To the Members of Abbott India Limited
Report on the audit of the Ind AS Financial Statements
We have audited the accompanying Ind AS financial statements of Abbott India Limited("the Company") which comprise the Balance Sheet as at March 31 2019 theStatement of Profit Loss including the statement of Other Comprehensive Income the CashFlow Statement and the Statement of Changes in Equity for the year then ended and notesto the financial statements including a summary of significant explanatory information.
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid Ind AS financial statements give the information required bythe Companies Act 2013 ("the Act") in the manner so required and give a trueand fair view in conformity with the accounting principles generally accepted in India ofthe state of affairs of the Company as at March 31 2019 its profit including othercomprehensive income its cash flows and the changes in equity for the year ended on thatdate.
Basis for Opinion
We conducted our audit of the Ind AS financial statements in accordance with theStandards on Auditing (SAs) as specified under Section 143(10) of the Act. Ourresponsibilities under those Standards are further described in the Auditor'sResponsibilities for the Audit of the Ind AS Financial Statements' section of our report.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 financial statements under the Act and the Rulesthereunder and we have fulfilled our other ethical responsibilities in accordance withthese requirements and the Code of Ethics. We believe that the audit evidence we haveobtained is sufficientand appropriate to provide a basis for our audit opinion on the IndAS financial statements.
Key Audit Matters
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the Ind AS accounting policies and other financial statementsfor the financial year ended March 31 2019.
These matters were addressed in the context of our audit of the
Ind AS financial statements as a whole and in forming our opinion thereon and we donot provide a separate opinion on these matters. For each matter below our description ofhow our audit addressed the matter is provided in that context.
We have determined the matters described below to be the key audit matters to becommunicated in our report. We have fulfilled the responsibilities described in theAuditor's responsibilities for the audit of the Ind AS financial statements section of ourreport including in relation to these matters. Accordingly our audit included theperformance of procedures designed to respond to our assessment of the risks of materialmisstatement of the Ind AS financial statements. The results of our audit proceduresincluding the procedures performed to address the matters below provide the basis for ouraudit opinion on the accompanying Ind
AS financial statements.
|Key audit matter ||How our audit addressed the key audit matter |
|Provision for Non-Saleable returns (as described in Note 24 of the Ind AS financial statements) || |
|The Company makes sales to stockists who further sells products in the market. Stockists have a right of return in case goods are not sold further during shelf lives of the products. Return of these expired goods result in deductions to gross amounts invoiced in arriving at revenue and creation of obligations for the Company to give credit for sales returns. ||Our audit procedures included amongst others |
| ||Obtained an understanding of management process for making provision for non-saleable returns including related controls. |
|The amounts pertaining to such sales return are estimated at the time of sale and deducted from gross sales and recorded as provisions for sales returns. These estimates are based on analysis of historical trends of sales return and shelf life of the products. ||Tested the Companys key controls relating to the deductions made to gross sales for sales returns including those controls over booking of sales and sales return process. |
|The management has determined provision for sales returns amounting to र 12917.77 Lakhs which have been recorded at March 31 2019 (including reimbursable provision for sales return amounting to र 6009.65 Lakhs) ||We obtained management's calculations for provisions recalculated the amounts and validated the assumptions used by reference to historical sales returns levels and current trends. |
| ||We considered the management's estimates in previous years by comparing historical accrued provisions and revenue deductions recorded to the actual amounts. |
|We focused on this area because establishing an appropriate year- end position requires significant judgement and estimation by the management. The assumptions required for estimating provisions for sales returns are complex in nature the estimates may not be appropriate and as a result provisions and revenue may be incorrectly recorded. ||We tested the working of discounting of non-current provisions for sales return prepared by the management. |
| ||We understood and assessed the Company's revenue recognition accounting policies including the recognition and measurement of deductions to gross sales relating to sales returns and related disclosures. |
Information Other than the 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 Annual report but does not includethe Ind AS financial statements and our auditor's report thereon.
Our opinion on the Ind AS financial statements does not cover the other information andwe do not express any form of assurance conclusion thereon.
In connection with our audit of the Ind AS financial statements our responsibility isto read the other information and in doing so consider whether the other information ismaterially inconsistent with the financial statements or our knowledge obtained in theaudit or otherwise appears to be materially misstated. If based on the work we haveperformed we conclude that there is a material misstatement of this other information weare required to report that fact. We have nothing to report in this regard.
Responsibilities of Management for the Ind AS 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 controls system of these Ind ASfinancial statements that give a true and fair view of the financial position financialperformance including other comprehensive income cash flows of the Company in accordancewith the accounting principles generally accepted in India including the IndianAccounting Standards (Ind AS) specified under Section 133 of the Act read with theCompanies (Indian Accounting Standards) Rules 2015 as amended. This responsibility alsoincludes maintenance of adequate accounting records in accordance with the provisions ofthe Act for safeguarding of the assets of the Company and for preventing and detectingfrauds and other irregularities; selection and application of appropriate accountingpolicies; making judgments and estimates that are reasonable and prudent; and the designimplementation 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 Ind AS financial statementsthat give a true and fair view and are free from material misstatement whether due tofraud or error.
In preparing the Ind AS financial statements management is responsible for assessingthe Company's ability to continue as a going concern disclosing as applicable mattersrelated to going concern and using the going concern basis of accounting unless managementeither intends to liquidate the Company or to cease operations or has no realisticalternative but to do so.
The Board of Directors is also responsible for overseeing the Company's financialreporting process.
Auditor's Responsibilities for the Audit of the Ind AS Financial Statements
Our objectives are to obtain reasonable assurance about whether the Ind AS financialstatements as a whole are free from material misstatement whether due to fraud or errorand to issue an auditor's report that includes our opinion. Reasonable assurance is a highlevel of assurance but is not a guarantee that an audit conducted in accordance with SAswill always detect a material misstatement when it exists. Misstatements can arise fromfraud or error and are considered material if individually or in the aggregate theyinfluencethe could reasonably be expected to economic decisions of users taken on thebasis of these Ind AS financial statements.
As part of an audit in accordance with Standards on Auditing (SAs) we exerciseprofessional judgment and maintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the Ind AS financialstatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentional omissions misrepresentations or the override of internal control.
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 theAct we are also responsible for expressing our opinion on whether the Company hasadequate internal financial in place and the operating effectiveness of such controls.
Evaluate the appropriateness of accounting policies used and changes in equity and thereasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basis ofaccounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant on the Company's abilityto continue as a going concern. If we conclude that a material uncertainty exists we arerequired to draw attention in our auditor's report to the related disclosures in thefinancial statements or if such disclosures are inadequate to modify our opinion. Ourconclusions are based on the audit evidence obtained up to the date of our auditor'sreport. However future events or conditions may cause the Company to cease to continue asa going concern.
Evaluate the overall presentation structure and content of the Ind AS financialstatements including the disclosures and whether the Ind AS financial statementsrepresent 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 anyinternal 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 Ind AS financial financial yearended March 31 2019 and are therefore the key audit matters. We describe these matters inour auditor's report unless law or regulation precludes public disclosure about the matteror when in extremely rare circumstances 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 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 Act we give in in the Annexure 1 a statement on the matters specified paragraphs 3and 4 of the Order.
2. 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 purpose 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 Statement of Profit and Loss including the Statement of OtherComprehensive Income the Cash Flow Statement and Statement of Changes in Equity dealtwith by this Report are in agreement with the books of account;
(d) In our opinion the aforesaid Ind AS financial statements comply with theAccounting Standards specified under Section 133 of the Act read with Companies (IndianAccounting Standards) Rules 2015 as amended;
(e) On the basis of written representations received from the directors as on March 312019 and taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2019 from being appointed as a director in terms of Section 164 (2) ofthe Act;
(f) With respect to the adequacy of the internal financial controls overfinancialreporting of the Company with reference to these Ind AS financial statements andthe operating effectiveness of such controls refer to our separate Report in"Annexure 2" to this report;
(g) In our opinion the managerial remuneration for the year ended March 31 2019 hasbeen paid/provided by the Company to its directors in accordance with the provisions ofSection 197 read with Schedule V to the Act; (h) With respect to the other matters to beincluded in the Auditor's Report in accordance with Rule 11 of the Companies (Audit andAuditors) Rules 2014 in our opinion and to the best of our information and according tothe explanations given to us :
i. The Company has disclosed the impact of pending litigations on its financialposition in its Ind AS financial statements Refer Note 39 to the Ind AS financialstatements;
ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses; and
iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.
ANNEXURE 1 TO THE INDEPENDENT AUDITOR'S REPORT OF EVEN DATE ON THE STANDALONE FINANCIALSTATEMENTS OF ABBOTT INDIA LIMITED
(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
(b) Some fixed assets were physically verifiedby the management during the year inaccordance with a planned programme of verifying them once in three years which in ouropinion is reasonable having regard to the size of the Company and the nature of itsassets. No material discrepancies were noticed on such verification.
(c) According to the information and explanations given by the management the titledeeds of immovable properties included in property plant and equipment are held in thename of the Company except for the following :
|Sr. No. ||Asset Category ||Gross Block at March 31 2019 ||Net Block at March 31 2019 ||Remarks |
| || ||(र in Lakhs) ||(र in Lakhs) || |
|1 ||Buildings ||641.98 ||560.02 ||The title deeds are in the erstwhile name of the Company. |
|2 ||Buildings ||3050.61 ||2771.63 ||The title deeds are in the name of the entities that was merged with the Company. |
(ii) The management has conducted physical verification of inventory at reasonableintervals during the year and no material discrepancies were noticed on such physicalverification. Inventories lying with third parties have been confirmed by them as at yearend and no material discrepancies were noticed in respect of such confirmations.
(iii) According to the information and explanations given to us the Company has notgranted any loans secured or unsecured to companies firms Limited LiabilityPartnerships or other parties covered in the register maintained under Section 189 of theCompanies Act 2013. Accordingly the provisions of clause 3(iii) (a) (b) and (c) of theOrder are not applicable to the Company and hence not commented upon.
(iv) In our opinion and according to the information and explanations given to usprovisions of Section 185 and 186 of the Companies Act 2013 in respect of loans todirectors including entities in which they are interested and in respect of loans andadvances given investments made and guarantees and securities given have been compliedwith by the Company.
(v) The Company has not accepted any deposits within the meaning of Sections 73 to 76of the Act and the Companies (Acceptance of Deposits) Rules 2014 (as amended).Accordingly the provisions of clause 3(v) of the Order are not applicable.
(vi) We have broadly reviewed the books of account maintained by the Company pursuantto the rules made by the Central Government for the maintenance of cost records underSection 148 (1) of the Companies Act 2013 related to the manufacture of formulationsand are of the opinion that prima facie the specified accounts and records have been madeand maintained. We have not however made a detailed examination of the same.
(vii) (a) The Company is generally regular in depositing undisputed statutory duesincluding provident fund employees' state insurance income tax duty of custom goodsand services tax cess and other statutory dues applicable to it with appropriateauthorities.
(b) According to the information and explanations given to us no undisputed amountspayable in respect of provident fund employees' state insurance income tax duty ofcustom goods and services tax cess and other statutory dues were outstanding at theyear end for a period of more than six months from the date they became payable.
(c) According to the records of the Company the dues of income tax sales tax servicetax duty of custom duty of excise value added tax and cess on account of any disputeare as follows :
|Name of the Statute ||Nature of Dues ||Amount disputed in र Lakhs (net of payments) ||Forum where dispute is pending ||Period to which the amount relates |
|Income Tax Act 1961 ||Income Tax ||277.10 ||ITAT ||A.Y. 2006-2007 and A.Y. 2011-12 |
|Central Excise Act 1944 ||Excise Duty ||3.20 ||Commissioner (Appeals) ||1991-1992 |
| || ||3.56 ||Commissioner ||1994-1995 |
| || ||2.51 ||Assistant Commissioner ||1994 and 1997 to 2002 |
| || ||26.72 ||CESTAT ||2005 to 2006 |
|The Bombay Sales Tax Act 1959 ||Sales Tax ||39.87 ||Deputy Commissioner of Sales Tax ||1999-2000 |
|Uttar Pradesh Value Added Tax Act 2008 ||Value Added Tax ||1.50 ||Additional Commissioner of Commercial Tax (Appeals) ||2008 to 2010 |
|Kerala General Sales Tax Act 1963 ||Sales Tax ||13.05 ||Sales Tax Appellate Tribunal Additional Bench ||2002-2003 |
|Goa Value Added Tax Act 2005 ||Value Added Tax ||2.07 ||Additional Commissioner of Commercial Taxes ||2006-2007 |
|Central Sales Tax 1956 (Goa) ||Sales Tax ||900.80 ||Additional Commissioner of Commercial Taxes Panaji Goa ||2006 to 2009 |
|The Assam Central ||Sales Tax ||16.67 ||Assistant Commissioner of Commercial Taxes Panaji Goa ||2009-2010 |
|Sales Tax Act 1956 || ||10.23 ||Commissioner of Taxes Assam ||2012-13 |
|Maharashtra Value Added Tax Act 2002 ||Value Added Tax ||2767.18 ||Deputy Commissioner of Sales Tax (Appeals) ||2011-12 |
|Customs Act 1962 ||Custom Duty ||4.43 ||Commissioner (Appeals) ||1996 |
| || ||75.00 ||CESTAT ||2011 to 2013 |
(viii) The Company did not have any outstanding loans or borrowing dues in respect of afinancial institution or bank or to government or dues to debenture holders during theyear.
(ix) According to the information and explanations given by the management the Companyhas not raised any money by way of initial public offer/further public offer/debtinstruments and term loans and hence reporting under clause (ix) is not applicable to theCompany and not commented upon.
(x) Based upon the audit procedures performed for the purpose of reporting the true andfair view of the financial statements and according to the information and explanationsgiven by the management we report that no fraud by the Company or no material fraud onthe Company by the officers and employees of the Company has been noticed or reportedduring the year.
(xi) According to the information and explanations given by the management themanagerial remuneration has been paid/provided in accordance with the requisite approvalsmandated by the provisions of Section 197 read with Schedule V to the Companies Act 2013.(xii) In our opinion the Company is not a nidhi company. Therefore the provisions ofclause 3(xii) of the order are not applicable to the Company and hence not commented upon.
(xiii) According to the information and explanations given by the managementtransactions with the related parties are in compliance with Section 177 and 188 ofCompanies Act 2013 where applicable and the details have been disclosed in the notes tothe financial statements as required by the applicable accounting standards.
(xiv) According to the information and explanations given to us and on an overallexamination of the Balance Sheet the Company has not made any preferential allotment orprivate placement of shares or fully or partly convertible debentures during the yearunder review and hence reporting requirements under clause 3(xiv) are not applicable tothe Company and not commented upon. (xv) According to the information and explanationsgiven by the management the Company has not entered into any non-cash transactions withdirectors or persons connected with him as referred to in Section 192 of Companies Act2013.
(xvi) According to the information and explanations given to us the provisions ofSection 45-IA of the Reserve Bank of India Act 1934 are not applicable to the Company.
ANNEXURE 2 TO THE INDEPENDENT AUDITOR'S REPORT OF EVEN DATE ON THE STANDALONE FINANCIALSTATEMENTS OF ABBOTT INDIA LIMITED
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 AbbottIndia Limited ("the Company") as of
March 31 2019 in conjunction with our audit of the 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 the 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.
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 as specified under Section143(10) of the Companies Act 2013 to the extent applicable to an audit of internalfinancial controls and both issued by the Institute of Chartered Accountants of India.Those Standards and the Guidance Note require that we comply with ethical requirements andplan and perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls over financial reporting was established and maintained and if suchcontrols operated effectively in all material respects. Our audit involves performingprocedures to obtain audit evidence about the adequacy of the internal financial controlssystem over financial reporting and their operating effectiveness. Our audit of internalfinancial controls over financial reporting included obtaining an understanding ofinternal financial controls over financial reporting assessing the risk that a materialweakness exists and testing and evaluating the design and operating effectiveness ofinternal control based on the assessed risk. The procedures selected depend on theauditor's judgement including the assessment of the risks of material misstatement of thefinancial 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 internal financial controls system overfinancial 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 financial reporting includes those policiesand procedures that (1) pertain to the maintenance of records that in reasonable detailaccurately and fairly reflect the transactions and dispositions of the assets of thecompany; (2) provide reasonable assurance that transactions are recorded as necessary topermit preparation of 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 of unauthorisedacquisition use or disposition of the company's assets that could have a material effecton 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 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 2019 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 S R B C & CO LLP
ICAI Firm Registration Number : 324982E/E300003
per Ravi Bansal
Membership Number : 49365
Place : Mumbai
Date : May 27 2019