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Alkem Laboratories Ltd.

BSE: 539523 Sector: Health care
NSE: ALKEM ISIN Code: INE540L01014
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OPEN 2646.00
PREVIOUS CLOSE 2651.75
VOLUME 1477
52-Week high 3089.55
52-Week low 1945.00
P/E 21.22
Mkt Cap.(Rs cr) 31,402
Buy Price 2625.85
Buy Qty 1.00
Sell Price 2631.15
Sell Qty 13.00
OPEN 2646.00
CLOSE 2651.75
VOLUME 1477
52-Week high 3089.55
52-Week low 1945.00
P/E 21.22
Mkt Cap.(Rs cr) 31,402
Buy Price 2625.85
Buy Qty 1.00
Sell Price 2631.15
Sell Qty 13.00

Alkem Laboratories Ltd. (ALKEM) - Auditors Report

Company auditors report

To the Members of Alkem Laboratories Limited

Report on the Audit of the Standalone Financial

Statements

Opinion

We have audited the standalone financial statements of AlkemLaboratories Limited ("the Company") which comprise the standalone balancesheet as at 31 March 2020 and the standalone statement of profit and loss (includingother comprehensive income) standalone statement of changes in equity and standalonestatement of cash flows for the year then ended and notes to the standalone financialstatements including a summary of the significant accounting policies and otherexplanatory 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 2020and 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 Auditor Rs s 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 Revenue recognition

The key audit matter How the matter was addressed in our audit
• The Company provides a right of return to its customers as a customary business practice. The initial revenue recognition is reduced taking into consideration the anticipated sales return for which a provision is created as underlying revenues are recognized. To obtain sufficient and appropriate audit evidence our principal audit procedures included amongst others
• Evaluated the Company's revenue recognition policies including those relating to anticipated sales returns by confirming compliance with applicable accounting standards.
• Due to the competitive business environment the estimation of provision for anticipated sales return is done considering historical trend of actual returns and expected period over which such products could be returned which is inherently complex and judgmental. Accordingly this was an area of focus for our audit. • Tested design implementation and operating effectiveness of the Company's general IT controls and key application controls over the Company's systems which governs recording of revenue creation of new customers and key controls over revenue cut-off and sales return accruals in the general ledger accounting system.
• Performed substantive testing (including period end cut off testing) by selecting samples of revenue transactions recorded during the year by verifying the underlying documents which include sales/contracts and shipping documents to test evidence for transfer of control.
• Revenue under the new standard is recognized when the control of the products being sold has been transferred to the customer. There is a risk of revenue being overstated at period ends as management to achieve its performance targets may recognize certain transactions as revenue though control may not have transferred to the customer as of the period end. This was an area of focus for us.
• Performed analysis of one-off sales to customers during the year.
• Performed testing by selecting samples relating to actual sales returns recorded during the year by verifying the relevant source documents and comparing the sales return trend with the parameters used in the Company's estimation of sales return provision.
• We have also verified the historical accuracy of the Company's estimates by comparing actual return trends and comparing that with provisions in earlier periods.
• Refer Note 2.9 of the standalone financial statements for details on accounting policy on revenue recognition.
• We assessed significant manual journals posted to revenue to identify unusual items.

Assessment of recoverability of the carrying valueof investment in subsidiaries

The key audit matter How the matter was addressed in our audit
As at 31 March 2020 the Company has investment in subsidiaries. The carrying value of investment in subsidiaries will be recovered through future cash flows and accordingly there is inherent risk that these assets may be impaired if these cash flows do not meet the Company's expectations. Refer Note 2.4 and 3.2 in the standalone financial statements for details of accounting policies on impairment of investment in subsidiaries and related disclosures. To obtain sufficient and appropriate audit evidence our principal audit procedures included amongst others
• Tested operating effectiveness of controls over Company's review of impairment analysis. Assessed the accuracy of prior period cash flow forecasts of the Company by reference to actual performance.
• Using our knowledge of the Company and industry challenged the significant assumptions and judgements used by the Company in its impairment assessment specifically in relation to forecast revenue margins terminal growth rate and discount rates with the assistance of our valuation specialists.
Valuation of investment in subsidiaries is a key audit matter due to:
• Performed sensitivity analysis of the key assumptions including revenue growth rates projected gross margins and the discount rate applied in the recoverable value and considering the resulting impact on the impairment testing and whether there were any indicators of management bias in the selection of these key assumptions;
• The inherent complexity in auditing the forwardlooking assumptions applied to determine recoverable value given the significant judgements involved. The key assumptions in the cash flow models include the forecast revenue margins terminal growth and discount rates.
• Evaluated adequacy of disclosures including disclosures of key assumptions judgements and sensitivities.

Taxation and MAT credit asset

The key audit matter How the matter was addressed in our audit
The Company operates in complex tax jurisdictions including India with various tax exemptions available across regions and are subject to tax challenges and audits by local tax authorities. There are open tax matters under litigation with tax authorities. To obtain sufficient and appropriate audit evidence our principal audit procedures included amongst others
• Tested the operating effectiveness of controls around the recording and re-assessment of tax provisions and disclosure of contingent liabilities.
Judgement is required in assessing the level of provisions and disclosure of contingent liabilities required in respect of uncertain tax positions that reflect Company's best estimate of the most likely outcome based on the facts available. • For uncertain tax positions we read and analysed select correspondence with tax authorities read Company's assessment and conclusion on likely eventual outcome. We also read opinion from third party experts judgement.
The Company pays minimum alternate tax (MAT) under section 115JB of the Income Tax Act 1961. The MAT paid is available as an offset over a period of 15 years. The MAT credit is recognized as a deferred tax asset to be available for offset when the Company pays taxes under the normal provision of Income Tax Act 1961. Refer note 2B(b) to the standalone financial statements. • We used our tax specialists Rs expertise to assess the status of the ongoing tax litigations and uncertain tax positions in tax returns and their most likely outcome basis expertise industry outcomes and Company's own past outcomes in respect of similar matters.
• In respect of deferred tax assets (MAT credit entitlement) we evaluated the Company's assessment and conclusion in relation to for its utilization within the period allowed for carry forward and set off against forecasted taxable income streams.
The recoverability of deferred tax asset on account of MAT credit requires significant judgment regarding the Company's estimation of future profitability and taxable income which will result in utilization of the MAT credit within the time limits available under the applicable Income tax laws.
• We assessed the income tax disclosures in note 3.7 to the standalone financial statements for compliance with applicable Ind AS.

Other Information

The Company's management and Board of Directors are responsible for theother information. The other information comprises the information included in theCompany's annual report but does not include the financial statements and our auditors Rsreport 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 Rs s and Board of Directors Rs Responsibility for theStandalone Financial Statements

The Company's Management and Board of Directors are responsible for thematters stated in section 134(5) of the Act with respect to the preparation of thesestandalone financial statements that give a true and fair view of the state of affairsprofit/loss and other comprehensive income changes in equity and cash flows of theCompany 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 as agoing 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 the Company'sfinancial reporting process.

Auditor Rs s 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 auditor Rs s 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 ourauditor Rs s report to the related disclosures in the standalone financial statements orif such disclosures are inadequate to modify our opinion. Our conclusions are based onthe audit evidence obtained up to the date of our auditor Rs s report. However futureevents 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 Rs report unless law or regulation precludes publicdisclosure about the matter or when in extremely rare circumstances we determine that amatter should not be communicated in our report because the adverse consequences of doingso 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 Rs 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 2020 taken on record by the Board of Directors none of thedirectors is disqualified as on 31 March 2020 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 the Auditors RsReport in accordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 inour opinion and to the best of our information and according to the explanations given tous:

i. The Company has disclosed the impact of pending litigations as at 31March 2020 on its financial position in its standalone financial statements - Refer Note3.26 to the standalone financial statements;

ii. The Company did not have any long-term contracts includingderivative contracts for which there were any material foreseeable losses

iii. There were no amounts which were required to be transferred to theInvestor 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 2020

(C) With respect to the matter to be included in the Auditors Rs Reportunder 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 Rs s Registration No.: 101248W/W-100022
Sadashiv Shetty
Partner
Mumbai Membership No. 048648
5 June 2020 UDIN:20048648AAAAAY5806

Annexure A to the Independent Auditor Rs s Report

The annexure referred to in independent auditors Rs report to themembers of the Company on the standalone financial statements for the year ended 31 March2020. We report that:

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

(b) The Company has a regular program of physical verification of itsfixed assets by which fixed assets are verified in a phased manner over a period of threeyears. In accordance with this program a portion of the fixed assets were to bephysically verified by the management during the year ended 31 March 2020. According tothe information and explanations given to us the Company has not been able to performphysical verification of certain fixed assets with carrying value aggregating Rs 730million due to continued lockdown due to COVID-19. Company does not expect any materialdiscrepancies on verification of those fixed assets once the lockdown restrictions areremoved.

(c) In our opinion and according to the information and explanationsgiven to us and on the basis of our examination of the records of the Company the titledeeds of the immovable properties are held in the name of the company.

(ii) The inventory except goods-in-transit has been physicallyverified by the management during the year. In our opinion the frequency of suchverification is reasonable. The discrepancies noticed on verification between the physicalstocks and book records were not material.

(iii) In our opinion and according to the 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 notapplicable to the Company.

(iv) In our opinion and according to information and explanations givento us the Company has not granted any loans or provided any guarantees or security tothe parties covered under Section 185 of the Act during the year. The Company has compliedwith the provisions of Section 186 of the Act with respect to the investments madeloans guarantees given to subsidiaries and securities given in respect of loan taken bythe subsidiaries.

(v) In our opinion and according to the information and explanationsgiven to us the Company has not accepted deposits in terms of directives issued by theReserve Bank

of India or under the provisions of Sections 73 to 76 or any otherrelevant provisions of the Act and the rules framed there under. Accordingly paragraph3(v) of the Order is not applicable to the Company.

(vi) We have broadly reviewed the records maintained by the Companypursuant to the rules made by the Central Government 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. However we have not made a detailedexamination of the records with a view to determine whether they are accurate or complete.

(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 of provident fundemployees Rs state insurance profession tax income-tax goods and services tax duty ofcustom cess and other material statutory dues have been regularly deposited with theappropriate authorities.

According to the information and explanations given to us noundisputed amounts payable in respect of provident fund employees Rs state insuranceprofession tax income-tax goods and services tax duty of custom cess and othermaterial statutory dues were in arrears as at 31 March 2020 for a period of more than sixmonths from the date they became payable.

(b) According to the information and explanations given to us thereare no dues of income tax sales tax service tax goods and service tax duty of customsduty of excise and value added tax as at 31 March 2020 which have not been deposited withthe appropriate authorities on account of any dispute other than those mentioned inEnclosure I to this report.

(viii) In our opinion and according to information and explanationsgiven to us the Company has not defaulted in repayment of dues to its bankers. TheCompany did not have any loans or borrowings from financial institutions during the yearand there are no dues to debenture holders during the year.

(ix) In our opinion and according to the information and explanationsgiven to us the Company did not raise any money by way of initial public offer (includingdebt instruments) and term loans during the year. Accordingly paragraph 3 (ix) of theOrder is not applicable.

(x) As more fully explained in Note 3.44 to the financial statementsmanagement has identified an instance wherein an employee of the Company was found to haveperpetrated misappropriation of Company's fund aggregating Rs 116.5 million. TheCompany has since recovered Rs 83.8 million as at 31 March 2020 and has securedrecovery of balance amount so misappropriated. Except for the said instance during thecourse of our examination of the books and records of the Company carried out inaccordance with the generally accepted auditing practice in India and according to theinformation and explanations given to us we have neither come across any instance offraud by the Company or on the Company by its officer and employees noticed or reportedduring the year nor have we been informed of any such case by the Company's management.

(xi) In our opinion and according to the information and explanationsgiven to us and based on our examination of the records of the Company the Company haspaid / provided for managerial remuneration in accordance with the requisite approvalsmandated by the provisions of Section 197 read with Schedule V to the Act.

(xii) In our opinion and according to the information and explanationsgiven to us the Company is not a Nidhi Company. Accordingly paragraph 3(xii) of theOrder 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 the Company is in compliance withSection 177 and 188 of the Act were applicable. The details of such transactions have beendisclosed in the standalone financial statements as required by the applicable IndianAccounting Standards.

(xiv) According to the information and explanations given to us andbased on our examination of records of the Company the Company has not made anypreferential allotment or private placement of shares or fully or partly convertibledebentures during the year. Accordingly paragraph 3(xiv) of the Order is not applicableto the Company.

(xv) According to the information and explanations given to us andbased on our examination of records of the Company the Company has not entered into anynoncash transactions with its directors or persons connected with them. Accordinglyparagraph 3(xv) of the Order is not applicable to the Company.

(xvi) According to the information and explanations given to us theCompany is not required to be registered under Section 45-IA of the Reserve Bank of IndiaAct 1934. Accordingly paragraph 3(xvi) of the Order is not applicable to the Company.

For B S R & Co. LLP
Chartered Accountants
Firm Rs s Registration No.: 101248W/W-100022
Sadashiv Shetty
Partner
Mumbai Membership No. 048648
5 June 2020 UDIN:20048648AAAAAY5806

Enclosure I to Annexure A to the Independent Auditor Rs s Report - 31March 2020

Name of the Statute Nature of dues Amount under dispute ( Rs in million) Amount paid under protest ( Rs in million) Financial year / year (s) Forum where dispute is pending
Central Excise Act 1944 Excise Duty and Penalty 138.9 10.0 2006-2014 CESTAT
Central Excise Act 1944 Excise Duty and Penalty 53.1 4.0 2015 Joint Secretary
Maharashtra VAT Act 2002 Value Added Tax 47.4 12.9 2006-2015 Joint Dy. Commissioner of Sales Tax (Appeals)
Maharashtra VAT Act 2002 Value Added Tax 65.5 4.7 2012-2014 Joint Commissioner of Sales Tax (Appeals)
Jharkhand-VAT Act 2005 Value Added Tax 6.2 4.2 2014-2016 Dy. Commissioner of Sales Tax (Appeals)
Kerala VAT Act 2003 Value Added Tax 0.1 0.1 2018 Assistant state tax officer
West Bengal VAT Act 2005 Value Added Tax 3.2 0.3 2015-2016 Senior Joint Commissioner Corporate Division (Appellate Authority)
West Bengal VAT Act2005 Value Added Tax 2.8 0.3 2017-2018 Additional Commissioner of Sales Tax
Uttar Pradesh VAT Act2008 Value Added Tax 3.6 1.8 2016-2017 Joint commissioner of Commercial taxes -Circle-I
Gujarat VAT Act 2003 Value Added Tax 0.1 - 2006-2007 Commissioner of Commercial Taxes Gujarat
Odisha Entry Tax Act 1999 Entry Tax 0.2 0.1 2012-2014 Odisha Sales Tax Tribunal Cuttack
Odisha VAT Act 2004 Value Added Tax 1.3 0.1 2012-2018 Odisha Sales Tax Tribunal Cuttack
Odisha VAT Act 2004 Value Added Tax 1.0 0.0 2014-2016 Joint commission of Commercial Tax
Bihar VAT Act 2005 Value Added Tax 0.7 0.2 1999-2001 Sales Tax Special circle for Re assessment
Bihar VAT Act 2005 Value Added Tax 13.4 3.2 2010-2012 Joint commissioner of Commercial taxes (Appeals)
Central Sales Tax Act 1956 Central Sales Tax 0.5 - 2014-15 Dy. Commissioner of Sales Tax (Appeals)
Central Sales Tax Act 1956 Central Sales Tax 0.3 0.0 2014-2017 Joint commissioner of Commercial Tax
Central Sales Tax Act 1956 Central Sales Tax 1.5 0.2 2009-2011 & Joint Dy. Commissioner of Sales Tax (Appeals)
2014-2015
Central Sales Tax Act 1956 Central Sales Tax 4.2 1.7 2002-2005 Sales Tax Special Circle
Central Sales Tax Act 1956 Central Sales Tax 51.2 4.4 2013-14 Appellate Forum Before Additional Commissioner
Central Sales Tax Act 1956 Central Sales Tax 4.4 0.4 2014-2015 Appellate Authority Large Tax Unit before Sr. Joint Commissioner
Central Sales Tax Act 1956 Central Sales Tax 0.4 0.0 2012-2014 Odisha Sales Tax Tribunal Cuttack
Income Tax Act 1961 Income Tax 560.5 123.0 2011-2015& 2016-2017 Commissioner of Income Tax (Appeal)

Annexure B to the Independent Auditors Rs report

on the standalone financial statements of AlkemLaboratories Limited for the period ended 31 March 2020.

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 2A(f) under Rs Report on Other Legal andRegulatory Requirements Rs section of our report of even date)

Opinion

We have audited the internal financial controls with reference tofinancial statements of Alkem Laboratories Limited ("the Company") as of 31March 2020 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 2020 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 Rs s Responsibility for InternalFinancial Controls

The Company's management and the Board of Directors are responsible forestablishing and maintaining internal financial controls based on the internal financialcontrols with reference to financial statements criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Note.These responsibilities include the design implementation and maintenance of adequateinternal financial controls that were operating effectively for ensuring the orderly andefficient conduct of its business including adherence to Company's policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information as required under the Companies Act 2013 (hereinafterreferred to as "the Act").

Auditors Rs Responsibility

Our responsibility is to express an opinion on the Company's internalfinancial controls with reference to financial statements based on our audit. We conductedour audit in accordance with the Guidance Note and the Standards on Auditing prescribedunder section 143(10) of the Act to the extent applicable to an audit of internalfinancial controls with reference to financial statements. Those Standards and theGuidance Note require that we comply with ethical requirements and plan and perform theaudit to obtain reasonable assurance about whether adequate internal financial controlswith reference to financial statements were established and maintained and whether suchcontrols operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence aboutthe adequacy of the internal financial controls with reference to financial statements andtheir operating

effectiveness. Our audit of internal financial controls with referenceto financial statements included obtaining an understanding of such internal financialcontrols assessing the risk that a material weakness exists and testing and evaluatingthe design and operating effectiveness of internal control based on the assessed risk. Theprocedures selected depend on the auditor Rs s judgement including the assessment of therisks of material misstatement of the standalone financial statements whether due tofraud or error.

We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the Company's internal financialcontrols with reference to financial statements.

Meaning of Internal Financial controls withReference to Financial Statements

A Company's internal financial controls with reference to financialstatements is a process designed to provide reasonable assurance regarding the reliabilityof financial reporting and the preparation of financial statements for external purposesin accordance with generally accepted accounting principles. A Company's internalfinancial controls with reference to financial statements include those policies andprocedures 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 Financialcontrols with Reference to Financial 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 financial statements to future periods are subject to the riskthat the internal financial controls with reference to financial statements may becomeinadequate because of changes in conditions or that the degree of compliance with thepolicies or procedures may deteriorate.

For B S R & Co. LLP
Chartered Accountants
Firm Rs s Registration No.: 101248W/W-100022
Sadashiv Shetty
Partner
Mumbai Membership No. 048648
5 June 2020 UDIN:20048648AAAAAY5806

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