To the Members of NATCO Pharma Limited
Report on the Standalone Financial Statements
1. We have audited the accompanying standalone financial statements of NATCO PharmaLimited ("the Company") which comprise the Balance Sheet as at 31 March 2016the Statement of Profit and Loss and the Cash Flow Statement for the year then ended anda summary of the significant accounting policies and other explanatory information.
Managements Responsibility for the Standalone Financial Statements
2. The Companys Board of Directors is responsible for the matters stated inSection 134(5) of the Companies Act 2013 ("the Act") with respect to thepreparation of these standalone financial statements that give a true and fair view ofthe financial position financial performance and cash flows of the Company in accordancewith the accounting principles generally accepted in India including the AccountingStandards specified under Section 133 of the Act read with Rule 7 of the Companies(Accounts) Rules 2014 (as amended). This responsibility also includes maintenance ofadequate accounting records in accordance with the provisions of the Act; safeguarding theassets of the Company; preventing and detecting frauds and other irregularities; selectionand application of appropriate accounting policies; making judgments and estimates thatare reasonable and prudent; and design implementation and maintenance of adequateinternal financial 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 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 whetherthe 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 theauditors judgment including the assessment of the risks of material misstatement ofthe financial statements whether due to fraud or error. In making those risk assessmentsthe auditor considers internal financial controls relevant to the Companyspreparation of the financial statements that give a true and fair view in order to designaudit 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 Companys Directors as well as evaluating theoverall presentation of 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 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 of the state of affairs of the Companyas at 31 March 2016 its profit and its cash flows for the year ended on that date.
Report on Other Legal and Regulatory Requirements
9. As required by the Companies (Auditors Report) Order 2016 ("theOrder") issued by the Central Government of India in terms of Section 143(11) of theAct we give in the Annexure I a statement on the matters specified in paragraphs 3 and 4of the Order.
10. As required by Section 143(3) of the Act we report that: a. we have sought andobtained all the information and explanations which to the best of our knowledge andbelief were necessary for the purpose of our audit; b. in our opinion proper books ofaccount as required by law have been kept by the Company so far as it appears from ourexamination of those books; c. the standalone financial statements dealt with by thisreport are in agreement with the books of account; d. in our opinion the aforesaidstandalone financial statements comply with the Accounting Standards specified underSection 133 of the Act and read with Rule 7 of the Companies (Accounts) Rules 2014 (asamended); e. on the basis of the written representations received from the directors as on31 March 2016 and taken on record by the Board of Directors none of the directors isdisqualified as on 31 March 2016 from being appointed as a director in terms of Section164(2) of the Act.; f. we have also audited the internal financial controls over financialreporting of the Company as of 31 March 2016 in conjunction with our audit of thestandalone financial statements of the Company for the year ended on that date and ourreport dated 26 May 2016 as per Annexure II expressed an unqualified opinion; and g. withrespect to the other matters to be included in the Auditors report in accordancewith Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinion and to thebest of our information and according to the explanations given to us:
i. as detailed in Note 33(b) to the standalone financial statements the Company hasdisclosed the impact of pending litigations on its standalone financial position;
ii. the Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses; and iii. there were no amounts whichwere required to be transferred to the Investor Education and Protection Fund by theCompany.
For Walker Chandiok & Co LLP Chartered Accountants Firm Registration No. :001076N/N500013
per Sanjay Kumar Jain
Membership No. : 207660 Place: Hyderabad Date : 26 May 2016
Annexure I to the Independent Auditors Report of even date to the members ofNATCO Pharma Limited on the financial statements for the year ended 31 March 2016
To the Members of NATCO Pharma Limited
Based on the audit procedures performed for the purpose of reporting a true and fairview on the financial statements of the Company and taking into consideration theinformation 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 fixed assets.
(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 3 years whichin our opinion is reasonable having regard to the size of the Company and the nature ofits assets. No material discrepancies were noticed on such verification. (c) The titledeeds of all the immovable properties are held in the name of the Company.
(ii) The management has conducted physical verification of inventory at reasonableintervals during the year and no material discrepancies between physical inventory andbook records were noticed on physical verification. (iii) The Company has not granted anyloan secured or unsecured to companies firms Limited Liability Partnerships (LLPs) orother parties covered in the register maintained under Section 189 of the Act.Accordingly the provisions of clauses 3(iii)(a) 3(iii)(b) and 3(iii)(c) of the Order arenot applicable.
(iv) In our opinion the Company has complied with the provisions of Sections 185 and186 of the Act in respect of loans investments guarantees and security.
(v) The Company has not accepted any deposits within the meaning of Sections 73 to 76of the Act and the Companies (Acceptance of Deposits) Rules 2014 (as amended).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 Companys products and are ofthe opinion that prima facie the prescribed accounts and records have been madeand maintained. However we have not made a detailed examination of the cost records witha view to determine whether they are accurate or complete.
(vii) (a) Undisputed statutory dues including provident fund investor education andprotection fund employees state insurance income-tax sales-tax wealth taxservice tax custom duty excise duty value added tax cess and other material statutorydues as applicable have generally been regularly deposited with the appropriateauthorities though there has been a slight delay in a few cases. Further no undisputedamounts payable in respect thereof were outstanding at the year-end for a period of morethan six months from the date they became payable.
(b) The dues outstanding in respect of income-tax sales-tax wealth tax service taxcustom duty excise duty cess on account of any dispute are as follows:
|Name of the statute ||Nature of dues ||Amount (3) ||Amount Paid Under Protest (3) ||Period to which the amount relates ||Forum where dispute is pending |
|The Central Sales Tax Act 1956 ||Central sales tax ||8690000 ||2500000 ||FY: 1997-98 ||Honorable High Court of Andhra Pradesh |
|The Customs Act 1962 ||Customs duty ||2000000 ||- ||July 2006 to June 2010 ||CESTAT |
|The Finance Act 1994 ||Service tax ||1749256 ||1068319 ||FY: 2011-12 ||CESTAT |
(viii) The Company has no loans or borrowings payable to government and no dues payableto debenture-holders. In our opinion the Company has not defaulted in repayment ofloans/borrowings to any financial institution or banks during the year.
(ix) The Company did not raise moneys by way of initial public offer or further publicoffer (including debt instruments) and term loans during the year. Accordingly theprovisions of clause 3(ix) of the Order are not applicable. (x) No fraud by the Company oron the company by its officers or employees has been noticed or reported during the periodcovered by our audit.
(xi) In our opinion managerial remuneration has been paid and provided in accordancewith the requisite approvals mandated by the provisions of Section 197 read with ScheduleV to the Act.
(xii) In our opinion the Company is not a Nidhi Company. Accordingly clause 3(xii) ofthe Order is not applicable. (xiii) In our opinion all transactions with the relatedparties are in compliance with Sections 177 and 188 of the Act where applicable and therequisite details have been disclosed in the financial statements as required by theapplicable accounting standards
(xiv) During the year the Company has made private placement of shares. In respect ofthe same in our opinion the Company has complied with the requirement of Section 42 ofthe Act and the Rules framed thereunder. Further in our opinion the amounts so raisedwere applied for the purposes for which these securities were issued though idle fundswhich were not required for immediate utilization have been invested in liquidinvestments.
(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 Registration No.: 001076N/N500013 per Sanjay Kumar Jain
Membership No.: 207660 Place: Hyderabad Date : 26 May 2016
Annexure II to the Independent Auditors Report of even date to the members ofNATCO Pharma Limited on the standalone financial statements for the year ended 31 March2016.
Independent Auditors report on the Internal Financial Controls under Clause (i)of Sub-section 3 ofSection 143 of the Companies Act 2013 ("the Act")
1. In conjunction with our audit of the standalone financial statements of NATCO PharmaLimited ("the Company") as of and for the year ended 31 March 2016 we haveaudited the internal financial controls over financial reporting (IFCoFR) of the Companyof as of that date.
Managements Responsibility for Internal Financial Controls
2. The Companys Board of Directors is responsible for establishing andmaintaining internal financialcontrols based on the internal control over financialreporting criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls overFinancial Reporting issued by the Institute of Chartered Accountants of India (theGuidance Note). These responsibilities include the designimplementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the orderly and efficient conduct of the companys business includingadherence to companys policies the safeguarding of its assets the prevention anddetection of frauds and errors the accuracy and completeness of the accounting recordsand the timely preparation of reliable financial information as required under the Act.
3. Our responsibility is to express an opinion on the Companys IFCoFR based onour audit. We conducted our audit in accordance with the Standards on Auditing issued bythe Institute 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. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate IFCoFR were established and maintained and if such controls operated effectivelyin all material respects.
4. Our audit involves performing procedures to obtain audit evidence about the adequacyof the IFCoFR and their operating effectiveness. Our audit of IFCoFR included obtaining anunderstanding of IFCoFR assessing the risk that a material weakness exists and testingand evaluating the design and operating effectiveness of internal control based on theassessed risk. The procedures selected depend on the auditors 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 sufficient and appropriate toprovide a basis for our audit opinion on the Companys IFCoFR.
Meaning of Internal Financial Controls over Financial Reporting
6. A companys IFCoFR is a process designed to provide reasonable assuranceregarding the reliability of financial reporting and the preparation of financialstatements for external purposes in accordance with generally accepted accountingprinciples. A companys IFCoFR includes those policies and procedures that (1)pertain to the maintenance of records that in reasonable detail accurately and fairlyreflect the transactions and dispositions of the assets of the company; (2) providereasonable assurance that transactions are recorded as necessary to permit preparation offinancial statements in accordance with generally accepted accounting principles and thatreceipts and expenditures of the company are being made only in accordance withauthorisations of management and directors of the company; and (3) provide reasonableassurance regarding prevention or timely detection of unauthorised acquisition use ordisposition of the companys assets that could have a material effect on thefinancial 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 effectively as at 31 March 2016 based on the internalcontrol over financial reporting criteria established by the Company considering theessential components of internal control stated in the Guidance Note.
For Walker Chandiok& Co LLP
Firms Registration No.: 001076N/N500013
per Sanjay Kumar Jain
Membership No.: 207660
Date: 26 May 2016