To the Members of Aarti Drugs Limited
Report on the Audit of the Standalone Financial Statements Opinion
We have audited the Standalone Financial Statements of Aarti Drugs Limited ("theCompany") which comprise the Balance Sheet as at March 312020 and the Statement ofProfit and Loss Statement of Changes in Equity and Statement of Cash Flows for the yearthen ended and notes to the Standalone Financial Statements including a summary ofsignificant accounting policies and other explanatory information (hereinafter referred toas "the Standalone Financial Statements").
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 Companies Act 2013 ("the Act") in the manner so required and give a trueand fair view in conformity with the Indian Accounting Standards prescribed under Section133 of the Act read with the Companies (Indian Accounting Standards) Rules 2015 asamended ("Ind AS") and other accounting principles generally accepted in Indiaof the state of affairs of the Company as at March 31 2020 and profit and totalcomprehensive income changes in equity and its cash flows for the year ended on thatdate.
Basis for Opinion
We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder Section 143(10) of the Act. Our responsibilities under those Standards are furtherdescribed in the Auditor's Responsibilities for the Audit of the Standalone FinancialStatements Section of our report. We are independent of the Company in accordance with theCode of Ethics issued by the Institute of Chartered Accountants of India together with theethical requirements that are relevant to our audit of the Standalone Financial Statementsunder the provisions of the Companies Act 2013 and the Rules thereunder and we havefulfilled our other ethical responsibilities in accordance with these requirements and theCode of Ethics. We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the Standalone Financial Statements of the current period.These matters were addressed in the context of our audit of the Standalone FinancialStatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters. Due to COVID-19 lockdown throughout the country sincelast week of March 2020 we have adopted alternative methodologies using technologicalsolutions in performing our audit procedures. We have determined the matters describedbelow to the Key Audit Matters to be communicated in the Report:
|Sr. Key Audit Matter No. ||Auditor's Response |
|1. Accuracy Completeness and ||Principal Audit Procedures |
|disclosure with reference to Ind AS 16 of Property Plant and Equipments. ||Our audit approach consisted of testing of the design and operating effectiveness of the internal controls and substantive testing as follows: |
|Peculiarity and technical complexities of Property Plant and Equipments used in the operations and different IT systems used for maintaining Fixed Asset Register (FAR) requires more attention to ensure reasonably accurateness and completeness of financial reporting in respect of Property Plant and Equipments. ||a) We assessed the Company's process regarding maintenance of records Valuation and accounting of transactions relating to Property Plant and |
| ||Equipment as per the Ind AS 16. |
| ||b) We have evaluated the design of Internal Controls relating to recording and valuation of Property Plant and Equipment. |
| ||c) We have carried out substantive audit procedures at financial and assertion level to verify the capitalization of asset as Property Plant and Equipment. |
| ||d) We have verified the maintenance of records and accounting of transactions regarding capital work in progress by carrying out substantive audit procedures at financial and assertion level. |
| ||e) We have reviewed management judgement pertaining to estimation of useful life and depreciation of the Property Plant and Equipment in accordance with Schedule II of Companies Act 2013. |
|Further due to technical complexities management is required to assess and make estimates/judgments about capitalization estimated useful life impairment etc. which has material impact on Balance Sheet and operating results ||f) We have verified the capitalization of borrowing cost incurred on qualifying asset in accordance with the Ind AS 23. |
|2. Valuation Accuracy Completeness and disclosures pertaining to Inventories with reference to Ind AS 2. ||Principal Audit Procedures Our audit approach consisted testing of the design and operating effectiveness of the internal controls and substantive testing as follows: |
|Inventories constitutes material component of financial statement. Correctness completeness and valuation are critical for reflecting true and fair financial results of operations. ||a) We assessed the Company's process regarding Maintenance of records Valuation and accounting of transactions relating to Inventory as per the Indian |
| ||Accounting Standard 2. b) We have evaluated the design of Internal Controls relating to recording and valuation of Inventory. |
| ||c) We have carried out substantive audit procedures at financial and assertion level to verify the allocation of overheads to Inventory. |
| ||d) We have verified the compliance with the standard norms relating to production as framed and timely updated by the management. |
Information Other than the Standalone Financial Statements and Auditor's Report thereon
The Company's Board of Directors is responsible for the Other Information. The otherinformation comprises the information included in the Board's Report including Annexuresto Board's Report thereon Directors Report Management and Discussion Analysis but doesnot include Standalone Financial Statements and our auditor's report thereon.
Our opinion on the Standalone Financial Statements does not cover the other informationand we do not express any form of assurance conclusion thereon.
In connection with our audit of the Standalone Financial Statements our responsibilityis to read the other information and in doing so consider whether the other informationis materially inconsistent with the Standalone Financial Statements or our knowledgeobtained in the audit or otherwise appears to be materially misstated.
If based on the work we have performed we conclude that there is a materialmisstatement of this information we required to report that fact. We have nothing toreport in this regard.
Management's Responsibility for the Standalone Financial Statements
The Company's Board of Directors is responsible for the matters stated in Section134(5) of the Act with respect to the preparation of these Standalone Financial Statementsthat give a true and fair view of the financial position financial performance changesin equity and cash flows of the Company in accordance with the Ind AS and accountingprinciples generally accepted in India. This responsibility also includes maintenance ofadequate accounting records in accordance with the provisions of the Act for safeguardingof the assets of the Company and for preventing and detecting frauds and otherirregularities; selection and application of appropriate implementation and maintenance ofaccounting policies; making judgments and estimates
that are 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 Standalone Financial Statements that give a true and fair view and are free frommaterial misstatement whether due to fraud or error.
In preparing the Standalone Financial Statements management is responsible forassessing the Company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessmanagement either intends to liquidate the Company or to cease operations or has norealistic alternative but to do so.
Those Board of Directors are also responsible for overseeing the Company's financialreporting process.
Auditor's Responsibilities for the Audit of the Standalone Financial Statements
Our objectives are to obtain reasonable assurance about whether the StandaloneFinancial Statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these Standalone Financial Statements.
As a part of an audit in accordance with SA's we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the StandaloneFinancial Statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrol.
Obtain an understanding of internal control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under section 143(3)
(i) of the Companies Act 2013 we are also responsible for expressing our opinion onwhether the company has adequate internal financial controls system in place and theoperating effectiveness of such controls.
Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basisof accounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe Standalone Financial Statements or if such disclosures are inadequate to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor's report. However future events or conditions may cause the Company to cease tocontinue as a going concern.
Evaluate the overall presentation structure and content of the StandaloneFinancial Statements including the disclosures and whether the Standalone FinancialStatements represent the underlying transactions and events in a manner that achieves fairpresentation.
We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.
From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the Standalone Financial Statementsof the current period and are therefore the key audit matters. We describe these mattersin our auditor's report unless law or regulation precludes public disclosure
about the matter or when in extremely rare circumstances we determine that a mattershould not be communicated in our report because the adverse consequences of doing sowould reasonably be expected to outweigh the public interest benefits of suchcommunication.
Report on Other Legal and Regulatory Requirements
1. 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 Balance Sheet the Statement of Profit and Loss and the Cash Flow Statementdealt with by this Report are in agreement with the books of account.
(d) In our opinion the aforesaid Standalone Financial Statements comply with theAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014.
(e) On the basis of the written representations received from the directors as on March31 2020 taken on record by the Board of Directors none of the directors is disqualifiedas on March 312020 from being appointed as a director in terms of Section 164 (2) of theAct.
(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".
(g) With respect to the other matters to be included in the Auditor's Report inaccordance with the requirements of Section 197(16) of the Act amended:
In our opinion and to the best of our information and according to the explanationsgiven to us the remuneration paid by the Company to its directors during the year is inaccordance with the provisions of Section 197 of the Act.
(h) With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our information and according to the explanations given to us:
i. The Company has disclosed the impact of pending litigations on its financialposition in its Standalone Financial Statements - Refer Note 27 to the StandaloneFinancial 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 Note 36 to the Standalone 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 the following.
a) There have been delays in crediting unpaid dividend amount to Investor Education andProtection Fund.
2. 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 Companies Act 2013 we give in the "Annexure B" a statement on the mattersspecified in paragraphs 3 and 4 of the Order to the extent applicable.
| ||For Kirtane & Pandit LLP |
| ||Chartered Accountants |
| ||FRN: 105215W/W100057 |
| ||Sd/- |
|UDIN: 20047973AAAABP4675 ||Milind Bhave |
|Place: Mumbai ||Partner |
|Date: May 15 2020 ||Membership No.: 047973 |
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 Aarti DrugsLimited ("the Company") as of March 31 2020 in conjunction with our audit ofthe Standalone Financial Statements of the Company for 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 Companies Act 2013.
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 Companies Act 2013 to the extentapplicable to an audit of internal financial controls both applicable to an audit ofInternal Financial Controls and both issued by the Institute of Chartered Accountants ofIndia. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls over financial reporting
was established and maintained and if such controls operated effectively in allmaterial respects.
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 Standalone Financial Statements whether due to fraud orerror.
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 Standalone Financial Statements for external purposes in accordance withgenerally accepted accounting principles. A company's internal financial control overfinancial reporting includes those policies and procedures that (1) pertain to themaintenance of records that in reasonable detail accurately and fairly reflect thetransactions and dispositions of the assets of the company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of StandaloneFinancial Statements in accordance with generally accepted accounting principles and thatreceipts and expenditures of the company are being made only in accordance withauthorizations of management and directors of the company; and (3) provide reasonableassurance regarding prevention or timely detection of unauthorized acquisition use ordisposition of the company's assets that could have a material effect on the StandaloneFinancial 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.
In our opinion 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 March 31 2020 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.
| ||For Kirtane & Pandit LLP |
| ||Chartered Accountants |
| ||FRN: 105215W/W100057 |
| ||Sd/- |
| ||Milind Bhave |
| ||Partner |
| ||Membership No.: 047973 |
|UDIN: 20047973AAAABP4675 || |
|Place: Mumbai || |
|Date: May 15 2020 || |
Annexure B referred to in paragraph 2 under 'Report on Other Legal and RegulatoryRequirements' section of our Report of even date to the members of Aarti Drugs Limited onthe accounts of the company for the year ended March 31 2020.
On the basis of such checks as we considered appropriate and according to theinformation and explanations given to us during the course of our audit we report that:
(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of Property Plant & Equipments;
(b) The Company has phased programme of physical verification of Property Plant &Equipments by which all Property Plant & Equipment are verified over a period ofthree years. In our opinion periodicity of the physical verification is reasonable havingthe regard to the size of the Company and nature of assets. We have informed that nomaterial discrepancies were noticed on such verification;
(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 the immovable propertiesother than self- constructed immovable properties (buildings) are held in the name of theCompany except leasehold lands Plot No. E-105 E-106 R-A/13 S-33/34 (aggregate bookvalue 26.57 Lakhs) are in the name of erstwhile entities which are merged with theCompany. According to explanations obtained from management in view of merger throughCourt scheme leasehold rights are deemed to be transferred to the Company and procedurefor transferring in the name of the Company is yet to be completed.
(ii) The Management has been conducted physical verification of the inventories atreasonable intervals except stock lying with the third parties. In our opinion theprocedures of physical verification of inventory followed by the management reasonable andadequate in relation to the size of the Company and the nature of its business. Thediscrepancies noticed on physical verification of stocks as compared to book records werenot material; However the same have been dealt with in books of accounts.
(iii) The Company has not granted any loans secured or unsecured to Companies FirmsLLP or other parties covered in the register maintained under Section 189 of the CompaniesAct 2013.
(iv) In our opinion and according to the information and explanation given to us theCompany has complied with provisions of Section 185 and Section 186 of the Act withrespect to loans and investments made.
(v) The Company has not accepted any deposits from the public covered under Section 73to 76 of the Companies Act 2013.
(vi) We have broadly reviewed the books of account maintained by the Company pursuantto the rules made by the Central Government of India for the maintenance of cost recordsunder Section 148(1) of the Act and are of the opinion that prima facie the prescribedaccounts and records have been made and maintained. We have not however made a detailedexamination of the records with a view to determine whether they are accurate or complete.
(vii) According to the information and explanations given to us and based on therecords of the company examined by us
(a) The company has generally been regular in depositing the undisputed statutory duesincluding Provident Fund Employees' State Insurance Income-tax Goods & Service TaxCustom Duty and other material statutory dues as applicable with the appropriateauthorities in India;
According to the information and explanation given to us no undisputed amount payablein respect of Provident Fund Employees' State Insurance Income-tax Goods & ServiceTax Custom Duty and other material statutory dues were in arrears as at March 31 2020for a period of more than six months from the date they become payable.
(b) According to the information and explanations given to us and based on the recordsof the company examined by us there are no dues of Income Tax Goods & Service Taxand Customs Duty which have not been deposited on account of any disputes.
|Name of the Statute/Nature of the Dues ||Financial Year || |
Forum where Dispute is pending (Rs in Lakhs)
|Total (Rs in Lakhs) |
| || ||Commissionerate/ Dy. Commissioner ||Appellate Authorities/ Tribunals || |
|The Central Excise Act 1944/Custom Duty/ Service Tax/Interest & Penalty ||FY 2007-08 to FY 2014-15 ||NIL ||350.02 ||350.02 |
|Maharashtra Sales Tax Act 2002/Sales Tax ||FY 2007-08 to FY 2014-15 ||30.55 ||NIL ||30.55 |
|Income Tax/ Interest & Penalty ||FY 2015-16 & FY 2016-17 ||NIL ||3.23 ||3.23 |
|Total || ||30.55 ||353.25 ||383.80 |
(viii) In our opinion and according to the information and explanations given to usand based on our examination of the records the Company has not defaulted in repayment ofloans or borrowings to a financial institution bank government or dues to debentureholders.
(ix) In our opinion and according to the information and explanations given to us theTerm Loans raised during the year were applied for the purpose for which the loans wereobtained. The Company did not raise money by way of public offer or further public offer(including debt instruments) during the year.
(x) According to the information and explanations given to us we have not noticed anyfraud by the company or any fraud on the company by its officers or employees during thecourse of audit.
(xi) According to the information and explanations given to us and based on ourexamination of the records of the Company the company has been paid or payable managerialremuneration in accordance with the requisite approvals mandated by the provisions ofSection 197 read with Schedule V of the Act.
(xii) According to the information and explanations given to
us the nature of business is not related to Nidhi Company. Accordingly paragraph3(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 incompliances with the Section 177 & 188 of the Act and details have been disclosed inthe Standalone Financial Statements as required by the applicable Accounting Standards.
(xiv) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year. Accordingly paragraph 3(xiv) of the Order is not applicable.
(xv) According to the information and explanations given to us the Company has notentered into any non-cash transactions with directors or persons connected with him.Accordingly paragraph 3(xv) of the Order is not applicable.
(xvi) The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934.
| ||For Kirtane & Pandit LLP Chartered Accountants |
| ||FRN: 105215W/W100057 |
|UDIN: 20047973AAAABP4675 ||Sd/- |
|Place: Mumbai ||Milind Bhave |
|Date: May 15 2020 ||Partner |
| ||Membership No.: 047973 |