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Panacea Biotec Ltd.

BSE: 531349 Sector: Health care
NSE: PANACEABIO ISIN Code: INE922B01023
BSE 00:00 | 22 May 255.15 22.70
(9.77%)
OPEN

236.15

HIGH

266.80

LOW

236.00

NSE 00:00 | 22 May 256.85 18.45
(7.74%)
OPEN

240.55

HIGH

266.80

LOW

236.00

OPEN 236.15
PREVIOUS CLOSE 232.45
VOLUME 68344
52-Week high 364.00
52-Week low 129.10
P/E
Mkt Cap.(Rs cr) 1,564
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 236.15
CLOSE 232.45
VOLUME 68344
52-Week high 364.00
52-Week low 129.10
P/E
Mkt Cap.(Rs cr) 1,564
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Panacea Biotec Ltd. (PANACEABIO) - Auditors Report

Company auditors report

To the Members of Panacea Biotec Limited

Report on the Standalone Financial Statements

1. We have audited the accompanying standalone financial statements of Panacea BiotecLimited(‘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 endedand asummary of the significant accounting policies and other explanatory information.

Management's Responsibility for the Standalone 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 standalone financial statements that give a true and fair view of the financialposition financial performance and cash flows of the Company in accordance with theaccounting principles generally accepted in India including the Accounting Standardsprescribed under Section 133 of the Act read with Rule 7 of the Companies(Accounts)Rules 2014 (as amended). This responsibility also includes maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the Company and for preventing and detecting frauds and other irregularities;selection and application of appropriate accounting policies; making judgments andestimates that are reasonable and prudent; and design implementation and maintenance ofadequate internal financial controls that were operating effectively for ensuring theaccuracy and completeness of the accounting records relevant to the preparation andpresentation of the standalone financial statements that give a true and fair view and arefree from material misstatement whether due to fraud or error.

Auditor's Responsibility

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 whetherthese 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 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 controls 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 these standalone financial statements.

Opinion

8. In our opinion and to the best of our information and according to the explanationsgiven to usthe aforesaid 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 of the state of affairs of the Companyas at March 31 2017 and its loss and its cash flows for the year ended on that date.Emphasis of Matter

9. We draw attention to the following notes to the standalone financial statements: a)Note 50 to the standalone financial statements regarding capital advances amounting toRs.176.8 million given to a real estate developer for acquiring certain immovableproperties in Dubai where the Company has initiated legal recourse. b) Note 47 to thestandalone financial statements regarding the revocation of loan restructuring facility byone of the lender of the Company which may result in reinstatement of the outstandingloan liability as per the original term of the loan agreement after adjusting the paymentsmade till date. c) Note 44 to the standalone financial statements regarding payment ofmanagerial remuneration for the financial years ended March 31 2017 2016 2014 and 2013which is in excess of the limits specified by the relevant provisions of the CompaniesAct 2013 / the Companies Act 1956 by Rs.74.7 million for the said years. The Company'sapplications to the Central Government seeking approval for payment of such excessremuneration have not been approved and consequently the Company is required to recoverthe excess amount thus paid for the said years. The Company has recorded an amount ofRs.74.7 million as recoverable from the directors towards such excess remuneration paid.The Company is also in the process of _ling applications with Central Government forwaiver of recovery of such excess remuneration paid. d) Note 45 to the standalonefinancial statements which indicates that the Company has incurred a net loss (beforeexceptional items) of Rs.487.1 million during the year ended March 31 2017 and as of thatdate the Company's current liabilities exceeded its current assets by Rs.1793.7 million.These conditions along with other matters as set forth in aforesaid note and (b) aboveindicate the existence of a material uncertainty that may cast significant doubt about theCompany's ability to continue as a going concern: Pending the ultimate outcome of theaforesaid matters which is presently unascertainable no adjustments have been made in thebooks of accounts. Our opinion is not qualified in respect of these matters Report onOther Legal and Regulatory Requirements 10. As required by the Companies (Auditor'sReport) Order 2016 (‘the Order') issued by the Central Government of India in termsof Section 143(11) of the Act we give in the Annexure A a statement on the mattersspecified in paragraphs 3 and 4 of the Order.

11. Further to our comments in Annexure A as required by Section 143(3) of the Act wereport that: a. we have sought and obtained all the information and explanations which tothe best of our knowledge and belief were necessary for the purpose of our audit; b. inour opinion proper books of account as required by law have been kept by the Company sofar as it appears from our examination of those books; c. the standalone financialstatements dealt with by this report are in agreement with the books of account; d. in ouropinion the aforesaid standalone financial statements comply with the AccountingStandards prescribed under Section 133 of the Act read with Rule 7 of the Companies(Accounts) Rules 2014 (as amended); e. the matters described in paragraph 9 above in ouropinion may have an adverse effect on the functioning of the Company; f. on the basis ofthe written representations received from the directors and taken on record by the Boardof Directors none of the directors is disqualified as on

March 31 2017 from being appointed as a director in terms of Section 164(2) of theAct; g. we have also audited the internal financial controls over financial reporting(IFCoFR) of the Company as on March 31 2017 in conjunction with our audit of thestandalone financial statements of the Company for the year ended on that date and ourreport dated May 30 2017 as per Annexure B expressed an unqualified opinion; and h. withrespect to the other matters to be included in the Auditor's Report in accordance withRule 11 of the Companies (Audit and Auditors) Rules 2014 (as amended) in our opinion andto the best of our information and according to the explanations given to us: i. theCompany as detailed in Note 28 to the standalone financial statements has disclosed theimpact of pending litigations on its financial position; ii. the Company did not have anylong-term contracts including derivative contracts for which there were any materialforeseeable losses; iii. there were no amounts which were required to be transferred tothe Investor Education and Protection Fund by the Company; and iv. the company asdetailed in Note 53 to the standalone financial statements has made requisite disclosuresin these standalone financial statements as to holdings as well as dealings in SpecifiedBank Notes during the period from November 8 2016 to December 30 2016.

Based on the audit procedures performed and taking into consideration the informationand explanations given to us in our opinion these are in accordance with the books ofaccount maintained by the company.

For Walker Chandiok & Co LLP
Chartered Accountants
Firm's Registration No.: 001076N/N500013
per Anupam Kumar
Place : New Delhi Partner
Date : May 30 2017 Membership No.: 501531

Annexure A

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 full particularsincluding quantitative details and situation of fixed assets. b) The Company has a regularprogram of physical verification of its fixed assets under which fixed assets are verifiedin a phased manner over a period of three years which in our opinion is reasonablehaving regard to the size of the Company and the nature of its assets. In accordance withthis program certain fixed assets were verified during the year and no materialdiscrepancies were noticed on such verification. c) The title deeds of all the immovableproperties (which are included under the head ‘fixed assets') are held in the name ofthe Company. ii) In our opinion the management has conducted physical verification ofinventory at reasonable intervals during the year except for goods-in-transit and stockslying with third parties. For stocks lying with third parties at the year-end writtenconfirmations have been obtained by the management. No material discrepancies were noticedon the aforesaid verification. iii) The Company has not granted any loan secured orunsecured to companies firms Limited Liability

Partnerships (LLPs) or other parties covered in the register maintained under Section189 of the Act. Accordingly the provisions of clauses 3(iii)(a) 3(iii)(b) and 3(iii)(c)of the Order are not applicable. iv) In our opinionthe Company has complied with theprovisions of Sections 185 and 186 of the Act in respect of loans investments guaranteesand security. v) In our opinion the Company has not accepted any deposits within themeaning of Sections 73 to 76 of the Act and the Companies (Acceptance of Deposits) Rules2014 (as amended). Accordingly the provisions of clause 3(v) of the Order are notapplicable. vi) We have broadly reviewed the books of account maintained by the Companypursuant to the Rules made by the Central Government for the maintenance of cost recordsunder sub-section (1) of Section 148 of the Act in respect of Company's products and areof the opinion that prima facie the prescribed accounts and records have been made andmaintained. However we have not made a detailed examination of the cost records with aview to determine whether they are accurate or complete. vii) a) Undisputed statutory duesincluding provident fund employees'state insurance income-tax sales-tax service taxduty of customs duty of excise value added tax cess and other material statutory duesas applicable have generally been regularly deposited to the appropriate authoritiesthough there has been a slight delay in a few cases. Undisputed amounts payable in respectthereof which were outstanding at the year-end for a period of more than six months fromthe date they became payable are as follows:

Statement of arrears of statutory dues outstanding for more than six months:

Name of the statute Nature of the dues Amount (Rs. in million) Period to which the amount relates Due Date Date of Payment Remarks if any
Income Tax Act 1961 Demand u/s 154/250/153A/ 143(3) of Income Tax Act 1961 14.5 Assessment Year 2011-12 April 21 2016 Not yet paid The Company intends to settle the demand with refund of other years.

b) The dues outstanding in respect of income-tax sales-tax service tax duty ofcustoms duty of excise and value added tax on account of any dispute are as follows:

Name of the statute Nature of dues Amount (Rs. in million) Amount paid under Protest (Rs. in million) Period to which the amount relates Forum where dispute is pending
Income Tax Act 1961 Disallowance in respect of certain purchases and expense items 162.2 - Assessment Year 2005-06 Income Tax Appellate Tribunal (ITAT)
Income Tax Act 1961 Disallowance in respect of certain purchases and expense items 3294.9 - Assessment Year 2006-07 to 2012-13 Income Tax Appellate Tribunal (ITAT)
The Finance Act 1994 Demand raised for service tax by Assessing Officer 72.6 9.8 Financial Year 2003-04 to 2011-12 Custom Excise & Service Tax Appellate Tribunal
Customs Act 1962 Duty levied on exempted goods 4.0 4.0 Financial Year 2001-02 Custom Excise & Service Tax Appellate Tribunal

viii) There are no dues payable to debenture-holders. The Company has defaulted inrepayment of loans/borrowings to the following banks financial institutions andgovernments including interest thereon:

Loan Particulars Amount of default (Rs. in million) Period of default (Days)
Indian Overseas Bank – Term Loan 16.5 27
State Bank of India – Term Loan - I 12.0 24
State Bank of India – Term Loan – I 13.2 18
State Bank of India – Term Loan – II 6.1 24
State Bank of India – Term Loan – II 6.5 19
Edelweiss Asset Reconstruction Company Limited – Term Loan I 37.5 27
Edelweiss Asset Reconstruction Company Limited – Term Loan II 4.7 21
Canara Bank – Working Capital Term Loan (“WCTL”) 0.3 21
State Bank of India –WCTL 9.1 21
Bank of India – WCTL 1.0 21
Union Bank of India – WCTL 0.7 28
Indian Overseas Bank – WCTL 0.7 24
Canara Bank – Funded Interest Term Loan (“FITL”) 0.2 21
State Bank of India – FITL 11.4 21
Bank of India – FITL 2.9 21
Union Bank of India – FITL 0.5 28
Indian Overseas Bank – FITL 4.1 27
Department of Science & Technology 2.5 9
Biotechnology Industrial Research Assistance Council 8.4 24

ix) The Company did not raise moneys by way of initial public offer or further publicoffer (including debt instruments). In our opinion the term loans were applied for thepurposes for which the loans were obtained. x) No fraud by the Company or on the companyby its officers or employees has been noticed or reported during the period covered by ouraudit. xi) The Company has provided and paid managerial remuneration which is not inaccordance with the requisite approval mandated by the provisions of Section 197 of theAct read with Schedule V to the Act. Further as mentioned in Note 44 to the standalonefinancial statements the Company has paid managerial remuneration which is not inaccordance with the requisite threshold mandated by the provisions of Companies Act forthe years ended March 31 2017 2016 2014 and 2013. The details are as follows:

S. No Payment made to Amount Paid/ provided in excess of limits prescribed (Rs. in million) Amount due for Recovery as at 31 March 2017 (Rs. in million) Steps taken to secure the recovery of the amount Remarks (if any)#
1. Managing/Joint Managing and Whole Time Director 14.3 14.3 Company is in process of filing applications for waiver of recovery of excess remuneration paid Remuneration pertains to year ended March 31 2013
2. Managing/Joint Managing and Whole Time Director 14.8 14.8 Company is in process of filing applications for waiver of recovery of excess remuneration paid Remuneration pertains to year ended March 31 2014
3. Whole Time Director 2.6 2.6 Company is in the process of filing representation for approval of remuneration Remuneration pertains to year ended March 31 2016
4. Managing/Joint Managing and Whole Time Director 43.0 43.0 Company is in the process of filing representations for approval of remuneration Remuneration pertains to year ended March 31 2017

#The Company has recorded a receivable amounting to Rs.74.7 million asrecoverable from the relevant directors. xii) In our opinion the Company is not a NidhiCompany. Accordingly provisions of clause 3(xii) of the Order are not applicable. xiii)In our opinion all transactions with the related parties are in compliance with Sections177 and 188 of Act where applicable and the requisite details have been disclosed in thefinancial statements etc. as required by the applicable accounting standards.

xiv) During the year the company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures. xv) In our opinion thecompany has not entered into any non-cash transactions with the directors or personsconnected with them covered under Section 192 of the Act. xvi) The company is not requiredto be registered under Section 45-IA of the Reserve Bank of India Act 1934.

For Walker Chandiok & Co LLP
Chartered Accountants
Firm's Registration No.: 001076N/N500013
per Anupam Kumar
Place : New Delhi Partner
Date : May 30 2017 Membership No.: 501531

Annexure B

Independent Auditor's report on the Internal Financial Controls under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 (“the Act”)

1. In conjunction with our audit of the standalone financial statements of PanaceaBiotec Limited(“the Company”) as of and for the year ended March 31 2017 wehave audited the internal financial controls over financial reporting (“IFCoFR”)of the Company as of that date. Management's Responsibility for Internal FinancialControls

2. The Company's Board of Directors is responsible for establishing and maintaininginternal financial controls based on the internal control over financial reportingcriteria established by the Company considering the essential components of internalcontrol stated in the Guidance Note on Audit of Internal Financial Controls over financialreporting (the “Guidance Note”) issued by the Institute of Chartered Accountantsof India (“ICAI”). These responsibilities include the designimplementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the orderly and efficient conduct of the Company's business including adherenceto the Company's policies the safeguarding of its assets the prevention and detection offrauds and errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Act.

Auditors'Responsibility

3. Our responsibility is to express an opinion on the Company's IFCoFR based on ouraudit. We conducted our audit in accordance with the Standards on Auditing issued by theICAI and deemed to be prescribed under section 143(10) of the Act to the extentapplicable to an audit of IFCoFR and the Guidance Note 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 IFCoFR wereestablished and maintained and if such controls operated effectively in all materialrespects.

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 auditor's judgement including theassessment of the risks of material misstatement of the financial statements whether dueto 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 IFCoFR.

Meaning of Internal Financial Controls over Financial Reporting

6. A Company's IFCoFR is a process designed to provide reasonable assurance regardingthe reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles. A Company'sIFCoFR includes those policies and procedures that (1) pertain to the maintenance ofrecords that in reasonable detailaccurately 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

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.

Opinion

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 March 31 2017 based on the internalcontrol over financial reporting criteria established by the Company considering theessential components of internal control stated in the Guidance Note issued by ICAI.

For Walker Chandiok & Co LLP
Chartered Accountants
Firm's Registration No.: 001076N/N500013
per Anupam Kumar
Place : New Delhi Partner
Date : May 30 2017 Membership No.: 501531