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Aarti Drugs Ltd.

BSE: 524348 Sector: Health care
NSE: AARTIDRUGS ISIN Code: INE767A01016
BSE 00:00 | 24 Jun 393.00 5.75
(1.48%)
OPEN

394.80

HIGH

395.00

LOW

387.55

NSE 00:00 | 24 Jun 392.15 4.25
(1.10%)
OPEN

389.90

HIGH

395.00

LOW

387.55

OPEN 394.80
PREVIOUS CLOSE 387.25
VOLUME 3676
52-Week high 749.45
52-Week low 378.40
P/E 18.66
Mkt Cap.(Rs cr) 3,639
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 394.80
CLOSE 387.25
VOLUME 3676
52-Week high 749.45
52-Week low 378.40
P/E 18.66
Mkt Cap.(Rs cr) 3,639
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Aarti Drugs Ltd. (AARTIDRUGS) - Auditors Report

Company auditors report

To The Members of

Aarti Drugs Limited

Report on the Audit of the Standalone Financial Statements

Opinion

We have audited the accompanying Standalone Financial Statements of Aarti Drugs Limited("the Company") which comprise the Balance Sheet as at March 31 2021 and theStatement of Profit and Loss (including Other Comprehensive Income) the Statement ofChanges in Equity and the Statement of Cash Flows for the year then ended and notes tothe Standalone Financial Statements policiesincluding a summary of significant and otherexplanatory information (hereinafter referred to as "the Standalone FinancialStatements").

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 2021 and its profit totalcomprehensive income changes in equity and its cash flows for the year ended on thatdate.

Basis for Opinion

We conducted our audit of the standalone financial statements in accordance with theStandards on Auditing (SAs) specified under Section 143(10) of the Act. Ourresponsibilities under those Standards are further described in the Auditor’sResponsibilities for the Audit of the Standalone Financial Statements Section of ourreport. We are independent of the Company in accordance with the Code of Ethics issued bythe Institute of Chartered Accountants of India together with the ethical requirementsthat are relevant to our audit of the Standalone Financial Statements under the provisionsof the Companies Act 2013 and the Rules thereunder and we have fulfilled our otherethical responsibilities in accordance with these requirements and the Code of Ethics. Webelieve that the audit evidence obtained by us is sufficient and appropriate to provide abasis for our opinion on the standalone financial statements.

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 in thelast year we have adopted alternative methodologies using technological solutions inperforming our audit procedures. We have determined the matters described below to the KeyAudit Matters to be communicated in the Report:

Key Audit Matter Auditor’s Response
1. Accuracy Completeness and disclosure with reference to Ind AS 16 of Property Plant and Equipment. Principal Audit Procedures
Peculiarity and technical complexities of Property Plant and Equipment 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 Equipment. Our audit approach consisted of testing of the design and operating effectiveness of the internal controls and substantive testing as follows:
Further due to technical complexities management is required to assess and make estimates/judgments about capitalisation estimated useful life impairment etc. which has material impact on Balance Sheet and operating results 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 capi- talisation of asset as Property Plant and Equip- ment.
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 per- taining to estimation of useful life and depreciation of the Property Plant and Equipment in accordance with Schedule II of Companies Act 2013.
f) We have verified the capitalisation of borrowing cost incurred on qualifying asset in accordance with the Ind AS 23.
2. Valuation Accuracy Completeness and disclosures per- taining to Inventories with reference to Ind AS 2. Principal Audit Procedures
Inventories constitutes material component of financial statement. Correctness completeness and valuation are critical for reflecting true and fair financial results of operations. Our audit approach consisted testing of the design and operating effectiveness of the internal controls and substantive testing as follows:
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 Reportthereon

The Company’s Board of Directors is responsible for the Other Information. Theother information comprises the information included in the Board’s Report includingAnnexures to Board’s Report thereon Directors Report Management and DiscussionAnalysis Business Responsibility Report but does not include Standalone FinancialStatements 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 thework we have performed we conclude that there is a material misstatement of this otherinformation we required to report that fact. We have nothing to report 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; anddesign implementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the Standalone FinancialStatements that give a true and fair view and are free from material misstatement whetherdue 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 asapplicable matters related to going concern and using the going concern basis ofaccounting unless management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so. Those Board of Directors arealso responsible for overseeing the Company’s financial reporting 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. Reasonableassurance is a high level of assurance but is not a guarantee that an audit conducted inaccordance with SAs will always detect a material misstatement when it exists.Misstatements can arise from fraud or error and are considered material if individuallyor in the aggregate they could reasonably be expected to influence the economic decisionsof users taken on the basis of these Standalone Financial Statements.

As a part of an audit in accordance with SA’s we exercise professional judgmentand maintain 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 to designaudit procedures that are appropriate in the circumstances. Under section 143(3)(i) of theCompanies Act 2013 we are also responsible for expressing our opinion on whether theCompany has adequate internal financial controls system in place and the operatingeffectiveness 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 concernbasis of accounting and based on the audit evidence obtained whether a materialuncertainty exists related to events or conditions that may cast significant doubt on the

Company’s ability to continue as a going concern. If we conclude that a materialuncertainty exists we are required to draw attention in our auditor’s report to therelated disclosures in the Standalone Financial Statements or if such disclosures areinadequate to modify our opinion. Our conclusions are based on the audit evidenceobtained up to the date of our auditor’s report. However future events or conditionsmay cause the Company to cease to continue 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 alsoprovide those charged with governance with a statement that we have complied with relevantethical requirements regarding independence and to communicate with them allrelationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards. From the matters communicated withthose charged with governance we determine those matters that were of most significancein the audit of the Standalone Financial Statements of the current period and aretherefore the key audit matters. We describe these matters in our auditor’s reportunless law or regulation precludes public disclosure about the matter or when inextremely rare circumstances financial position we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.

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 Statement of changes in Equity and Cash Flow Statement dealt with by thisReport are in agreement with the books of account.

(d) In our opinion the aforesaid Standalone Financial Statements comply with theIndian Accounting Standards specified under Section 133 of the Act read with Rule 7 ofthe Companies (Accounts) Rules 2014.

(e) On the basis of the written representations received from the directors as on March31 2021 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2021 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 opinionand to the best of our information and according to the explanations given to us theremuneration paid by the Company to its directors during the year is in accordance withthe 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 in its StandaloneFinancial Statements – Refer Note 27 to the Standalone 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 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 ("theOrder") issued by the Central Government of India in terms of Sub-Section (11) ofSection 143 of the Companies Act 2013 we give in the "Annexure B" a statementon the matters specified in paragraphs 3 and 4 of the Order to the extent applicable.

For KIRTANE & PANDIT LLP
Chartered Accountants
Firm’s Registration No: 105215W/W100057
Sd/-
Milind Bhave
Partner
Place: Mumbai Membership No.: 047973
Date: May 15 2021 UDIN: 21047973AAAAAY1485

Annexure A to the Auditor’s Report - March 31 2021

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 2021 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 theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the Companies Act 2013.

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 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 andmaintained and if such controls operated effectively in all material 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 controlssystem over financial reporting.

Meaning of Internal Financial Controls Over Financial Reporting

A company’s internal financial control over financial reporting is a processdesigned to provide reasonable assurance regarding the reliability of financial reportingand the preparation of Standalone Financial Statements for external purposes in accordancewith generally accepted accounting principles. A company’s internal financial controlover financial reporting includes those policies and procedures that

(1) pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the Company;

(2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of Standalone Financial Statements in accordance with generally acceptedaccounting principles and that receipts and expenditures of the Company are being madeonly in accordance with authorisations of management and directors of the Company; and

(3) provide reasonable assurance regarding prevention or timely detection ofunauthorised acquisition use or disposition of the Company’s assets that could havea material effect on the Standalone Financial Statements.

Inherent Limitations of Internal Financial Controls Over Financial Reporting

Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion 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 2021 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
Firm Registration No.: 105215W/W100057
Sd/-
Milind Bhave
Partner
Place: Mumbai Membership No.: 047973
Date: May 15 2021 UDIN: 21047973AAAAAY1485

Annexure B to the Auditor’s Report - March 31 2021

Referred to in paragraph 2 under ‘Report on Other Legal and RegulatoryRequirements’ section of our Report of even date to the members of Aarti DrugsLimited on the accounts of the Company for the year ended March 31 2021.

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

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. According to the informationand explanation given to us no material discrepancies were noticed such

(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 Rs. 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 intervals except stocklying with the third parties. In our opinion the procedures of by physical verificationthe management is reasonable and adequate in relation to the size of the Company and thenature of its business. The discrepancies noticed on physical verification to book recordswere not 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 & ServiceTax Custom Duty and other material statutory dues as applicable with the appropriateauthorities in India; According to the information and explanation given to us noundisputed amount payable in respect of Provident Fund Employees’ State InsuranceIncome-tax Goods & Service Tax Custom Duty and other material statutory dues were inarrears as at March 31 2021 for a period of more than six months from the date theybecome 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)
Commissione rate/ Dy. Commissioner Appellate Authorities/ Tribunals
The Central Excise Act 1944/Custom Duty/ Service Tax/Interest & Penalty FY 2007-08 to FY 2018-19 NIL 456.19 456.19
Maharashtra Sales Tax Act 2002/Sales Tax FY 2007-08 to FY 2017-18 39.36 NIL 39.36
Income Tax/ Interest & Penalty FY 2009-10 to FY 2018-19 NIL 6750.04 6750.04
Total 39.36 7206.23 7245.59

(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 businessis not related to Nidhi Company. Accordingly paragraph 3(xii) of the Order is notapplicable.

(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
Firm Registration No. : 105215W/W100057
Sd/-
Milind Bhave
Partner
Place: Mumbai Membership No.: 047973
Date: May 15 2021 UDIN: 21047973AAAAAY1485

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