internal financial controls and bothissued by the ICAI. Those Standards and the Guidance Note require that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance aboutwhether adequate internal financial controls over financial reporting was established andmaintained and if such controls operated effectively in all material respects.
4. Our audit involves performing procedures to obtain audit evidence about the adequacyof the 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.
5. 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
6. 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
7. 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.
8. 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 March 31 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 Price Waterhouse |
| ||Firm Registration Number: 301112E |
| ||Chartered Accountants |
| ||Pramit Agrawal |
|Place: Gurugram ||Partner |
|Dated: May 112017 ||Membership Number: 099903 |
Annexure B to Independent Auditors' Report
Referred to in paragraph 10 of the Independent Auditors' Report of even date to themembers of GlaxoSmithKline Consumer Healthcare Limited on the financial statements as ofand for the year ended March 31 2017
i. (a) The Company is maintaining proper records showing full particulars includingquantitative details and situation of fixed assets.
(b) The fixed assets are physically verified by the Management according to a phasedprogramme designed to cover all the items over a period of three years which in ouropinion is reasonable having regard to the size of the Company and the nature of itsassets. Pursuant to the programme a portion of the fixed assets has been physicallyverified by the Management during the year and no material discrepancies have been noticedon such verification.
(c) The title deeds of immovable properties as disclosed in Note 3 on Property plantand equipment to the financial statements are held in the name of the Company except forone building having original cost of Rs. 21.74 lacs and net book value of Rs. Nil and fivefreehold lands having original cost of Rs. 6.25 lacs and net book value of Rs. 6.25 lacsfor which title deeds are not available with the Company and seven buildings havingoriginal cost of Rs. 123.95 lacs and net book value of Rs. 75.20 lacs for whichregistration is pending in the name of the Company.
ii. The inventory has been physically verified by the management during the year. Inrespect of inventory lying with third parties to the extent such inventories have notbeen physically verified by the Management such inventories have been substantiallyconfirmed by the third parties. The discrepancies noticed on physical verification ofinventory as compared to book records were not material.
iii. The Company has not granted any loans secured or unsecured to companies firmsLimited Liability Partnerships or other parties covered in the register maintained underSection 189 of the Act. Therefore the provisions of Clause 3(iii) (iii)(a) (iii)(b) and(iii)(c) of the said Order are not applicable to the Company.
iv. The Company has not granted any loans or made any investments or provided anyguarantees or security to the parties covered under Section 185 and 186. Therefore theprovisions of Clause 3(iv) of the said Order are not applicable to the Company.
v. The Company has not accepted any deposits from the public within the meaning ofSections 73 74 75 and 76 of the Act and the Rules framed there under to the extentnotified.
vi. The Central Government of India has not specified the maintenance of cost recordsunder subsection (1) of Section 148 of the Act for any of the products of the Company.
vii. (a) According to the information and explanations given to us and the records ofthe Company examined by us in our opinion the Company is generally regular in depositingundisputed statutory dues in respect of provident fund employees' state insurance incometax and professional tax though there has been a slight delay in a few cases and isregular in depositing undisputed statutory dues including sales tax service tax duty ofcustoms duty of excise value added tax cess and other material statutory dues asapplicable with the appropriate authorities.
(b) According to the information and explanations given to us and the records of theCompany examined by us there are no dues of duty of customs which have not been depositedon account of any dispute. The particulars of dues of income tax sales tax service taxduty of excise and value added tax as at March 31 2017 which have not been deposited onaccount of a dispute are as follows:
|Name of the statute ||Nature of dues ||Amount (Rs. in Lacs)# ||Period to which the amount relates ||Forum where the dispute is pending |
|DUTY OF EXCISE || || || || |
|The Central Excise Act 1944 ||Interest demand on excess refund ||2714 ||2001-2003 ||Supreme Court |
|The Central Excise Act 1944 ||Excise duty on clearance from excise exempt zone ||5114.79 ||2009 ||Himachal Pradesh High Court |
|The Central Excise Act 1944 ||Demand upon finalisation of provisional assessment inadmissibility of credit on capital goods by the job worker and denial of refund on quality samples ||230.54 ||Various years between 2013-2015 ||Customs Excise & Service Tax Appellate Tribunal of Kolkata Chandigarh and Chennai |
|The Central Excise Act 1944 ||Denial of credit on the ground that the seller received refund of the duty paid ||38.00 ||1983-86 ||Customs Excise & Service Tax Appellate Tribunal of Delhi |
|The Central Excise Act 1944 ||Dispute on CENVAT credit ||13.78 ||1997-98 ||Assistant Commissioner of Central Excise of Ghaziabad |
|The Central Excise Act 1944 ||Denial of rebate claim ||1.05 ||2015-16 ||Commissioner (Appeals) Central Excise Bangalore |
|Subtotal(A) || ||5425.30 || || |
|SERVICE TAX || || || || |
|The Finance Act 1994 ||Availment of credit of service tax on outward transportation ||19.19 ||Various year between 2005-2007 ||Customs Excise & Service Tax Appellate Tribunal of Allahabad |
|The Finance Act 1994 ||Inadmissibility of service tax credit on outward transportation cleaning canteen and gardening service and demand of service tax under category of manpower supply service ||112.04 ||Various year between 2006-2014 ||Commissioner (Appeals) of Central Excise of various states |
|The Finance Act 1994 ||CENVAT credit on rent denied in respect of land lying outside factory Boundary ||53.57 ||2009-2014 ||Customs Excise & Service Tax Appellate Tribunal Chandigarh |
|Subtotal(B) || ||1.84.80 || || |
|SALES TAX ENTRY TAX AND VAL ||UEADDED TAX || || || |
|As per the statue applicable in the state of Himachal Pradesh ||Entry Tax on bulk powder received for packing purposes only ||645.84 ||2015-17 ||Himachal Pradesh High Court |
|As per the statue applicable in the state of Tamil Nadu ||Additions on account of concessional rates of tax ||27.04 ||2007-2016 ||Advance ruling Authority |
|As per the statute applicable in the state of Uttar Pradesh Assam Maharashtra West Bengal Bihar JharkhandMadhya Pradesh Orissa and Telangana ||Various disallowances on account of alleged non- availability/submission of prescribed forms alleged sale of freebies denial of concessional rate of tax and other matters ||146.69 ||Various year between 1998-2016 ||Sales Tax Appellate Tribunal/ Revenue Board |
|As per the statue applicable to Orissa West Bengal Maharashtra Uttar Pradesh Punjab Haryana Gujarat and Kerala ||Various disallowances on account of non-availability of prescribed forms demand of entry tax denial of concessional rate of tax and other matters ||239.39 ||Various year between 2002-2014 ||First Appellate Authorities at various levels |
|As per the statue applicable to Delhi Rajasthan Uttar Pradesh Assam Bihar and Jharkhand ||Various disallowances on account of non-availability of forms denial of concessional rate of tax and other matters ||309.91 ||Various year between 2000-2015 ||Adjudication Level |
|Subtotal(C) || ||1368.87 || || |
|INCOME TAX || || || || |
|Income Tax Act 1961 ||Income tax and Interest ||864.80 ||AY1997-98 ||High Court of Punjab and Haryana |
|Income Tax Act 1961 ||Income tax and Interest ||1000719 ||AY2008-09 ||Income Tax Appellate Tribunal |
|Income Tax Act 1961 ||Income tax and Interest ||11970.55 ||AY2011-12 ||Income Tax Appellate Tribunal |
|Income Tax Act 1961 ||Income tax and Interest ||26425.48 ||AY2012-13 ||Income Tax Appellate Tribunal |
|Sub Total (D) || ||49268.02 || || |
|Grand Total (A +B +C+D) || ||56246.99 || || |
The above details exclude appeals made by the department to higher appellateauthorities as there is no stay on the order(s) passed by the lower authorities in favourof the Company and the amount is not ascertainable.
#Includes interest and penalty amounts as specified in the demand order and is net ofamount paid under protest.
viii. As the Company does not have any loans or borrowings from any financialinstitution or bank or Government nor has it issued any debentures as at the balancesheet date the provisions of Clause 3(viii) of the Order are not applicable to theCompany.
ix. The Company has not raised any moneys by way of initial public offer furtherpublic offer (including debt instruments) and term loans. Accordingly the provisions ofClause 3(ix) of the Order are not applicable to the Company.
x. During the course of our examination of the books and records of the Companycarried out in accordance with the generally accepted auditing practices in India andaccording to the information and explanations given to us we have neither come across anyinstance of material fraud by the Company or on the Company by its officers or employeesnoticed or reported during the year nor have we been informed of any such case by theManagement.
xi. The Company has paid/ provided for managerial remuneration in accordance with therequisite approvals mandated by the provisions of Section 197 read with Schedule V to theAct.
xii. As the Company is not a Nidhi Company and the Nidhi Rules 2014 are not applicableto it the provisions of Clause 3(xii) of the Order are not applicable to the Company.
xiii. The Company has entered into transactions with related parties in compliance withthe provisions of Sections177 and 188 of the Act. The details of such related partytransactions have been disclosed in the financial statements as required under IndianAccounting Standard (Ind AS) 24 Related Party Disclosures specified under Section 133 ofthe Companies Act 2013 [Companies (Indian Accounting Standard) Rules 2015 (as amended)].
xiv. The Company has not made any preferential allotment or private placement of sharesor fully or partly convertible debentures during the year under review. Accordingly theprovisions of Clause 3(xiv) of the Order are not applicable to the Company.
xv. The Company has not entered into any non cash transactions with its directors orpersons connected with him. Accordingly the provisions of Clause 3(xv) of the Order arenot applicable to the Company.
xvi. The Company is not required to be registered under Section 45-IA of the ReserveBank of India Act 1934. Accordingly the provisions of Clause 3(xvi) of the Order are notapplicable to the Company.
For Price Waterhouse Firm Registration Number: 301112E Chartered Accountants
| ||Pramit Agrawal |
|Place: Gurugram ||Partner |
|Dated: May 11 2017 ||Membership Number: 099903 |