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Lyka Labs Ltd.

BSE: 500259 Sector: Health care
NSE: LYKALABS ISIN Code: INE933A01014
BSE 00:00 | 24 Apr 48.55 -0.15
(-0.31%)
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48.55

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50.30

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NSE 00:00 | 24 Apr 48.65 0.20
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50.30

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OPEN 48.55
PREVIOUS CLOSE 48.70
VOLUME 10210
52-Week high 81.90
52-Week low 38.65
P/E
Mkt Cap.(Rs cr) 137
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 48.55
CLOSE 48.70
VOLUME 10210
52-Week high 81.90
52-Week low 38.65
P/E
Mkt Cap.(Rs cr) 137
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Lyka Labs Ltd. (LYKALABS) - Auditors Report

Company auditors report

To

The Members of

LYKA LABS LIMITED

Report on the Standalone Financial Statements

We have audited the accompanying standalone financial statements of LYKA LABSLIMITED ("the Company") which comprise the Balance Sheet as at 31stMarch 2017 the Statement of Profit and Loss and the Cash Flow Statement for the year thenended (in which are incorporated the accounts of the Company's branch at Ankleshwaraudited by another auditor after making such changes as were considered necessary for thepurpose of incorporation) and a summary of significant accounting policies and otherexplanatory information.

Management's Responsibility for the Standalone Financial Statements

The Company's Board of Directors are responsible for the matters stated in Section134(5) of the Companies Act 2013 ("the Act") with respect to the preparationand presentation of these standalone financial statements that give a true and fair viewof the financial position financial performance and cash flows of the Company inaccordance with the accounting principles generally accepted in India including theAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Amendment Rules 2016. This responsibility also includes maintenanceof adequate accounting records in accordance with the provisions of the Act forsafeguarding the assets of the Company and for preventing and detecting frauds and otherirregularities; selection and application of appropriate accounting policies; makingjudgements 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.

Auditors' Responsibility

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 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 financial statements. The procedures selected depend on theauditor's judgement 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.

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

Basis for Qualified Opinion

We draw attention to Note No.36(ii) relating to "Intangible Assets UnderDevelopment".

Qualified Opinion

In our opinion and to the best of our information and according to the explanationsgiven to us except for the effect of the matter described in the Basis for QualifiedOpinion paragraph these standalone 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:

(a) in the case of the Balance Sheet of the state of affairs of the Company as at 31stMarch 2017;

(b) in the case of the Statement of Profit and Loss of the profit for the year endedon that date; and

(c) in the case of the Cash Flow Statement of the cash flows for the year ended onthat date.

Emphasis of Matters

1. Note No. 33 regarding Sundry Debtors outstanding for more than six monthsaggregating to Rs.104584973 being considered good for recovery by the Company.

2. Note No. 34 regarding pending balance confirmation from Sundry Debtors SundryCreditors Group Companies and Loans and Advances.

3. Note No. 35(ii) regarding non provision for diminution in value of investments.

4. Note No. 36(i) regarding Tangible Capital Work-in-Progress.

5. Note No. 38 regarding slow/non-moving material aggregating to Rs.15352260/-.

Our opinion is not qualified in respect of all these matters.

Other Matters

We did not audit the Financial Statements of a Branch included in the standalonefinancial statements of the Company whose financial statements reflect total assets ofRs.725111401 as at 31st March 2017 as well as total revenue ofRs.583974179 for the year ended on that date as considered in the standalone financialstatements. These financial statements and other financial information have been auditedby another auditor whose report has been furnished to us by the Management and ouropinion on these standalone financial statements in so far as it relates to the amountsand disclosures included in respect of this branch is based solely on the report of suchauditor.

Our opinion is not qualified in respect of all this matter.

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 reports on the accounts of the branch office of the Company audited underSection 143(8) of the Act by branch auditor has been sent to us and has been properlydealt with by us in preparing this report (Refer Other Matters);

(d) 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;

(e) 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) Amendment Rules 2016;

(f) On the basis of the written representations received from the Directors as on 31stMarch 2017 and taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2017 from being appointed as a director in termsof Section 164(2) of the Act;

(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) Amendment Rules 2017 inour opinion and to the best of our information and according to the explanations given tous:

(i) The company has disclosed the impact of pending litigations on its financialposition in its financial statements - Refer to Note No. 27(i) to (vii) of other notes tothe standalone financial statements.

(ii) The Company does not have any long-term contracts including derivative contractsand hence there are no material foreseeable losses.

(iii) There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company.

(iv) The Company has provided requisite disclosures in the financial statements as toholdings as well as dealings in Specified Bank Notes during the period from 8th November2016 to 30th December 2016 and the same are in accordance with books of accountmaintained by the Company. Refer Note No.58 of the financial statements.

For M. A. Parikh & Co.
Chartered Accountants
Firm Registration No. 107556W
MUKUL PATEL
Partner
Membership No. 032489
Place : Mumbai
Date : 29th May 2017

ANNEXURE - A TO THE AUDITORS' REPORT

Annexure referred to in paragraph 1 of our report on Other Legal and RegulatoryRequirements of even date

(i) In respect of its fixed assets:

(a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.

(b) The fixed assets were physically verified during the year by the Management inaccordance with a regular program of verification which in our opinion provides forphysical verification of all the fixed assets at reasonable intervals. According to theinformation and explanations given to us no material discrepancies were noticed on suchverification.

(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 Leasehold Land are held inthe name of the Company.

(ii) As explained to us inventories excluding inventories with third parties werephysically verified during the year by the management at reasonable intervals and nomaterial discrepancies were noticed on physical verification. In respect of inventorieslying with third parties these have substantially been confirmed by them.

(iii) During the year the Company has not granted loan to any party covered in theregister maintained under section 189 of the Act and hence clause 3(iii) of the Order isnot applicable.

(iv) The Company has not granted any loan made investment given guarantee or securityand hence clause 3(iv) of the Order is not applicable.

(v) The Company had received an Order of Company Law Board (CLB) dated 22ndJanuary 2016 granting extension of time for repayment of Fixed Deposits. During theyear the Company has repaid deposits that were claimed aggregating to Rs.624.15 lacs. Asregards the balance of Rs.67.37 lacs the same shall be paid as and when claimed. ReferNote No. 28.

(vi) We have broadly reviewed the books of accounts and records maintained by theCompany relating to the manufacture of Bulk Drugs and Formulations pursuant to the ordermade by the Central Government for the maintenance of cost records under Section 148(1) ofthe Companies Act 2013 and are of the opinion that prima facie the prescribed accountsand records have been so made and maintained. We have however not made a detailedexamination of the cost records with a view to determining whether they are accurate orcomplete.

(vii) According to the information and explanations given to us and as per relevantrecords produced before us in respect of statutory and other dues:

(a) During the year the Company has not been regular in depositing undisputedstatutory dues relating to Provident Fund Professional Tax E.S.I.C. Service TaxIncome-tax Value Added Tax and Sales Tax. The arrears of the said dues as at the last dayof the financial year and outstanding for more than six months from the date they becomepayable are as follows:

Sr. No. Nature of Dues Amount Rs.
1. Professional Tax 181210
2. Sales Tax deferral Scheme-SICOM 5014447

(b) Following disputed dues have not been deposited since the matters are pending withthe respective forums:

Sr. No. Nature of dues Amount Rs. Period to which the amount relates Name of Forum
1. Demand under Drugs Price Control Order 106195565 Demands raised in 1987 1990 and 1995 Gujarat High Court
2. Purchase Tax 1600442 1991-96 Gujarat Sales Tax Appellate Tribunal
3. Excise duty 1122138 2006-2007 Commissioner of Excise & Customs
6015116 2008-2013 Customs Excise & Service Tax Appellate Tribunal
8375257 Since September 1995 to February 2000 Customs Excise & Service Tax Appellate Tribunal
4. Bombay Sales Tax 6186400 1998-99 Sales Tax Appellate Tribunal
9824035 2000-01
420682 2002-03
379164 2004-05
5. Maharashtra Value Added Tax 3054230 2005-06 Sales Tax Appellate Tribunal
3413662 2007-08 Deputy Commissioner of Sales Tax Appeals
5642668 2011-12 Joint Commissioner of Sales Tax Appeal
6. Central Sales Tax 1795241 1998-99 Sales Tax Appellate Tribunal
1096776 2000-01
4667834 2005-06
592379 2006-07
5944865 2007-08 Deputy Commissioner of Sales Tax Appeal
3812330 2011-12 Joint Commissioner of Sales Tax Appeal
7. Service Tax 1628874 2011-12 Commissioner of Service Tax Appeal
8. Gujarat Sales Tax 3964045 2002-03 Commissioner of Sales Tax
4531617 2010-11 Appeal
6337079 2011-12
14601842 2012-13
9. Income Tax 81247500 2001-02 Commissioner of Income
26418000 2002-03 Tax Appeals
4462530
71750000 2004-05
15000828
8085480 2010-11
15539749 2011-12

(* net of amounts paid under protest)

(viii) Based on our audit procedures and according to the information and explanationsgiven by the management in respect of:

a. Loan from Banks: The Company has defaulted in repayment of dues to Banks thedefaults whereof are stated hereunder:

Period of Default

Principal Amount

Interest

Kapol Bank Dena Bank Bank of Maharashtra Dena Bank Bank of Maharashtra
February2016 - - - - 1517959
March 2016 - - - - 1629613
April 2016 - - - - 1550830
May2016 - - - - 1613883
June 2016 - - 3000000 - 1572259
July 2016 - - 4000000 - 1308754
August 2016 - - - - 1308754
September 2016 - - 3000000 - 1308754
October 2016 - - 5000000 - 1308754
November 2016 - - - - 1308754
December 2017 - - 48000000 - 1308754
January 2017 - - 5000000 4977072 1266047
February 2017 115876 100000000 - 4977072 1266047
March 2017 659878 25547000 3000000 4977072 1266047
Total 775754 125547000 71000000 14931217 19535208

b. Debentures : The Company has received Order of National Company Law Tribunal(Ahmadabad Bench) dated 22nd May 2017 granting extension of time forrepayment of Debentures Refer Note No. 29.

(ix) Based on our audit procedures and according to the information and explanationsgiven by the management the Company has not raised money by way of initial public offeror further public offer. Further the Company has availed the term loans from Banks whichwere applied for the purpose for which those are raised.

(x) According to the information and explanations given to us no fraud by the Companyor on the Company by its officers or employees has been noticed or reported during theyear.

(xi) The Company has paid/provided managerial remuneration which is in accordance withthe provisions of section 197 read with Schedule V of the Act.

(xii) In our opinion and according to the information and explanations given to us theCompany is not a nidhi company and hence clause 3(xii) of the Order is not applicable.

(xiii) According to the information and explanations given to us and based on ourexamination of the records of the Company transactions with 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 (Refer Note No. 46)

(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. Thus paragraph 3(xiv) of the Order is not applicable.

(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 and hence clause 3(xv) of theOrder is not applicable.

(xvi) According to the information and explanations given to us the Company is notrequired to be registered under section 45-IA of the Reserve Bank of India Act 1934.

For M. A. Parikh & Co.
Chartered Accountants
Firm Registration No. 107556W
MUKUL PATEL
Partner
Membership No. 032489
Place : Mumbai
Date : 29th May 2017

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 LYKALABS LIMITED ("the Company") as of 31st March 2017 in conjunctionwith our audit of the standalone 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 Financial Reportingissued by the Institute of Chartered Accountants of India (‘ICAI'). 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 Act.

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 Act to the extent applicable to an audit ofinternal financial controls both applicable to an audit of Internal Financial Controlsand both issued by the ICAI. Those Standards and the Guidance Note require that we complywith ethical requirements and plan and perform the audit to obtain reasonable assuranceabout whether adequate internal financial controls over financial reporting wasestablished and maintained and if such controls operated effectively in all materialrespects.

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 judgment 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 andexpenditure 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 to the best of our information and according to the explanation givento us and based on consideration of report of another auditor as referred to in the OtherMatters paragraph 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 31st March 2017based 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 ICAI.

Other Matters

Our aforesaid report under section 143(3)(i) of the Act on the adequacy and operatingeffectiveness of the internal financial controls over financial reporting in so far as itrelates to financial statements of a branch of the Company is based on the correspondingreports of the auditor of such branch.

For M. A. Parikh & Co.
Chartered Accountants
Firm Registration No. 107556W
MUKUL PATEL
Partner
Membership No. 032489
Place : Mumbai
Date : 29th May 2017