You are here » Home » Companies » Company Overview » Sun Pharmaceuticals Industries Ltd

Sun Pharmaceuticals Industries Ltd.

BSE: 524715 Sector: Health care
NSE: SUNPHARMA ISIN Code: INE044A01036
BSE LIVE 15:59 | 24 Nov 548.55 3.80
(0.70%)
OPEN

544.50

HIGH

550.25

LOW

542.00

NSE 15:57 | 24 Nov 549.50 4.75
(0.87%)
OPEN

545.75

HIGH

551.00

LOW

541.70

OPEN 544.50
PREVIOUS CLOSE 544.75
VOLUME 202925
52-Week high 730.75
52-Week low 433.15
P/E 783.64
Mkt Cap.(Rs cr) 131,614
Buy Price 548.55
Buy Qty 38.00
Sell Price 0.00
Sell Qty 0.00
OPEN 544.50
CLOSE 544.75
VOLUME 202925
52-Week high 730.75
52-Week low 433.15
P/E 783.64
Mkt Cap.(Rs cr) 131,614
Buy Price 548.55
Buy Qty 38.00
Sell Price 0.00
Sell Qty 0.00

Sun Pharmaceuticals Industries Ltd. (SUNPHARMA) - Auditors Report

Company auditors report

TO THE MEMBERS OF SUN PHARMACEUTICAL INDUSTRIES LIMITED

Report on the Standalone Ind AS Financial Statements

We have audited the accompanying standalone Ind AS financial statements of SunPharmaceutical Industries Limited ("the Company") comprise the Balance Sheet asat 31st March 2017 and the Statement of Profit and Loss (including Other ComprehensiveIncome) the Cash Flow Statement and the Statement of Changes in Equity for the year thenended and a summary of the significant accounting policies and other explanatoryinformation.

Management's Responsibility for the Standalone Ind AS Financial Statements

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 Ind AS financial give a true and fair view of the financial positionstatementsthat performance financial including other comprehensive income cash flows andchanges in equity of the Company in accordance with the accounting principles generallyaccepted in India including the Indian Accounting Standards (Ind AS) prescribed undersection 133 of the Act.

This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding the assets of the Company andfor preventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; and design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the accuracy and to the preparationand presentation of the standalone Ind AS financial statements that give a true and fairview and are free from misstatement whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on these standalone Ind AS financialstatements based on our audit

In conducting our audit we have taken into account the provisions of the Act theaccounting and auditing standards and matters which are required to be included in theaudit report under the provisions of the Act and the Rules made thereunder.

We conducted our audit of the standalone Ind AS financial statements in accordance withthe Standards on Auditing specified under Section 143(10) of the Act. Those Standardsrequire that we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether the standalone Ind AS financial statements are freefrom material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the standalone Ind AS financial statements. The procedures selecteddepend on the auditor's judgment including the assessment of the risks of materialmisstatement of the standalone Ind AS financial statements whether due to fraud or error.In making those risk assessments the auditor considers internal financial controlrelevant to the Company's preparation of the standalone Ind AS financial statements thatgive to design audit procedures that are appropriate in the circumstances. An audit alsoincludes evaluating the appropriateness of the accounting policies used and thereasonableness of the accounting estimates made by the Company's Directors as well asevaluating the overall presentation of the standalone Ind AS financial statements.

We believe that the audit evidence obtained by us is sufficient and appropriate toprovide a basis for our audit opinion on the standalone Ind AS financial statements.

Opinion

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone Ind AS financial statements give the informationrequired by the Act in the manner so required and give a true and fair view in conformitywith the accounting principles generally accepted in India of the state of affairs of theCompany as at 31st March 2017 and its loss total comprehensive loss its cash flows andthe changes in equity for the year ended on that date.

Emphasis of Matter

We draw attention to Note 59(11) to the standalone Ind AS financial statements. Asreferred to in the said Note: Remuneration to the Managing Director and the Whole-timeDirector(s) of the Company for the years ended 31st March 2015 31st March 2016 and 31stMarch 2017 are higher by Rs. 49.6 Million Rs. 29.6 Million and Rs. 44.7 Millionrespectively than the amounts approved by the Central Government of India (Ministry ofCorporate Affairs) on applications made by the Company to approve the maximum remunerationas approved by the members of the Company for the three years ended 31st March 2017 inexcess of the limits specified under Schedule V to the Act in case of inadequacy ofprofits. The Company have re-represented to the office of the Ministry of CorporateAffairs for approval Management ofthe of remuneration within the overall limits approvedby the members of the Company for the years ended 31st March 2015 and 31st March 2016and for the year ended 31st March 2017 applications for revision in the remuneration asapproved by the members of the Company has been made to the Ministry of CorporateAffairs. The responses in respect of the foregoing re-representation / applications forrevision are awaited from the Ministry of Corporate Affairs.

Our opinion is not modified in respect of this matter.

Other Matter

The transition date opening balance sheet of the Company as at 1st April 2015 includethe financial information of erstwhile Ranbaxy Laboratories Limited consequent to itsamalgamation into the Company which was effected on 24th March 2015 with the appointeddate of 1st April 2014 [refer Note 59(4) to the standalone Ind AS financial statements].The said financial information included in these standalone Ind AS financial statementsare pre based on financial information viously prepared in accordance with the Companies(Accounting Standards) Rules 2006 audited by the other auditors and have been restatedto comply with Ind AS. Adjustments made to the financial information previously preparedin accordance with the Companies (Accounting Standards) Rules 2006 to comply with Ind AShave been audited by us.

Our opinion is not modified in respect of this matter.

Report on Other Legal and Regulatory Requirements

1. As required by Section 143(3) of the Act based on our audit we report to theextent applicable 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 including Other ComprehensiveIncome the Cash Flow Statement and Statement of Changes in Equity dealt with by thisReport are in agreement with the books of account.

d) In our opinion the aforesaid standalone Ind AS financial statements comply with theIndian Accounting Standards prescribed under Section 133 of the Act.

e) On the basis of the written representations received from the directors as on 31stMarch 2017 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 terms of Section164(2) of the Act.

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 A". Our report expresses an unmodified opinion onthe adequacy and operating effectiveness of the Company's internal financial controls overfinancial reporting.

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 as amended 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 financial its standaloneInd AS statements - Refer Note 40(i) to thestandalone Ind AS financial statements.

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 Refer Notes 25 and 30 to the standalone Ind AS financial statements.

iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company except a sum of Rs. 13.4Million which is held in abeyance due to pending legal cases.

iv. The Company has provided requisite disclosures in Note 56 to the standalone Ind ASfinancial statements as regards its holding and dealings in Specified Bank Notes asdefined in the NotificationO. 3407(E) dated 8th November 2016 of the S.

Ministry of Finance during the period from 8th November 2016 to 30th December 2016.Based on audit procedures performed and the representations provided to us by theManagement of the Company we report that the disclosures are in accordance with the booksof account maintained by the Company and as produced to us by the Management of theCompany.

2. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government in terms of Section 143(11) of the Act we give in"Annexure B" a statement on the matters specified in paragraphs 3 and 4 of theOrder.

For DELOITTE HASKINS & SELLS LLP
Chartered Accountants
(Firm's Registration No. 117366W/W-100018)
RAJESH K. HIRANANDANI
Place: Mumbai Partner
Date: 26th May 2017 (Membership No. 36920)

ANNEXURE "A"

TO THE INDEPENDENT AUDITOR'S REPORT

(Referred to in paragraph 1(f) under ‘Report on Other Legal and RegulatoryRequirements' section of our report of even date to the Members of Sun PharmaceuticalIndustries Limited)

Report on the Internal Financial Controls Over Financial Reporting under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 ("the Act")

We have audited the internal financial controls over financial reporting of SunPharmaceutical Industries Limited ("the Company") as of 31st March 2017 inconjunction with our audit of the standalone Ind AS financial statements of the Companyfor 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 Act.

Auditor's 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 Reportingissued by the Institute of Chartered Accountants of India and the Standards on Auditingprescribed under Section 143(10) of the Act to the extent applicable to an audit ofinternal financial controls. 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 established and maintained and ifsuch controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system 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 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.Also projections of any evaluation of the internal financial controls over financialreporting to future over financial reporting may become inadequate because of changes inconditions or that the degree of compliance with the policies or procedures maydeteriorate.

Opinion

In our opinion to the best of our information and according to the explanations givento us the Company has in all material respects an adequate internal financial controlssystem over financial reporting and such internal financial controls over financialreporting were operating effectively as at 31st March 2017 based on the internal controlover financial 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.

For DELOITTE HASKINS & SELLS LLP
Chartered Accountants
(Firm's Registration No. 117366W/W-100018)
RAJESH K. HIRANANDANI
Place: Mumbai Partner
Date: 26th May 2017 (Membership No. 36920)

ANNEXURE "B"

TO THE INDEPENDENT AUDITOR'S REPORT

(Referred to in paragraph 2 under ‘Report on Other Legal and RegulatoryRequirements' section of our report of even date to the Members of Sun PharmaceuticalIndustries Limited)

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

(b) The Company has a program of verification of fixed assets to cover all the items ina phased manner over a period of three years which in our opinion is reasonable havingregard to the size of the Company and the nature of its assets. Pursuant to the programcertain fixed assets were physically verified by the Management during the year. Accordingto the information and explanations given to us no material discrepancies were noticed onsuch verification.

(c) According to the information and explanations given to us and the records examinedby us and based on the examination of the registered sale deed / transfer deed /conveyance deed / agreement for sale along with registered power of attorney / consentterms taken on record by the Honorable Bombay City Civil Court at Bombay / sharecertificate / other documents evidencing title provided to us we report that the titledeeds comprising all the immovable properties of freehold land and buildings are held inthe name of the Company as at the balance sheet date except the following:

Particulars of the freehold land and building Cost or deemed cost as at 31st March 2017 (Rs. in Million) Carrying amount as at 31st March 2017 Rs. ( in Million) Remarks
Freehold land located in Himachal Pradesh admeasuring 645150 Square metres 76.3 76.3 The title deeds are in the name of Ranbaxy Laboratories Limited erstwhile company that was merged with the Company under Sections 391 to 394 of the Companies Act 1956 in terms of the approval of the Honorable High Courts of Gujarat and of Punjab and Haryana.
Freehold land located in Punjab admeasuring 370527 Square metres 27.2 27.2
Freehold land located in Haryana admeasuring 64161 Square metres 109.0 109.0
Freehold land located in Madhya Pradesh admeasuring 91330 Square metres 5.8 5.8
Freehold land located in Karnataka admeasuring 30362 Square metres 28.3 28.3
Freehold land located in Punjab admeasuring 8364 Square metres 2.5 2.5 The title of this land is under dispute in respect of which we have been informed by the Management of the Company that they have filed a Special Leave Petition with the Honorable Supreme Court against the order passed by the Honorable High Court of Punjab and Haryana and the matter is under adjudication.
Freehold land located in Chennai admeasuring 71747 Square metres and building thereon 11.3 10.2 The titles are in the name of Tamilnadu Dadha Pharmaceuticals Limited / Pradeep Drug Company Limited erstwhile companies that was merged with the Company under Sections 391 to 394 of the Companies Act 1956 in terms of the approval of the Honorable High Courts of Gujarat and of Tamilnadu / order of the New Delhi Bench of Board of Industrial and Financial Reconstruction respectively.

In respect of a building where the Company is entitled to the right of occupancy anduse and disclosed as fixed Ind AS financial statements we report that the agreement /non-convertible preference shares / compulsorily convertible debentures entitling theright of occupancy and use of building are in the name of the Company as at the balancesheet date.

In respect of immovable properties of land and buildings that have been taken on leaseand disclosed as fixed assets in the standalone Ind AS financial statements the leaseagreements are in the name of the Company where the Company is the lessee in theagreement except for the following:

Particulars of the leasehold land Cost or deemed cost as at 31st March 2017 (Rs. in Million) Carrying amount as at 31st March 2017 (Rs. in Million) Remarks
Located in Maharashtra admeasuring 20000 Square metres. *represents composite consideration for land and building. * 17.4 16.6 The lease agreements are in the name of Crosslands Research Laboratories Limited which was merged with Ranbaxy Laboratories Limited erstwhile company that was merged with the Company under Sections 391 to 394 of the Companies Act 1956 in terms of the approval of the Honorable High Courts of Gujarat and of Punjab and Haryana.
Located in Goa admeasuring 18450 Square metres 2.7 2.6
Located in Punjab admeasuring 323866 Square metres 213.2 208.3 The lease agreements are in the name of Ranbaxy Laboratories Limited erstwhile company that was merged with the Company under Sections 391 to 394 of the Companies Act 1956 in terms of the approval of the Honorable High Courts of Gujarat and of Punjab and Haryana.
Located in Madhya Pradesh admeasuring 630552 Square metres 222.4 217.8
Located in Gujarat admeasuring 24000 Square metres 0.7 0.6 The lease agreement is in the name of Gujarat Lyca Limited erstwhile company that was merged with the Company under Sections 391 to 394 of the Companies Act 1956 in terms of the approval of the Honorable High Court of Gujarat.

(ii) As explained to us the inventories excluding stocks with some of the thirdparties were physically verified during the year by the Management at reasonableintervals and no material discrepancies were noticed on physical verification. In respectof inventories lying with third parties these have substantially been confirmed by them.

(iii) In respect of loans secured or unsecured granted by the Company to companiesfirms Limited Liability Partnerships or other parties covered in the register maintainedunder Section 189 of the Companies Act 2013 ("the Act"):

(a) In our opinion and according to the information given to us the terms andconditions of the grant of such loan is in our opinion prima facie not prejudicial tothe interest of the Company.

(b) In respect of loans granted to a wholly owned subsidiary where the aggregateamount involved is Rs. 4.8 Million (including interest accrued) the repayments orreceipts of principal amounts and interest where due during the year have been regularas per stipulations and in respect of loans granted to an associate there is no repaymentor receipt of the principal amount of Rs. 512.0 Million and the interest thereon of Rs.214.9 Million which are overdue as per the stipulations.

(c) There is no overdue amount remaining outstanding as at the balance sheet dateexcept in respect of amounts of Rs. 512.0 Million and Rs. 199.1 Million of principal andinterest respectively aggregating to Rs. 711.1 Million given to an associate which hasbeen overdue for more than 90 days where there is no evidence of reasonable steps havingbeen taken for the recovery of the principal outstanding or interest receivable. Asrepresented by the Management of the Company the Company is evaluating various options torecover its dues in respect of the principal amount and interest.

Refer Note 59(1) to the standalone Ind AS financial statements.

(iv) In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of Section 186 of the Act in respect of grant ofloans making investments and providing guarantees and securities as applicable. Duringthe year the Company has not granted any loans covered under Section 185 of the Act.

(v) In our opinion and according to the information and explanations given to us theCompany has not accepted any deposit from the public in accordance with the provisions ofSections 73 to 76 or any other relevant provisions of the Act and the rules framedthereunder and hence reporting under clause (v) of paragraph 3 of the Order is notapplicable.

(vi) The maintenance of cost records has been specified by the Central Government undersub-section (1) of Section 148 of the Act. We have broadly reviewed the cost recordsmaintained by the Company pursuant to the Companies (Cost Records and Audit) Rules 2014as amended prescribed by the Central Government under sub-section (1) of Section 148 ofthe Act and are of the opinion thatprima facie the prescribed cost records have beenmade and maintained. We have however not made a detailed examination of the cost recordswith a view to determine whether they are accurate or complete.

(vii) According to the information and explanations given to us in respect ofstatutory dues:

(a) The Company has generally been regular in depositing undisputed statutory duesincluding Provident Fund Employees' State Insurance Income-tax Sales Tax Service TaxCustoms Duty Excise Duty Value added Tax Cess and other material statutory duesapplicable to it with the appropriate authorities though there have been slight delays infew cases.

(b) There were no undisputed amounts payable in respect of Provident Fund Employees'State Insurance Income-tax Sales Tax Service Tax Customs Duty Excise Duty Valueadded Tax Cess and other material statutory dues in arrears as at 31st March 2017 for aperiod of more than six months from the date they became payable.

(c) Details of dues of Income-tax Sales Tax Service Tax Customs Duty Excise Dutyand Value added Tax which have not been deposited as at 31st March 2017 on account ofdisputes are given below:

Amount paid /
Name of Statute Nature of Dues Forum where dispute is pending Period to which the amount relates Amount involved ( Rs. in Million) adjusted under protest ( Rs. in Million)
Income Tax Act 1961 Income Tax Interest and Penalty Commissioner (Appeals) 2003-04 2005-06 2006-07 2010- 11 and 2012-13 2617.2 3923.6
Income Tax Appellate Tribunal (ITAT) 1995-96 and 2007-08 to 2011-12 27193.9 11828.5
Sales Tax Act/ VAT (Various States) Sales Tax Interest and Penalty Assistant / Additional / 1999-00 2000-01 2003-04 2004- 24.8 2.1
Senior Joint Commissioner 05 2013-14 and 2014-15
Appellate Authority 1998-99 2008-09 2012-13 to 2014-15 7.2 3.1
Tribunal 1998-99 to 2003-04 2008-09 and 2014-15 6.1 2.3
High Court 1999-00 2001-02 to 2003-04 and 2005-06 to 2010-11 53.2 6.4
Entry Tax Madhya Pradesh 2009-10 2.5 -
Commercial Tax Appellate Board
The Central Excise Act 1944 Service Tax Customs Excise and Service Tax Appellate Tribunal (CESTAT) Delhi 2006 to 2015 49.7 6.8
Customs Act 1962 Customs Duty Penalty and Interest Commissioner (Appeals) 2014-15 13.8 10.8
CESTAT 2015-16 118.7 -
The Central Excise Act 1944 Excise Duty Interest and Penalty Settlement Commission 2000-01 4.2 -
Commissioner (Appeals) 2001-02 to 2015-16 50.2 5.3
Tribunal 2002-03 to 2014-15 1783.6 449.5
High Court 2002-03 to 2014-15 70.9 9.7

# Net of amount paid / adjusted under protest

(viii) In our opinion and according to the information and explanations given to usthe Company has not defaulted in the repayment of loans or borrowings to financialinstitutions banks and government. The Company has not issued any debentures.

(ix) In our opinion and according to the information and explanations given to usmoney raised by way of the term loans have been applied by the Company during the year forthe purposes for which they were raised. The Company has not raised money by way ofinitial public offer further public offer (including debt instruments) during the year.

(x) To the best of our knowledge and according to the information and explanationsgiven to us no fraud by the Company and no material fraud on the Company by its officersor employees has been noticed or reported during the year.

(xi) In our opinion and according to the information and explanations given to us theCompany has paid managerial remuneration in excess of the limits and approvals prescribedunder Section 197 read with Schedule V to the Act to the following managerial personnel:

(xii) The Company is not a Nidhi Company and hence reporting under clause (xii) ofparagraph 3 of the Order is not applicable.

(xiii) In our opinion and according to the information and explanations given to usthe Company is in compliance with Sections 177 and 188 of the Act where applicable forall transactions with the related parties identified by the Management of the Company andthe details of related party transactions have been disclosed in the standalone Ind ASfinancial statements 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 and hence reporting underclause (xiv) of paragraph 3 of the Order is not applicable to the Company.

(xv) In our opinion and according to the information and explanations given to usduring the year the Company has not entered into any non-cash transactions with itsdirectors or directors of its subsidiary or associate company or persons connected withthem and hence provisions of Section 192 of the Act are not applicable.

(xvi) The Company is not required to be registered under Section 45-IA of the ReserveBank of India Act 1934.

For DELOITTE HASKINS & SELLS LLP
Chartered Accountants
(Firm's Registration No. 117366W/W-100018)
RAJESH K. HIRANANDANI
Place: Mumbai Partner
Date: 26th May 2017 (Membership No. 36920)