To the Members of Gufic Biosciences Limited
Report on the Financial Statements
1. We have audited the accompanying standalone financial statements of GuficBiosciences Limited ("the Company") which comprise the Balance Sheet as atMarch 31 2017 the Statement of Profit and Loss the Cash Flow Statement for the yearthen ended and a summary of the significant accounting policies and other explanatoryinformation.
Management Responsibility for the Financial Statements
2. The Company's Board of Directors is responsible for the matters stated inSection 134(5) of the Companies Act 2013 ("the Act") with respect to thepreparation and presentation of these standalone financial statements that give a true andfair view of the financial position financial performance and cash flows of the Companyin accordance with the accounting principles generally accepted in India including theAccounting Standards referred in under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014. This responsibility also includes maintenance ofadequate accounting records in accordance with the provisions of the Act for safeguardingthe assets of the Company and for preventing and detecting frauds and otherirregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the financial statements that give a true and fair viewand 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. We have taken into account the provisions of the Act the accountingand auditing standards and matters which are required to be included in the audit reportunder the provisions of the Act and the Rules made thereunder.
4. 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.
5. 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.
6. We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our qualified audit opinion on the standalone financial statements.
Basis for Qualified Opinion
7. Amount of Rs. 124.04 lakhs (2015 2016: Rs. 124.04 lakhs) has beenshown as recoverable under the head other non-current assets relating to misappropriationdone by the marketing employee of the company in earlier year. However no provision hasbeen made against the said amount as the management has initiated steps for the recoveryof the said amount and is confident of recovery. In our opinion the recovery of the amountis doubtful and consequently the profit is over stated by Rs. 124.04 lakhs (20152016: Rs. 124.04 lakhs) with consequential impact on Shareholders Fund and othernon-current assets which are over stated by the said amount. (Refer Note 56)
8. We are unable to express our opinion on recoverability of debts of Rs. 209.08lakhs (2015 2016 Rs. 185.45 lakhs) and advances of Rs. 68.37 lakhs shownunder the head long term loans and advances as at Balance sheet date (2015 - 2016: Rs..68.46 lakhs) which are outstanding for more than one year. In the absence of appropriateevidences we are unable to ascertain its recoverability and its impact on the accounts ofthe company. However in the opinion of the management no provision is required in respectof such debts since they are good and recoverable in nature (Refer Note 55).
9. In our opinion and to the best of our information and according to the explanationsgiven to us except for the effects of the matter specified in para 7 and possible effectsof the matter specified in para 8 in the Basis for Qualified Opinion paragraph above theaforesaid standalone financial statements read together with notes to the accountsthereon give the information required by the Act in the manner so required and give atrue and fair view in conformity with the accounting principles generally accepted inIndia:
a. in case of balance sheet of the state of affairs of the Company as at March 312017
b. in the case of Profit and Loss Account of the profit for the year ended on thatdate; and
c. in the case of the Cash Flow Statement of the cash flows for the year ended on thatdate.
Emphasis of Matter
10. In the absence of information we have relied upon the segment wise report preparedby the management based on the nature of product risk and returns and organizationstructure. The figures have been regrouped and reclassified wherever necessary by themanagement.
11. The company has introduced implementation of ERP system in stages and only certainmodules are operational accuracy of which are yet to be tested. The audited financialamounts for year ended March 31 2017 has been compiled from various sources by themanagement including introduced ERP Modules. We have relied on management representationthat it has taken enough care and diligence to ensure that the presented data andaccounts so compiled are true & correct. (Refer Note No. 57)
12. We did not participate in physical counting of the Inventory and its valuation. TheCompany has appointed an internal auditor an independent firm of Chartered Accountants tocarry out physical verification and valuation of inventories and also to conduct audit ofstock records maintained by the company. We have relied upon certificate issued by them inthis regard. (Refer Note No. 51 & 52)
Report on Other Legal and Regulatory Requirements
13. As required by the Companies (Auditors' 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 in paragraphs 3and 4 of the Order.
14. As required by Section 143 (3) of the Act we report that:
(a) We have sought and except for the matters described in the para 8 of the Basis forQualified Opinion paragraph obtained all the information and explanations which to thebest of 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 standalone financial statements comply with theAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014.
(e) The matter described in the Basis for Qualified Opinion paragraph 7 & 8above in our opinion may have an adverse effect on the functioning of the Company.
(f) 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.
(g) 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; and
(h) 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 as referred to in Note 33 to the financialstatements.
(ii) The Company has made provision as required under the applicable law or accountingstandards for material foreseeable losses if any on long-term contracts includingderivative contracts.
(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 has provided requisite disclosures in its standalone financialstatements as to holdings as well as dealings in Specified Bank Notes during the periodfrom 8 November 2016 to 30 December 2016 refer Note 34 to the standalone financialstatements. As per the information and explanation provided to us and based on therepresentation received from the management the said disclosure are in accordance withthe books of accounts maintained by the Company.
For S H R & Co.
FRN : 120491W
Deep N. Shroff
Membership No. 122592
Mumbai : 29th May 2017
ANNEXURE TO THE AUDITOR'S REPORT
Annexure Referred to in Paragraph 13 of Our Report of Even Date On The StandaloneFinancial Statements For The Year Ended March 31 2017 of Gufic Biosciences Limited:
i. In respect of Fixed Assets :
(a) The company has updated its records showing quantitative details and situation ofthe fixed assets.
(b) According to information and explanations provided to us the fixed assets arephysically verified by the management according to a phased programme designed to coverall the items over a period of five years which in our opinion is reasonable havingregard to the size of the company and nature of its business. Pursuant to the programme aportion of the fixed assets has been physically verified by the management during theyear. We have been informed that necessary adjustments in respect of discrepancies if anybetween physical asset and book record have already be made in the books uponreconciliation.
(c) According to information and explanations provided to us there are no immovableproperties in the name of the company and as regards the building shown in fixed assetschedule represents capital expenditure incurred on extension/renovation of factorybuilding acquired on lease. Hence question of title deeds of immovable properties in thename of the company does not arise.
ii. In respect of Inventories:
As explained to us inventory have been physically verified by the management duringthe year. The discrepancies if any between physical verification of inventory as comparedto book records have been be adjusted in the books of account.
iii. In respect of Granting of Loan:
According to the information and explanations given to us the Company has not grantedany loans to parties covered in the register maintained u/s. 189 of the Companies Act2013 (The Act). (other than interest free security deposits or advancesgiven for its business purpose. Refer Note No. 51 & 52) Thus the clause relatingto terms and conditions of grant of loan schedule repayment of principal and interest andamount overdue are not applicable to the company.
iv. In our opinion and according to information and explanations provided to usthe company has not granted any loan made any investment or provided any securitiescovered under section 185 and 186 of the Act during the year under review except loans toemployees as part of condition of services. In respect of guarantees given the company hascomplied with the provision of section 186 of the Act.
v. In our opinion and according to the information and explanations given to usthe Company has not accepted any deposits from the public within the meaning of section 73to 76 or any other relevant provision of the Companies Act and the rule framed there underduring the year. No order has been passed by Company Law Board or National Company LawTribunal or Reserve Bank of India or any Court or any Tribunal.
vi. We have broadly reviewed the cost records pursuant to the Rules made by theCentral Government for the maintenance of cost records under Section 148 (1) of theCompanies Act 2013 and we are of the opinion that prima facie the prescribed accountsand records have been made and maintained. We have however not made detailed examinationof records with a view to determine whether they are accurate.
vii. In respect of Statutory dues:
(a) According to the information and explanations given to us and according to therecords of the company examined by us the company is generally regular in depositingundisputed statutory dues in respect of excise duty and custom duty with appropriateauthorities. However we have observed delays in depositing undisputed statutory duesincluding Provident Fund Employees' State Insurance Income Tax Sales Tax Service Taxand Profession tax applicable to it with the appropriate authorities. According to theinformation and explanations given to us there are no statutory dues outstanding as atthe last day of the financial year for a period of more than six months from the date theybecame payable except the Income Tax Dividend Distribution Tax Rs. 15.75 lakhsIncome Tax Rs. 446.34 lakhs Sales tax Rs. .89.93 lakhs Profession Tax Rs.15.73lakhs ESIC Rs. 20.47 lakhs and Provident Fund Rs. 69.43 lakhs.
(b) According to the information and explanations given to us there are no dues ofWealth Tax Service Tax Customs Duty or Cess outstanding on account of any dispute exceptfollowing dues have not been deposited with appropriate authorities on account of dispute:
|Name of the Statute ||Nature of Dues ||Amount ||Period to which it relates ||Forum where matter is pending |
| || ||(Rs. in Lakhs) || || |
|Income Tax Act 1961 ||Income Tax - TDS ||94.79 ||2007 - 2008 to 2012 - 2013 ||Departmental Authority |
| || ||18.52 ||2013 2014 || |
| || ||5.73 ||2014 2015 || |
| || ||26.30 ||2015 - 2016 || |
| || ||8.22 ||2016 - 2017 || |
| ||Income Tax ||45.82 ||1999 2000 to 2009 2010 & 2012 2013 ||Departmental Authority |
| || ||282.91 ||2010 2011 & 2011 2012 ||Appeal preferred by the company to the Commissioner of Income Tax (Appeal) |
|Central Excise ||Central ||8.21 ||2000 ||Departmental Authority |
|Act 1944 ||Excise Duty ||86.61 ||2001 2008 ||Appeal preferred by the company to the Tribunal |
| || ||14.04 ||2008 2009 ||Appeal preferred by the company to the Commissioner Appeal |
|Gujarat Value Added Tax Act 2003 ||Sales Tax ||29.15 ||2010 2011 ||Appeal preferred by the company to the Commissioner Appeal |
viii. We have relied on the representation and confirmation received from the bank thatthe company has not defaulted in repayment of dues to a bank.
ix. According to the information and explanations given to us the term loans wereapplied for the purpose for which the loans were obtained. The company has not raised anymoneys by way of further public offer (including debt instruments).
x. Based on the audit procedures performed and information and explanations given bythe management we report that no fraud on the company by its officers or employees or bythe Company have been noticed or reported during the year.
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.
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 sections 177 and 188 of the Act where applicable and details of suchtransactions have been disclosed in the financial statements as required by the applicableaccounting standards.
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.
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 non-cashtransactions with directors or persons connected with him.
xvi. In our opinion and according to the information and explanations given to us theCompany is not required to registered under section 45-IA of the Reserve Bank of India Act1934.
For S H R & Co.
FRN : 120491W
Deep N. Shroff
Membership No. 122592
Mumbai : 29th May 2017
ANNEXURE: B REFERRED TO IN PARA 14(g) OF THE INDEPENDENT AUDITOR S REPORT OF EVEN DATEON THE STANDALONE FINANCIAL STATEMENT OF GUFIC BIOSCIENCES LIMITED
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013
1. We have audited the internal financial controls over financial reporting of GuficBiosciences Limited (the Company) as of March 31 2017 in conjunction withour audit of the standalone financial statements for the year ended on that date.
2. Management s Responsibility for Internal Financial Controls: The Company'smanagement is responsible for establishing and maintaining internal financial controlsbased on the internal control over financial reporting criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Note onAudit of Internal Financial Controls over Financial Reporting issued by the Institute ofChartered Accountants of India (ICAI). These responsibilities include thedesign implementation and maintenance of adequate internal financial controls that wereoperating 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.
3. Auditors Responsibility: Our responsibility is to express an opinion on theCompany's internal financial controls over financial reporting based on our audit. We haveconducted our audit in accordance with the Guidance Note on Audit of Internal FinancialControls Over Financial Reporting (the Guidance Note) and the Standards onAuditing issued by ICAI and deemed to be prescribed under section 143(10) of the CompaniesAct 2013 to the extent applicable to an audit of internal financial controls bothapplicable to an audit of Internal Financial Controls and both issued by the ICAI. ThoseStandards and the Guidance Note require that we comply with ethical requirements and planand perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls over financial reporting was established and maintained and if suchcontrols operated effectively in all material respects to the extent applicable.
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 Qualified audit opinion on the Company's internal financialcontrols system over financial reporting.
4. Meaning of Internal Financial Controls over Financial Reporting: A company'sinternal financial control over financial reporting is a process designed to providereasonable assurance regarding the reliability of financial reporting and the preparationof financial statements for external purposes in accordance with generally acceptedaccounting principles. A company's internal financial control over financial reportingincludes those policies and procedures that (1) pertain to the maintenance of recordsthat 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.
5. Inherent Limitations of Internal Financial Controls over Financial Reporting: Becauseof the inherent limitations of internal financial controls over financial reportingincluding the possibility of collusion or improper management override of controlsmaterial 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.
6. Qualified opinion: According to the information and explanations given to usand based on our audit the following material weaknesses have been identified as at March31 2017:
The company did not have an appropriate internal control system:
a) for review of debtors other recoverable including loans and advances and creditorsoutstanding balances obtaining their confirmations and reconciliation of theiroutstanding balances with the books of accounts. This could potentially affect the balancein the trade receivable other recoverable trade payable income and expenses accountbalances.
b) for timely payment of statutory due which could potentially give rise toliabilities.
A material weakness is a deficiency or a combination of deficiencies ininternal financial control over financial reporting such that there is a reasonablepossibility that a material misstatement of the Company s annual or interim financialstatements will not be prevented or detected on a timely basis.
7. Opinion: In our opinion except for the possible effects of the materialweaknesses described above on the achievement of the objectives of the control criteriathe Company has maintained in all material respects adequate internal financial controlsover financial reporting and such internal financial controls over financial reportingwere operating effectively as of March 31 2017 based on the internal control overfinancial reporting criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note on Audit of Internal FinancialControls Over Financial Reporting issued by the Institute of Chartered Accountants ofIndia.
8. We have considered the material weaknesses identified and reported above indetermining the nature timing and extent of audit tests applied in our audit of thestandalone financial statements of the Company for the year ended March 31 2017 and thesematerial weaknesses do not affect our opinion on the standalone financial statements ofthe Company other than qualification reported by us in our Independent Audit Report.
For S H R & Co.
FRN : 120491W
Deep N. Shroff
Membership No. 122592
Mumbai : 29th May 2017