To the Members of Godavari Drugs Limited
Report on the Financial Statements
1. We have audited the accompanying financial statements of Godavari Drugs Limited("the Company") which comprise the Balance Sheet as at March 31 2017 thestatement of Profit and Loss and the Cash Flow Statement for the year then ended and asummary of significant accounting policies and other explanatory information.
Management's Responsibility for the 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 preparationand presentation of these financial statements that give a true and fair view of thefinancial position financial performance and Cash flows of the Company in accordance withthe accounting 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.
3. Our responsibility is to express an opinion on these financial statements based onour 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 rules made there under.
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 whetherthe 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 control 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 sufficient and appropriate toprovide a basis for our audit opinion on the financial statements.
8. In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid financial statements give the information required by the Actin the manner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in
India of the state of affairs of the Company as at March 31 2017 and its Profit andits Cash Flows for the year ended on that date.
Emphasis of Matter
Without qualifying our report we draw attention to:
Note No. 2.32 of the financial statements which describes that the confirmation ofbalances of Trade receivables Trade payables sundry balances outstanding to the debitand credit of the parties are subject to reconciliation review and adjustments thereof;
Report on Other Legal and Regulatory Requirements
9. 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 (hereinafterreferred to as the "Order") and on the basis of such checks of the books andrecords of the Company as we considered appropriate and according to the information andexplanations given to us we give in the "Annexure A" a statement on thematters specified in the paragraph 3 and 4 of the Order to the extent applicable.
10. 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 and the Cash Flow Statementdealt with by this Report are in agreement with the books of account.
(d) In our opinion the aforesaid financial statements comply with the AccountingStandards specified under Section 133 of the Act read with Rule 7 of the Companies(Accounts) Rules 2014.
(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 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 under contingent liability not provided for the possibleimpact of pending litigations on its financial position in its financial statement - ReferNote No. 2.26 to the financial statements;
ii. the company has made provision as required under the applicable law or AccountingStandards for the material foreseeable losses if any on long term contracts. Thecompany has entered into derivative contracts during the year and outstanding derivatecontract at the end of the year is disclosed in the notes to account - Refer Note no. 2.41to the financial statements;
iii. as represented by the company there is no amount required to be transferred toInvestor Education and Protection Fund by the company.
h) The Company has provided requisite disclosures in its financial statements as toholdings as well as dealings in Specified Bank Notes during the period from 8 November2016 to 30 December 2016 and these are in accordance with the books of accountsmaintained by the Company. Refer Note No. 2.31 to the financial statements.
For S Daga & Co.
(ICAI FRN: 000669S)
M. No. 011617
Annexure - A to the Auditors' Report
Referred to in paragraph 9 of the Independent Auditors' Report of even date to themembers of Godavari Drugs Limited on the financial statements as of and for the year endedMarch 31 2017
1. (a) The Company is maintaining proper records showing full particulars includingquantitative details and situation of fixed assets.
(b) Fixed assets have been physically verified by the management during the year and nomaterial discrepancies between the book records and the physical inventory have beennoticed. In our opinion the frequency of verification is reasonable.
(c) The title deeds of immovable properties as disclosed in Note 2.10 on fixed assetsto the financial statements are held in the name of the company.
2. (a) The physical verification of inventory excluding stocks with third parties havebeen conducted at reasonable intervals by the Management during the year. In respect ofinventory lying with third parties these have substantially been confirmed by them. Inour opinion the frequency of verification is reasonable.
(b) On the basis of our examination of the inventory records the company ismaintaining proper records of inventory. The discrepancies noticed on physicalverification of inventory as compared to book records have been properly dealt with by thecompany.
3. The Company has not granted any loans secured or unsecured to companies firms orother parties covered in the registers maintained under Section 189 of the Act. Thusparagraph 3(iii) of the Order is not applicable.
4. The company has not granted any loan to directors or made investments provided anyguarantees and securities and paragraph 3(iv) of the Order are not applicable. As suchthe non-compliance of Section 185 and 186 of the Companies Act 2013 does not arise.
5. The Company has taken unsecured loans from relatives of Directors to avail thefacility of working capital from bank and as such the company has to comply with theprovisions of Sections 73 to 76 of Companies Act 2013 and the rules and notificationsframed there under to the extent notified.
6. We have broadly reviewed the books of accounts maintained by the Company pursuant tothe rules made by the Central Government for maintenance of cost records under sub-section(1) of Section 148 of the Act in respect of its products and are of the opinion thatprima facie the prescribed accounts and records have been made and maintained. Howeverwe have not carried out detailed examination of the records with a view to determinewhether these are accurate or complete.
7. (a) According to the information and explanations given to us and the records of theCompany examined by us in our opinion the Company is generally regular in depositingundisputed statutory dues including provident fund employees' state insurance incometax sales tax value added tax wealth tax service tax custom duty excise duty cessand other material statutory dues as applicable to it with appropriate authorities. Thereare no undisputed statutory dues payable for a period of more than six months from thedate they became payable as at 31st March 2017.
(b) According to the information and explanations given to us and the records of thecompany examined by us there are no dues of income tax wealth tax service tax customsduty and cess as at 31st March 2017 which has not been deposited on account ofa dispute except as under:
|Sl. No. Name of the Statute ||Nature of Dues ||Amount (Rs. In Lakhs) ||Claim Period ||Forum where the dispute is pending ||Amount Deposited (Rs. in Lakhs) |
|(i) Central Excise Act 1944 ||Excise Duty ||16.30 ||2008-09 to 2013-14 ||Commissioner(A)- Nagpur ||0.41 |
|(ii) Customs Act 1962 ||Customs Duty ||6.96 ||2000-01 ||CESTAT-Mumbai ||2.50 |
|(iii) Central Excise Act 1962 ||Service Tax ||3.98 ||2014-15 ||Commissioner(A) Nagpur ||0.14 |
8. According to the information and explanations given to us and records of the companyexamined by us the company has not defaulted in repayment of dues to any financialinstitution or bank or debenture holders as at the Balance Sheet date.
9. The Company has not raised any moneys by way of initial public offer further publicoffer (including debt instruments) and term loans. Accordingly the provisions of Clause3(ix) of the Order are not applicable to the Company.
10. 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 its officers or employeesnoticed or reported during the year nor have we been informed by any such case by themanagement.
11. 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.
12. 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.
13. The company has entered into transactions with related parties in compliance withthe provisions of Section 177 and 188 of the Act. The details of such related partytransactions have been disclosed in the financial statements as required under AccountingStandards (AS) 18 Related Party Disclosures specified under Section 133 of the Act readwith Rule 7 of the Companies (Accounts) Rules 2014.
14. 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.
15. 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.
16. 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 S. Daga & Co.
(ICAI FRN: 000669S)
M. No. 011617
Annexure - B to the Auditors' Report
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 GodavariDrugs Limited ("the Company") as of 31 March 2017 in conjunction with our auditof the financial statements of the Company for the year ended on that 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 Financial Reportingissued by the Institute of Chartered Accountants of India. These responsibilities includethe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to company's policies the safeguarding of its assets the preventionand detection of frauds and errors the accuracy and completeness of the accountingrecords and the timely preparation of reliable financial information as required underthe Companies Act 2013.
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 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. Alsoprojections of any evaluation of the internal financial controls over financial reportingto future periods are subject to the risk that the internal financial control overfinancial reporting may become inadequate because of changes in conditions or that thedegree of compliance with the policies or procedures may deteriorate.
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 S Daga & Co.
(ICAI FRN: 000669S)
M. No. 011617