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Ajanta Pharma Ltd.

BSE: 532331 Sector: Health care
NSE: AJANTPHARM ISIN Code: INE031B01049
BSE 00:00 | 20 May 1733.35 28.00
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OPEN 1714.15
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VOLUME 1449
52-Week high 2420.00
52-Week low 1593.30
P/E 20.57
Mkt Cap.(Rs cr) 14,803
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 1714.15
CLOSE 1705.35
VOLUME 1449
52-Week high 2420.00
52-Week low 1593.30
P/E 20.57
Mkt Cap.(Rs cr) 14,803
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Ajanta Pharma Ltd. (AJANTPHARM) - Auditors Report

Company auditors report

To the Members of

Ajanta Pharma Limited

REPORT ON THE AUDIT OF THE STANDALONE FINANCIAL STATEMENTS

Opinion

We have audited the standalone financial statements of Ajanta PharmaLimited ("the Company") which comprise the standalone balance sheet as at 31March 2021 and the standalone statement of profit and loss (including other comprehensiveincome) standalone statement of changes in equity and standalone statement of cash flowsfor the year then ended and notes to the standalone financial statements including asummary of the significant accounting policies and other explanatory information.

In our opinion and to the best of our information and according to theexplanations given to us the aforesaid standalone financial statements give theinformation required by the Companies Act 2013 ("Act") in the manner sorequired and give a true and fair view in conformity with the accounting principlesgenerally accepted in India of the state of affairs of the Company as at 31 March 2021and profit and other comprehensive income changes in equity and its cash flows for theyear ended on that date.

Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing(SAs) specified under section 143(10) of the Act. Our responsibilities under those SAs arefurther described in the Auditors' Responsibilities for the Audit of the StandaloneFinancial Statements section of our report. We are independent of the Company inaccordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia together with the ethical requirements that are relevant to our audit of thestandalone financial statements under the provisions of the Act and the Rules thereunderand we have fulfilled our other ethical responsibilities in accordance with theserequirements and the Code of Ethics. We believe that the audit evidence we have obtainedis sufficient and appropriate to provide a basis for our opinion on the standalonefinancial statements.

Key Audit Matters

Key audit matters are those matters that in our professional judgmentwere of most significance in our audit of the standalone financial statements of thecurrent period. These matters were addressed in the context of our audit of the standalonefinancial statements as a whole and in forming our opinion thereon and we do not providea separate opinion on these matters.

Description of Key Audit Matter
Fraud risk and accrual for sales returns in revenue recognition
The key audit matter How the matter was addressed in our audit
Refer note 6.9 of accounting policies and note 51 to the standalone financial statements. Our procedures in respect of recognition of revenue included the following:
As stated in Note 6.9 of accounting policies to the standalone financial statements revenue from sale of products is recognised at a point in time when control of the products is transferred to the customer. Revenue from the sale of goods is measured at the fair value of the consideration received or receivable after adjusting variable components like sales returns. The actual point in time when revenue is recognised varies depending on the specific terms and conditions of the sales contracts entered into with customers. The Company has a large number of customers operating in various geographies and sales contracts with these customers have distinct terms and conditions relating to the recognition of revenue and right of return. - Testing the appropriateness of revenue recognition accounting policies by comparing with applicable accounting standards;
- Testing the design implementation and operating effectiveness of the Company's general IT controls and key IT application as well as manual controls over the Company's financial reporting systems which govern recording of revenue in the correct period;
- Performing substantive testing by selecting samples of revenue transactions recorded during the year- end using statistical sampling and verifying sales invoices/contracts and shipping documents for those transactions;
Revenue is a key performance indicator for the Company. Accordingly there could be pressure to meet the expectations of investors / other stakeholders and / or to meet revenue targets stipulated in performance incentive schemes for a reporting period. We have considered that there is a risk of fraud related to revenue being overstated by recognition before control has passed. - Analysing and testing manual journals posted to revenue on a sample basis to identify any unusual items;
- Testing the sales return data and key considerations used to dertmine the accrual for sales returns including the past trend of returns impact of COVID on the market conditions and impact of new products and expected returns in future.
Accordingly we identified period end recognition of revenue from sale of products as a key audit matter.

Other Information

The Company's management and Board of Directors are responsiblefor the other information. The other information comprises the information included in theCompany's annual report but does not include the financial statements and ourauditors' report thereon.

Our opinion on the standalone financial statements does not cover theother information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the standalone financial statementsour responsibility is to read the other information and in doing so consider whether theother information is materially inconsistent with the standalone financial statements orour knowledge obtained in the audit or otherwise appears to be materially misstated. Ifbased on the work we have performed we conclude that there is a material misstatement ofthis other information we are required to report that fact. We have nothing to report inthis regard.

MANAGEMENT'S AND BOARD OF DIRECTORS' RESPONSIBILITY FOR THE STANDALONEFINANCIAL STATEMENTS

The Company's Management and Board of Directors are responsiblefor the matters stated in section 134(5) of the Act with respect to the preparation ofthese standalone financial statements that give a true and fair view of the state ofaffairs profit/loss and other comprehensive income changes in equity and cash flows ofthe Company in accordance with the accounting principles generally accepted in Indiaincluding the Indian Accounting Standards (Ind AS) specified under section 133 of the Act.This responsibility also includes maintenance of adequate accounting records in accordancewith the provisions of the Act for safeguarding of the assets of the Company and forpreventing 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 accuracy and completeness of theaccounting records relevant to the preparation and presentation of the standalonefinancial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.

In preparing the standalone financial statements the Management andBoard of Directors are responsible for assessing the Company's ability to continue asa going concern disclosing as applicable matters related to going concern and using thegoing concern basis of accounting unless the Board of Directors either intends toliquidate the Company or to cease operations or has no realistic alternative but to doso.

The Board of Directors is also responsible for overseeing theCompany's financial reporting process.

AUDITORS' RESPONSIBILITIES FOR THE AUDIT OF THE STANDALONE FINANCIALSTATEMENTS

Our objectives are to obtain reasonable assurance about whether thestandalone financial statements as a whole are free from material misstatement whetherdue to fraud or error and to issue an auditors' report that includes our opinion.Reasonable assurance is a high level of assurance but is not a guarantee that an auditconducted in accordance with SAs will always detect a material misstatement when itexists. Misstatements can arise from fraud or error and are considered material ifindividually or in the aggregate they could reasonably be expected to influence theeconomic decisions of users taken on the basis of these standalone financial statements.

As part of an audit in accordance with SAs we exercise professionaljudgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of thestandalone financial statements whether due to fraud or error design and perform auditprocedures responsive to those risks and obtain audit evidence that is sufficient andappropriate to provide a basis for our opinion. The risk of not detecting a materialmisstatement resulting from fraud is higher than for one resulting from error as fraudmay involve collusion forgery intentional omissions misrepresentations or the overrideof internal control.

• Obtain an understanding of internal control relevant to theaudit in order to design audit procedures that are appropriate in the circumstances. Undersection 143(3) (i) of the Act we are also responsible for expressing our opinion onwhether the Company has adequate internal financial controls with reference to financialstatements in place and the operating effectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures in the standalone financialstatements made by the Management and Board of Directors.

• Conclude on the appropriateness of the Management and Board ofDirectors use of the going concern basis of accounting and based on the audit evidenceobtained whether a material uncertainty exists related to events or conditions that maycast significant doubt on the Company's ability to continue as a going concern. If weconclude that a material uncertainty exists we are required to draw attention in ourauditors' report to the related disclosures in the standalone financial statementsor if such disclosures are inadequate to modify our opinion. Our conclusions are basedon the audit evidence obtained up to the date of our auditors' report. Howeverfuture events or conditions may cause the Company to cease to continue as a going concern.

• Evaluate the overall presentation structure and content of thestandalone financial statements including the disclosures and whether the standalonefinancial statements represent the underlying transactions and events in a manner thatachieves fair presentation.

We communicate with those charged with governance regarding amongother matters the planned scope and timing of the audit and significant audit findingsincluding any significant deficiencies in internal control that we identify during ouraudit.

We also provide those charged with governance with a statement that wehave complied with relevant ethical requirements regarding independence and tocommunicate with them all relationships and other matters that may reasonably be thoughtto bear on our independence and where applicable related safeguards.

From the matters communicated with those charged with governance wedetermine those matters that were of most significance in the audit of the standalonefinancial statements of the current period and are therefore the key audit matters. Wedescribe these matters in our auditors' report unless law or regulation precludespublic disclosure about the matter or when in extremely rare circumstances we determinethat a matter should not be communicated in our report because the adverse consequences ofdoing so would reasonably be expected to outweigh the public interest benefits of suchcommunication.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

1. As required by the Companies (Auditors' Report) Order 2016("the Order") issued by the Central Government in terms of section 143 (11) ofthe Act we give in the "Annexure A" a statement on the matters specified inparagraphs 3 and 4 of the Order to the extent applicable.

2. (A) As required by Section 143(3) of the Act we report that:

a) We have sought and obtained all the information and explanationswhich to the best of our knowledge and belief were necessary for the purposes of ouraudit.

b) In our opinion proper books of account as required by law have beenkept by the Company so far as it appears from our examination of those books.

c) The standalone balance sheet the standalone statement of profit andloss (including other comprehensive income) the standalone statement of changes in equityand the standalone statement of cash flows dealt with by this Report are in agreement withthe books of account.

d) In our opinion the aforesaid standalone financial statements complywith the Ind AS specified under section 133 of the Act.

e) On the basis of the written representations received from thedirectors as on 31 March 2021 taken on record by the Board of Directors none of thedirectors is disqualified as on 31 March 2021 from being appointed as a director in termsof Section 164(2) of the Act.

f) With respect to the adequacy of the internal financial controls withreference to financial statements of the Company and the operating effectiveness of suchcontrols refer to our separate Report in "Annexure B".

(B) With respect to the other matters to be included in theAuditors' Report in accordance with Rule 11 of the Companies (Audit and Auditors)Rules 2014 in our opinion and to the best of our information and according to theexplanations given to us:

i. The Company has disclosed the impact of pending litigations as at 31March 2021 on its financial position in its standalone financial statements - Refer Note53 to the standalone financial statements.

ii. The Company does not have any material foreseeable losses onlong-term contracts including derivative contracts during the year ended 31 March 2021.

iii. There has been no delay in transferring amounts required to betransferred to the Investor Education and Protection Fund by the Company.

iv. The disclosures in the standalone financial statements regardingholdings as well as dealings in specified bank notes during the period from 8 November2016 to 30 December 2016 have not been made in these financial statements since they donot pertain to the financial year ended 31 March 2021.

(C) With respect to the matter to be included in the Auditors'Report under section 197(16):

In our opinion and according to the information and explanations givento us the remuneration paid by the Company to its directors during the current year is inaccordance with the provisions of Section 197 of the Act. The remuneration paid to anydirector is not in excess of the limit laid down under Section 197 of the Act. TheMinistry of Corporate Affairs has not prescribed other details under Section 197(16) whichare required to be commented upon by us.

For B S R & Co. LLP
Chartered Accountants
Firm's Registration No: 101248W/W-100022
Sreeja Marar
Partner
Mumbai Membership No: 111410
30 April 2021 UDIN: 21111410AAAAAL2645

Annexure A to the Independent Auditors Report 31 March 2021

(Referred to in our report of even date)

(i) (a) The Company has maintained proper records showing fullParticulars including quantitative details and situation of fixed assets.

(b) The Company has a regular programme of physical verification bywhich all property plant and equipment are verified in a phased manner over a period ofthree years. In accordance with this programme a portion of the property plant andequipment has been physically verified by the management during the year and no materialdiscrepancies have been noticed on such verification. In our opinion this periodicity ofphysical verification is reasonable having regard to the size of the Company and thenature of its assets.

(c) According to the information and explanations given to us and basedon the examination of the registered sale deed / transfer deed / conveyance deed / sharecertificate / other documents evidencing title we report that the title deeds ofimmovable properties of land and building which are freehold as disclosed in Note 8 tothe standalone financial statements are held in the name of the Company. In respect ofimmovable properties of land and buildings that have been taken on lease and disclosed asright of use assets in Note 8 to the standalone financial statements the lease agreementsare in the name of the Company.

(ii) The inventory except goods-in-transit and goods lying with thirdparties have been physically verified by the management at reasonable intervals duringthe year. In our opinion the frequency of such verification is reasonable. In respect ofinventory lying with third parties at year end these have substantially been confirmed bythem. The discrepancies noticed on verification between the physical stocks and the bookrecords were not material.

(iii) In our opinion and according to information and explanationsgiven to us the Company has not granted any loans secured or unsecured to companiesfirms Limited Liability Partnerships or other parties covered in the register maintainedunder Section 189 of the Act. Accordingly paragraph 3(iii) of the Order is not applicableto the Company.

(iv) In our opinion and according to the information and explanationgiven to us the Company has complied with the provisions of Section185 and 186 of theAct in respect of investments made and guarantee provided as applicable. The Company hasnot granted any loans or security on behalf of the parties covered under Section 185 and186 of the Act.

(v) According to the information and explanations given to us theCompany has not accepted any deposits as per the directives issued by the Reserve Bank ofIndia under the provisions of Sections 73 to 76 or any other relevant provisions of theAct and the rules framed there under. Accordingly paragraph 3(v) of the Order is notapplicable to the Company.

(vi) We have broadly reviewed the records maintained by the Companypursuant to the rules prescribed by Central Government for maintenance of cost recordsunder Section 148 (1) of the Act for drugs and pharmaceutical products and are of theopinion that prima facie the prescribed accounts and records have been made andmaintained. However we have not made a detailed examination of the records.

(vii) (a) According to the information and explanations given to us andon the basis of our examination of the records of the Company amounts deducted/ accruedin the books of account in respect of undisputed statutory dues including income- taxduty of customs provident fund employees' state insurance goods and service taxcess and other material statutory dues have been generally regularly deposited during theyear by the Company with the appropriate authorities though there have been slight delaysin few payments of professional tax.

According to the information and explanations given to us noundisputed amounts payable in respect of provident fund employees' state insuranceincome-tax goods and service tax sales-tax service tax duty of customs duty ofexcise value added tax cess and other material statutory dues were in arrears as at 31March 2021 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us thereare no dues of Income tax Sales Tax Value added tax Service tax duty of Customs dutyof Excise Goods and Service tax and Cess which have not been deposited with theappropriate authorities on account of any dispute except as stated below.

Rs. in Crore
Name of the Statute Nature of dues Amount Demanded Amount not deposited under dispute Amount deposited under dispute Period to which the amount relates Forum where dispute is pending
Central Goods & Service Tax Act 2017 GST 0.26 0.25 0.01 FY 2017-18 Joint Commissioner (Appeals) Hyderabad
Central Goods & Service Tax Act 2017 GST 0.01 0.01 - FY 2017-18 Assistant Commissioner Palghar
Central Excise Act 1944 Excise duty 0.20 0.20 - FY 2010-11 to FY 2015-16 CESTAT Bengaluru
Central Excise Act 1944 Excise duty 0.05 0.05 - FY 2006-07 to FY 2010-11 CESTAT Mumbai
Kerala VAT Act VAT 1.83 1.63 0.20 FY 2012-13 Deputy Commissioner (Appeals) SGST Ernakulam
Central Sales Tax Act CST 0.04 0.03 0.01 FY 2012-13 Deputy Commissioner (Appeals) SGST Ernakulam
Gujarat VAT Act CST 0.02 0.02 - FY 2015-16 Assistant Commissioner Ahmedabad
Assam VAT Act CST 0.01 0.01 - FY 2016-17 Superintendent of Taxes Guwahati
Kerala VAT Act VAT 0.37 0.37 - F.Y 2014-15 Deputy Commissioner SGST Ernakulam
Gujarat VAT Act CST 0.16 0.14 0.02 FY 2016-17 Assistant Commissioner Ahmedabad
Gujarat VAT Act CST 0.02 0.02 - FY 2017-18 Assistant Commissioner Ahmedabad
Central Goods & Service Tax Act 2017 GST 0.14 - 0.14 FY 2020-21 Assistant Commissioner Agra

(viii) In our opinion and according to the information and explanationsgiven to us the Company does not have any loans or borrowings from any financialinstitution or bank or Government nor has it issued any debentures. Accordinglyparagraph 3(viii) of the Order is not applicable to the Company.

(ix) According to the information and explanations given to us andbased on our examination of the records of the Company the Company has not raised anymoney by way of initial public offer further public offer (including debt instruments)and term loans during the year. Accordingly the paragraph 3(ix) of the Order is notapplicable to the Company.

(x) According to the information and explanations given to us nomaterial fraud by the Company or on the Company by its officers or employees has beennoticed or reported during the year.

(xi) According to the information and explanations given to us andbased on our examination of the records the Company has paid/provided for managerialremuneration in accordance with the requisite approvals mandated by the provisions ofsection 197 read with Schedule V to the Act.

(xii) According to the information and explanations given to us theCompany is not a Nidhi company and the Nidhi Rules 2014 are not applicable to it.Accordingly paragraph 3(xii) of the Order is not applicable to the Company.

(xiii) According to the information and explanations given to us andbased on our examination of the records of the Company transactions with related partiesare in compliance with the provisions of Sections 177 and 188 of the Act where applicableand the details of such related party transactions have been disclosed in the standalonefinancial statements as required under Indian Accounting Standard (Ind AS) 24 RelatedParty Disclosures specified under Section 133 of the Act read with the relevant rulesissued thereunder.

(xiv) According to the information and explanations given to us andbased on our examination of the records 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 to the Company.

(xv) According to the information and explanations given to us andbased on our examination of the records of the Company the Company has not entered intoany non-cash transactions with directors or persons connected with him. Accordinglyparagraph 3(xv) of the Order is not applicable to the Company.

(xvi) In our opinion and according to the information and explanationsgiven to us the Company is not required to be registered under Section 45-IA of theReserve Bank of India Act 1934. Accordingly paragraph 3 (xvi) of the Order is notapplicable to the Company.

For B S R & Co. LLP
Chartered Accountants
Firm's Registration No: 101248W/W-100022
Sreeja Marar
Partner
Mumbai Membership No: 111410
30 April 2021 UDIN: 21111410AAAAAL2645

Annexure B to the Independent Auditors report on thestandalone financial statements of Ajanta Pharma Limited for the period ended 31 March2021

REPORT ON THE INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THEAFORESAID STANDALONE FINANCIAL STATEMENTS UNDER CLAUSE (I) OF SUB-SECTION 3 OF SECTION 143OF THE COMPANIES ACT 2013 (Referred to in paragraph 2(A) (f) under ‘Report on OtherLegal and Regulatory Requirements' section of our report of even date)

OPINION

We have audited the internal financial controls with reference tostandalone financial statements of Ajanta Pharma Limited ("the Company") as of31 March 2021 in conjunction with our audit of the standalone financial statements of theCompany for the year ended on that date.

In our opinion the Company has in all material respects adequateinternal financial controls with reference to financial statements and such internalfinancial controls were operating effectively as at 31 March 2021 based on the internalfinancial controls with reference to financial statements criteria established by theCompany considering the essential components of internal control stated in the GuidanceNote on Audit of Internal Financial Controls Over Financial Reporting issued by theInstitute of Chartered Accountants of India (the "Guidance Note").

MANAGEMENT'S RESPONSIBILITY FOR INTERNAL FINANCIAL CONTROLS

The Company's management and the Board of Directors areresponsible for establishing and maintaining internal financial controls based on theinternal financial controls with reference to financial statements criteria established bythe Company considering the essential components of internal control stated in theGuidance Note. These responsibilities include the design implementation and maintenanceof adequate internal financial controls that were operating effectively for ensuring theorderly and efficient conduct of its business including adherence to company'spolicies the safeguarding of its assets the prevention and detection of frauds anderrors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Companies Act 2013(hereinafter referred to as "the Act").

AUDITORS' RESPONSIBILITY

Our responsibility is to express an opinion on the Company'sinternal financial controls with reference to financial statements based on our audit. Weconducted our audit in accordance with the Guidance Note and the Standards on Auditingprescribed under section 143(10) of the Act to the extent applicable to an audit ofinternal financial controls with reference to financial statements. Those Standards andthe Guidance Note require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance about whether adequate internal financialcontrols with reference to standalone financial statements were established and maintainedand whether such controls operated effectively in all material respects. Our auditinvolves performing procedures to obtain audit evidence about the adequacy of the internalfinancial controls with reference to financial statements and their operatingeffectiveness. Our audit of internal financial controls with reference to financialstatements included obtaining an understanding of such internal financial controlsassessing 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 auditors' judgement 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 andappropriate to provide a basis for our audit opinion on the Company's internalfinancial controls with reference to financial statements.

MEANING OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO FINANCIALSTATEMENTS

A Company's internal financial controls with reference tofinancial statements is a process designed to provide reasonable assurance regarding thereliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles. Acompany's internal financial controls with reference to financial statements includethose policies and procedures that (1) pertain to the maintenance of records that inreasonable detail accurately and fairly reflect the transactions and dispositions of theassets of the Company; (2) provide reasonable assurance that transactions are recorded asnecessary to permit preparation of financial statements in accordance with generallyaccepted accounting principles and that receipts and expenditures of the Company arebeing made only in accordance with authorisations of management and directors of theCompany; 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 WITH REFERENCE TOFINANCIAL STATEMENTS

Because of the inherent limitations of internal financial controls withreference to financial statements including the possibility of collusion or impropermanagement override of controls material misstatements due to error or fraud may occurand not be detected. Also projections of any evaluation of the internal financialcontrols with reference to standalone financial statements to future periods are subjectto the risk that the internal financial controls with reference to standalone financialstatements may become inadequate because of changes in conditions or that the degree ofcompliance with the policies or procedures may deteriorate.

For B S R & Co. LLP
Chartered Accountants
Firm's Registration No: 101248W/W-100022
Sreeja Marar
Partner
Mumbai Membership No: 111410
30 April 2021 UDIN: 21111410AAAAAL2645

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