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Alkem Laboratories Ltd.

BSE: 539523 Sector: Health care
NSE: ALKEM ISIN Code: INE540L01014
BSE 15:13 | 23 Sep 1930.75 -16.65
(-0.85%)
OPEN

1980.00

HIGH

1997.40

LOW

1921.95

NSE 15:04 | 23 Sep 1930.25 -17.95
(-0.92%)
OPEN

1961.90

HIGH

1997.05

LOW

1929.00

OPEN 1980.00
PREVIOUS CLOSE 1947.40
VOLUME 811
52-Week high 2098.00
52-Week low 1660.35
P/E 26.20
Mkt Cap.(Rs cr) 23,082
Buy Price 1923.65
Buy Qty 5.00
Sell Price 1932.20
Sell Qty 7.00
OPEN 1980.00
CLOSE 1947.40
VOLUME 811
52-Week high 2098.00
52-Week low 1660.35
P/E 26.20
Mkt Cap.(Rs cr) 23,082
Buy Price 1923.65
Buy Qty 5.00
Sell Price 1932.20
Sell Qty 7.00

Alkem Laboratories Ltd. (ALKEM) - Auditors Report

Company auditors report

To the Members of Alkem Laboratories Limited

REPORT ON THE AUDIT OF THE STANDALONE IND AS FINANCIAL STATEMENTS

We have audited the accompanying standalone Ind AS financial statements of AlkemLaboratories Limited ("the Company") which comprise the Balance Sheet as at 31March 2018 the Statement of Profit and Loss the Statement of Changes in Equity and theStatement of Cash Flows for the year then ended and summary of the significant accountingpolicies and other explanatory information (herein after referred to as "StandaloneInd AS Financial Statements").

MANAGEMENT'S RESPONSIBILITY FOR THE STANDALONE IND AS FINANCIAL STATEMENTS

The Company's Board of Directors is responsible for the matters stated in Section134(5) of the Companies Act 2013 ("the Act") with respect to the preparation ofthese standalone Ind AS financial statements that give a true and fair view of the stateof affairs profit 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) prescribed under Section 133 of theAct.

This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding the assets of the Company andfor preventing 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 the accuracy and completeness ofthe accounting records relevant to the preparation and presentation of the standalone IndAS financial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.

In preparing the financial statements management is responsible for assessing theCompany'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.

AUDITOR'S RESPONSIBILITY

Our responsibility is to express an opinion on these standalone Ind AS financialstatements based on our audit.

We have taken into account the provisions of the Act the accounting and auditingstandards and matters which are required to be included in the audit report under theprovisions of the Act and the Rules made thereunder.

We conducted our audit of the standalone Ind AS financial statements in accordance withthe Standards on Auditing specified under Section 143(10) of the Act. Those Standardsrequire that we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether the financial statements are free from materialmisstatement.

An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the standalone Ind AS financial statements. The procedures selecteddepend on the auditor's judgment including the assessment of the risks of materialmisstatement of the standalone Ind AS financial statements whether due to fraud or error.In making those risk assessments the auditor considers internal financial controlrelevant to the Company's preparation of the standalone Ind AS financial statements thatgive a true and fair view in order todesignauditproceduresthatareappropriateinthecircumstances. An audit also includesevaluating the appropriateness of the accounting policies used and the reasonableness ofthe accounting estimates made by the Company's Directors as well as evaluating theoverall presentation of the standalone Ind AS financial statements.

We are also responsible to conclude on the appropriateness of management's use of thegoing concern basis of accounting and based on the audit evidence obtained whether amaterial uncertainty exists related to events or conditions that may cast significantdoubt on the entity's ability to continue as a going concern. If we conclude that amaterial uncertainty exists we are required to draw attention in the auditor's report tothe related disclosures in the financial statements or if such disclosures areinadequate to modify the opinion. Our conclusions are based on the audit evidenceobtained up to the date of the auditor's report. However future events or conditions maycause an entity to cease to continue as a going concern.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the standalone Ind AS financial statements.

OPINION

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone Ind AS financial statements give the informationrequired by the Act in the manner so required and give a true and fair view in conformitywith the accounting principles generally accepted in India of the state of affairs of theCompany as at 31 March 2018 its profit including other comprehensive income changes inequity and its cash flows for the year ended on that date.

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 Section 143(11) of the Act we givein "Annexure A" a statement on the matters specified in paragraphs 3 and 4 ofthe 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 purposes of our audit.

(b) In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books.

(c) The Balance Sheet the Statement of Profit and Loss the Statement of Changes inEquity and the Statement of Cash Flows dealt with by this Report are in agreement withthe books of account.

(d) In our opinion the aforesaid standalone Ind AS financial statements comply withthe Indian Accounting Standards prescribed under Section 133 of the Act.

(e) On the basis of the written representations received from the directors as on 31March 2018 taken on record by the Board of Directors none of the directors isdisqualified as on 31 March 2018 from being appointed as a director in terms of Section164 (2) of the Act.

(f) With respect to the adequacy of the internal financial controls with reference tofinancial statements of the Company and the operating effectiveness of such controlsrefer to our separate Report in "Annexure B".

(g) With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations on its financialposition in its standalone Ind AS financial statements – Refer Note 3.26 to thestandalone Ind AS financial statements;

ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses;

iii. There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company during the year ended 31 March 2018;

iv. The disclosures regarding details of specified bank notes held and transactedduring 8 November 2016 to 30 December 2016 have not been made since the requirement doesnot pertain to financial year ended 31 March 2018.

For B S R & Co. LLP
Chartered Accountants
Firm's Registration No: 101248W/W-100022
Sadashiv Shetty
Place: Mumbai Partner
Date: 30th May 2018 Membership No: 048648

Annexure - A

to the Independent Auditor's Report – 31 March 2018

(Referred to in our report of even date)

(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.

(b) The Company has a regular programme of physical verification of its fixed assets bywhich fixed assets are verified in a phased manner over a period of three years. Inaccordance with this programme a portion of the fixed assets have been physicallyverified by the management during the year and no material discrepancies were noticed onsuch verification. In our opinion this periodicity of physical verification is reasonablehaving regard to the size of the Company and the nature of its assets.

(c) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the title deeds of immovable properties areheld in the name of the Company

(ii) The inventory except goods-in-transit and stocks lying with third parties hasbeen physically verified by the management during the year. In respect of inventory lyingwith third parties at the year-end written confirmations have been obtained. In ouropinion the frequency of such verification is reasonable. The discrepancies noticed onverification between the physical stocks and the book records were not material.

(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 theAct. Accordingly paragraphs 3 (iii) (a) (b) and (c) of the Order is not applicable tothe Company.

(iv) In our opinion and according to the information and explanations given to us theCompany has not granted any loans or provided any guarantees or security to the partiescovered under Section 185 of the Act during the year. The Company has complied with theprovisions of Section 186 of the Act with respect to the investments made loansguarantees given to subsidiaries and securities given in respect of loan taken by thesubsidiaries.

(v) In our opinion and according to the information and explanations given to us theCompany has not accepted any deposit from the public during the year in terms of theprovisions of Sections 73 to 76 or any other relevant provisions of the Act and the rulesframed there under. Accordingly paragraph 3(v) of the Order is not applicable to theCompany.

(vi) We have broadly reviewed the records maintained by the Company pursuant to therules prescribed by the Central Government for maintenance of cost records undersubsection 1 of section 148 of the Act and are of the opinion that prima facie theprescribed accounts and records have been made and maintained. However we have not made adetailed examination of the records with a view to determine whether they are accurate orcomplete.

(vii) (a) According to the information and explanations given to us and on the basis ofour examination of the records of the Company amounts deducted/accrued in the books ofaccount in respect of undisputed statutory dues including provident fund employees' stateinsurance income-tax sales-tax service tax Goods and Services tax duty of customsduty of excise value added tax cess and other material statutory dues have beengenerally regularly deposited during the year by the Company with the appropriateauthorities.

According to the information and explanations given to us no undisputed amountspayable in respect of provident fund employees' state insurance income-tax sales-taxservice tax Goods and Services tax duty of customs duty of excise value added taxcess and other material statutory dues were in arrears as at 31 March 2018 for a period ofmore than six months from the date they became payable.

(b) According to the information and explanations given to us there are no dues ofincome-tax sales tax service tax Goods and Services Tax duty of customs duty ofexcise and value added tax as at 31 March 2018 which have not been deposited with theappropriate authorities on account of any dispute other than those mentioned in EnclosureI to this report.

(viii) In our opinion and according to the information and explanations given to usthe Company has not defaulted in repayment of dues to its bankers. The Company does nothave any loans or borrowings from financial institutions or Government nor has it issuedany debentures during the year.

(ix) The Company did not raise any money by way of initial public offer or furtherpublic offer (including debt instruments) and term loans during the year. Accordinglyparagraph 3 (ix) of the Order is not applicable.

(x) According to the information and explanations given to us no material fraud by theCompany or on the Company by its officers or employees has been noticed or reported duringthe course of our audit nor have we been informed of such case by the management.

(xi) According to the information and explanations given to us and based on ourexamination of the records of the Company 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) In our opinion and according to the information and explanations given to us theCompany is not a Nidhi company. Accordingly paragraph 3(xii) of the Order is notapplicable to the Company.

(xiii) According to the information and explanations given to us and based on ourexamination of the records of the Company transactions with the related parties are incompliance with the provisions of Sections 177 and 188 of the Act where applicable. Thedetails of such related party transactions have been disclosed in the standalone Ind ASfinancial statements as required under Indian Accounting Standard (AS) 24 Related PartyDisclosures specified under Section 133 of the Act.

(xiv) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year. Accordingly paragraph 3(xiv) of the Order is not applicable to the Company.

(xv) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not entered into any non-cashtransactions with directors or persons connected with them. Accordingly paragraph 3(xv)of the Order is not applicable to the Company.

(xvi) In our opinion and 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's Registration No: 101248W/W-100022
Sadashiv Shetty
Place: Mumbai Partner
Date: 30th May 2018 Membership No: 048648

Enclosure I to Annexure A to the Independent Auditor's Report – 31 March 2018

Name of the Statute Nature of dues Amount under dispute (Rs.in Millions) Amount paid under protest (Rs.in Millions) Financial year / year (s) Forum where dispute is pending
Central Excise Act 1944 Excise Duty and Penalty 172.6 18.6 2003-2014 CESTAT
Central Excise Act 1944 Excise Duty and Penalty 5.4 2.2 2012-2017 Commissioner of Central Excise (Appeals)
Maharashtra VAT Act 2002 Value Added Tax 6.4 3.5 2003-2005 Appellate Tribunal
Maharashtra VAT Act 2002 Value Added Tax 95.9 10.3 2006-2014 Joint Dy. Commissioner of Sales Tax (Appeals)
West Bengal VAT Act 2003 Value Added Tax 13.4 2 2012-2015 Senior Joint Commissioner Corporate Division (Appellate Authority)
West Bengal VAT Act 2003 Value Added Tax 0.3 - 2010-2011 Sr. Joint Commissioner of Commercial Tax
Bihar VAT Act 2005 Value Added Tax 13.4 3.2 2010-2012 Joint commissioner Commercial Taxes (Appeals)
Uttar Pradesh VAT Act 2008 Value Added Tax 3.6 1.8 2012-2013 Joint commissioner of Commercial taxes -Circle –I
Odisha VAT Act 2004 Value Added Tax 1.5 0.1 2012-2016 Commissioner of Commercial Taxes
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 Commissioner of Commercial Taxes
Central Sales Tax Act 1956 Central Sales Tax 32.0 4.8 2013-2015 Joint Commissioner Corporate Division (Appellate Authority)
Central Sales Tax Act 1956 Central Sales Tax 0.2 0.1 2010-2011 Joint Dy. Commissioner Of Sales Tax(Appeals)
Central Sales Tax Act 1956 Central Sales Tax 0.2 0.1 2009-2011 Joint Commissioner of Sales Tax (Appeals)
Central Sales Tax Act 1956 Central Sales Tax 0.6 0.1 2010-2011 & 2014-2017 Commissioner of Commercial Taxes
Income Tax Act 1961 Income Tax 25.2 23.6 2001-2012 Commissioner of Income Tax (Appeal)

Annexure - B

to the Independent Auditor's Report – 31 March 2018

(Referred to in our report of even date)

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 AlkemLaboratories Limited ("the Company") as of 31 March 2018 in conjunction with ouraudit of the standalone Ind AS financial statements of the Company for the year ended onthat 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 ("ICAI"). Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to company's policies the safeguarding ofits assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the Act.

AUDITOR'S RESPONSIBILITY

Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting(the "Guidance Note") and the Standards on Auditing issued by ICAI and deemedto be prescribed under Section 143(10) of the Act to the extent applicable to an audit ofinternal financial controls both applicable to an audit of Internal Financial Controlsand both issued by the ICAI. Those Standards and the Guidance Note require that we complywith ethical requirements and plan and perform the audit to obtain reasonable assuranceabout whether adequate internal financial controls over financial reporting wasestablished and maintained and if such controls operated effectively in all materialrespects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgement including the assessment of the risks ofmaterial misstatement of the financial 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 Company's internal financial controls systemover financial reporting.

MEANING OF INTERNAL FINANCIAL CONTROLS OVER FINANCIAL REPORTING

A Company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedures that (1) pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures of the company are being made only in accordance with authorisations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised acquisition use or disposition of thecompany's assets that could have a material effect on 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.

OPINION

In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at 31 March 2018 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 ICAI.

For B S R & Co. LLP
Chartered Accountants
Firm's Registration No: 101248W/W-100022
Sadashiv Shetty
Place: Mumbai Partner
Date: 30th May 2018 Membership No: 048648