To the Members of Aster DM Healthcare Limited
Report on the Audit of the Standalone Financial Statements
We have audited the accompanying standalone financial statements ofAster DM Healthcare Limited ("the Company") which comprise the Balance Sheet asat 31 March 2021 and the Statement of Profit and Loss (including Other ComprehensiveIncome) the Statement of Cash Flows and the Statement of Changes in Equity for the yearthen ended and a summary of significant accounting policies and other explanatoryinformation.
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 ("the Act") in the manner sorequired and give a true and fair view in conformity with the Indian Accounting Standardsprescribed under section 133 of the Act read with the Companies (Indian AccountingStandards) Rules 2015 as amended ("Ind AS") and other accounting principlesgenerally accepted in India of the state of affairs of the Company as at 31 March 2021and its loss total comprehensive loss its cash flows and the changes in equity for theyear ended on that date.
Basis for Opinion
We conducted our audit of the standalone financial statements inaccordance with the Standards on Auditing specified under section 143(10) of the Act(SAs). Our responsibilities under those Standards are further described in theAuditor's Responsibility for the Audit of the standalone financial statements sectionof our report. We are independent of the Company in accordance with the Code of Ethicsissued by the Institute of Chartered Accountants of India (ICAI) together with the ethicalrequirements that are relevant to our audit of the standalone financial statements underthe provisions of the Act and the Rules made thereunder and we have fulfilled our otherethical responsibilities in accordance with these requirements and the ICAI's Code ofEthics. We believe that the audit evidence obtained by us is sufficient and appropriate toprovide a basis for our audit opinion on the standalone financial statements.
Emphasis of Matter
We draw attention to Note 42 of the standalone financial statementswhich describes the effects of the continuing uncertainties arising from the outbreak ofCOVID-19 pandemic and the consequential impact on the standalone financial statements ofthe Company for the year ended 31 March 2021. Our opinion is not modified in respect ofthis matter.
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. We have determined the matter described below to bethe key audit matter to be communicated in our report.
|Key Audit Matter ||Auditor's Response |
|Evaluation of Impairment Assessment of Investment in Subsidiaries ||Principal audit procedures performed: |
|As at 31 March 2021 the Company had Rs. 2150.65 crores of investments in subsidiaries. The management tests such investments for impairment annually or more frequently if there is a trigger for assessing impairment. ||We tested the design implementation and operating effectiveness of internal controls over the Company's impairment evaluation by testing on a sample basis: |
|The Company's evaluation of impairment of its investments in subsidiaries involves a comparison of its expected recoverable values against its carrying values. The recoverable amount of the investment is based on Value in Use (VIU) calculations determined based on a discounted cash flow model. Determination of VIU involves significant estimates assumptions and judgements as regards reasonableness of assumptions involved in developing projections of financial performance and discount rates to be considered including possible impacts of the pandemic. || The forecasting process including controls related to the development of the revenue growth rates and EBITDA margins |
|Given the above complexities the determination of recoverable amount is subjective as it involves specific assumptions applicable to each investment which includes revenue growth rates Earning Before Interest Tax Depreciation and Amortisation (EBITDA) margins terminal growth rates and discount rates applied to estimated future cash flows. || The impairment review specifically the assumptions used to develop the terminal growth rate the discount rates and the mathematical accuracy of the workings and basis for final conclusion. |
|Refer note 3.4 for policy on "Impairment of financial assets"- Investments note 2D on "Critical accounting estimates and assumptions" related to impairment reviews and note 6 "Investments" for disclosures related to impairment review of investments in the standalone financial statements. ||We received the managements evaluation of the impairment assessment for sample investments and evaluated reasonableness of management's assumptions related to revenue growth rates |
| ||EBITDA margins and discount rates by considering |
| ||(i) the current and past performance of each of the investments |
| ||(ii) the consistency of internal assumptions with external market information and |
| ||(iii) whether these assumptions were consistent with evidence obtained in other areas of the audit and also subjected the |
| ||(iv) various assumptions to certain sensitivity to key inputs and |
| ||(v) testing the integrity and mathematical accuracy of the impairment models. |
| ||We involved our internal fair value specialists to assist in the evaluation of the appropriateness of the Company's model for calculating value in use for each of the investments and reasonableness of certain significant assumptions such as terminal growth rate and discount rate. |
| ||We reviewed the investments disclosed in the financial statements in accordance with the Companies Act 2013. |
Information Other than the Financial Statements and Auditor'sReport Thereon
The Company's Board of Directors is responsible for theother information. The other information comprises the information included in theManagement Discussion and Analysis Corporate Governance report Directors' reportand Business Responsibility Report but does not include the consolidated financialstatements standalone financial statements and our auditor's report thereon.
Our opinion on the standalone financial statements does notcover the other information and we do not express any form of assurance conclusionthereon.
In connection with our audit of the standalone financialstatements our responsibility is to read the other information and in doing so considerwhether the other information is materially inconsistent with the standalone financialstatements or our knowledge obtained during the course of our audit or otherwise appearsto be materially misstated.
If based on the work we have performed we conclude that thereis a material misstatement of this other information we are required to report that fact.We have nothing to report in this regard.
Management's Responsibility for the Standalone FinancialStatements
The Company's Board of Directors is responsible for the mattersstated in section 134(5) of the Act with respect to the preparation of these standalonefinancial statements that give a true and fair view of the financial position financialperformance including other comprehensive income cash flows and changes in equity of theCompany in accordance with the Ind AS and other accounting principles generally acceptedin India. 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 standalonefinancial statement that give a true and fair view and are free from materialmisstatement whether due to fraud or error.
In preparing the standalone financial statements management isresponsible for assessing the Company's ability to continue as a going concerndisclosing as applicable matters related to going concern and using the going concernbasis of accounting unless management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so.
Those Board of Directors are also responsible for overseeing theCompany's financial reporting process.
Auditor's Responsibility 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'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:
Auditor's Responsibility for the Audit of Standalone FinancialStatements (Contd..)
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 financial control relevantto the audit in order to design audit procedures that are appropriate in thecircumstances. Under section 143(3)(i) of the Act we are also responsible for expressingour opinion on whether the Company has adequate internal financial controls system inplace and the operating effectiveness of such controls.
Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures made by the management.
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 Company's ability to continue as a going concern. If we conclude that amaterial uncertainty exists we are required to draw attention in our auditor'sreport to the related disclosures in the standalone financial statements or if suchdisclosures are inadequate to modify our opinion. Our conclusions are based on the auditevidence obtained up to the date of our auditor's report. However future events orconditions 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.
Materiality is the magnitude of misstatements in the standalonefinancial statements that individually or in aggregate makes it probable that theeconomic decisions of a reasonably knowledgeable user of the standalone financialstatements may be influenced. We consider quantitative materiality and qualitative factorsin
(i) planning the scope of our audit work and in evaluating the resultsof our work; and
(ii) to evaluate the effect of any identified misstatements in thestandalone financial statements.
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 auditor's 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.
The financial information of the Company for the year ended 31 March2020 prepared in accordance with Ind AS included in the standalone financial statementsrepresenting the comparative and opening balances in these financial statements wereaudited by the predecessor auditor. The audit report of the predecessor auditor dated 23June 2020 on such financial information expressed an unmodified opinion.
Report on Other Legal and Regulatory Requirements
1. As required by section 143(3) of the Act based on our audit wereport 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 havebeen kept by the Company.
(c) The Balance Sheet the Statement of Profit and Loss including OtherComprehensive Income the Statement of Cash Flows and Statement of Changes in Equity dealtwith by this Report are in agreement with the relevant books of account.
(d) In our opinion the aforesaid standalone financial statementscomply with 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 controlsover financial reporting of the Company and the operating effectiveness of such controlsrefer to our separate Report in "Annexure A". Our report expresses an unmodifiedopinion on the adequacy and operating effectiveness of the Company's internalfinancial controls over financial reporting.
(g) With respect to the other matters to be included in theAuditor's Report in accordance with the requirements of section 197(16) of the Actas amended in our opinion and to the best of our information and according to theexplanations given to us the remuneration paid by the Company to its directors during theyear is in accordance with the provisions of section 197 of the Act.
(h) With respect to the other matters to be included in theAuditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors)Rules 2014 as amended 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 itsfinancial position in its standalone financial statements;
(ii) The Company did not have any long-term contracts includingderivative contracts for which there were any material foreseeable losses; and
(iii) There were no amounts which were required to be transferred tothe Investor Education and Protection Fund by the Company.
2. As required by the Companies (Auditor's Report) Order 2016("the Order") issued by the Central Government in terms of section 143(11) ofthe Act we give in "Annexure B" a statement on the matters specified inparagraphs 3 and 4 of the Order.
Annexure "A" to the Independent Auditor's Report
(Referred to in paragrapRs. 1(f) under Report on Other Legal andRegulatory Requirements' section of our report of even date)
Report on the Internal Financial Controls Over Financial Reportingunder Clause (i) of Sub-section 3 of section 143 of the Companies Act 2013 ("theAct")
We have audited the internal financial controls over financialreporting of Aster DM Healthcare Limited ("the Company") as of 31 March 2021 inconjunction with our audit of the standalone Ind AS 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 andmaintaining internal financial controls based on the internal control over financialreporting criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting issued by the Institute of Chartered Accountants of India. 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 the 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.
Our responsibility is to express an opinion on the Company'sinternal financial controls over financial reporting of the Company based on our audit. Weconducted our audit in accordance with the Guidance Note on Audit of Internal FinancialControls Over Financial Reporting (the "Guidance Note") issued by the Instituteof Chartered Accountants of India and the Standards on Auditing prescribed under section143(10) of the Companies Act 2013 to the extent applicable to an audit of internalfinancial controls. Those Standards and the Guidance Note require that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance aboutwhether adequate internal financial controls over financial reporting was established andmaintained and if such controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence aboutthe adequacy of the internal financial controls system over financial reporting and theiroperating effectiveness. Our audit of internal financial controls over financial reportingincluded obtaining an understanding of internal financial controls over financialreporting 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's judgement including the assessment ofthe risks of material misstatement of the 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 system over financial reporting.
Meaning of Internal Financial Controls Over Financial Reporting
A Company's internal financial control over financial reporting isa process designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles. A Company's internal financial controlover financial reporting includes those policies and procedures that
(1) pertain to the maintenance of records that in reasonable detailaccurately and fairly reflect the transactions and dispositions of the assets of theCompany;
(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 timelydetection of unauthorised acquisition use or disposition of the Company's assetsthat could have a material effect on the financial statements.
Inherent Limitations of Internal Financial Controls Over FinancialReporting
Because of the inherent limitations of internal financial controls overfinancial reporting including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected. Also projections of any evaluation of the internal financial controls overfinancial reporting to future periods are subject to the risk that the internal financialcontrol over financial reporting may become inadequate because of changes in conditionsor that the degree of compliance with the policies or procedures may deteriorate.
In our opinion to the best of our information and according to theexplanations given to us 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 2021 based on thecriteria for internal financial control over financial reporting 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.
Annexure "B" to the Independent Auditor's Report
(Referred to in paragrapRs. 2 under Report on Other Legal andRegulatory Requirements' section of our report of even date) (i) (a) The Company hasmaintained proper records showing full particulars including quantitative details andsituation of fixed assets.
(b) The Company has a program of verification of fixed assets to coverall the items in a phased manner over a period of 2 years which in our opinion isreasonable having regard to the size of the Company and the nature of its assets. Pursuantto the program certain fixed assets were physically verified by the management during theyear. According to the information and explanations given to us no material discrepancieswere noticed on such verification.
(c) With respect to immovable properties of land and buildings that arefreehold according to the information and explanations given to us and the recordsexamined by us and based on the examination of the registered sale deed provided to us wereport that the title deeds of such immovable properties are held in the name of theCompany as at the balance sheet date.
(ii) As explained to us the inventories were physically verifiedduring the year by the management at reasonable intervals and no material discrepancieswere noticed on physical verification.
(iii) According to the information and explanations given to us theCompany has granted unsecured loans to companies Limited Liability Partnerships coveredin the register maintained under section 189 of the Companies Act 2013 in respect ofwhich:
(a) The terms and conditions of the grant of such loans are in ouropinion prima facie not prejudicial to the Company's interest;
(b) The schedule of repayment of principal and payment of interest hasbeen stipulated and repayments or receipts of principal amounts and interest asapplicable have been regular as per stipulations; and
(c) There is no overdue amount remaining outstanding as at the balancesheet date.
(iv) In our opinion and according to the information and explanationsgiven to us the Company has complied with the provisions of sections 185 and 186 of theCompanies Act 2013 in respect of grant of loans making investments and providingguarantees and securities as applicable.
(v) According to the information and explanations given to us theCompany has not accepted any deposit during the year and does not have any unclaimeddeposits as at 31 March 2021 and therefore the provisions of clause (v) of the Order isnot applicable.
(vi) The maintenance of cost records has been specified by the CentralGovernment under section 148(1) of the Companies Act 2013 in respect of healthcareservices rendered. We have broadly reviewed the cost records maintained by the Companypursuant to the Companies (Cost Records and Audit) Rules 2014 as amended prescribed bythe Central Government under sub-section (1) of section 148 of the Companies Act 2013and are of the opinion that prima facie the prescribed cost records have been made andmaintained. We have however not made a detailed examination of the cost records with aview to determine whether they are accurate or complete.
(vii) According to the information and explanations given to us inrespect of statutory dues:
(a) The Company has generally been regular in depositing undisputedstatutory dues including Provident Fund Employees' State Insurance Income-taxSales Tax Service Tax Customs Duty Excise Duty Value Added Tax Goods and ServicesTax cess and other material statutory dues applicable to it to the appropriateauthorities.
(b) There were no undisputed amounts payable in respect of ProvidentFund Employees' State Insurance Income-tax Sales Tax Service Tax Customs DutyExcise Duty Value Added Tax Goods and Services Tax cess and other material statutorydues in arrears as at 31 March 2021 for a period of more than six months from the datethey became payable.
(c) Details of dues of Income-tax which have not been deposited as on31 March 2021 on account of disputes are given below:
|Name of Statute ||Nature of Dues ||Forum where Dispute is Pending ||Period to which the Amount Relates (financial year) ||Amount involved (INR crores) ||Amount remaining unpaid (INR crores) |
|Income Tax Act 1961 ||Income tax ||Commissioner of Income Tax Appeals ||2011-12 ||0.18 ||0.14 |
|Income Tax Act 1961 ||Income tax ||Commissioner of Income Tax Appeals ||2013-14 ||17.22 ||14.63 |
|Income Tax Act 1961 ||Income tax ||Commissioner of Income Tax Appeals ||2014-15 ||2.86 ||2.29 |
(viii) In our opinion and according to the information and explanationsgiven to us the Company has not defaulted in the repayment of loans or borrowings tobanks. The Company did not have any loans or borrowings from financial institutions andgovernment. The Company has not issued any debentures.
(ix) In our opinion and according to the information and explanationsgiven to us money raised by way of initial public offer and the term loans have beenapplied by the Company during the year for the purposes for which they were raised otherthan temporary deployment pending application of proceeds.
(x) To the best of our knowledge and according to the information andexplanations given to us no fraud by the Company and no material fraud on the Company byits officers or employees has been noticed or reported during the year.
(xi) In our opinion and according to the information and explanationsgiven to us the Company has paid / provided managerial remuneration in accordance withthe requisite approvals mandated by the provisions of section 197 read with Schedule V tothe Companies Act 2013.
(xii) The Company is not a Nidhi Company and hence reporting underclause (xii) of the Order is not applicable.
(xiii) In our opinion and according to the information and explanationsgiven to us the Company is in compliance with section 177 and 188 of the Companies Act2013 where applicable for all transactions with the related parties and the details ofrelated party transactions have been disclosed in the financial statements etc. asrequired by the applicable accounting standards.
(xiv) During the year the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures andhence reporting under clause (xiv) of the Order is not applicable to the Company.
(xv) In our opinion and according to the information and explanationsgiven to us during the year the Company has not entered into any non-cash transactionswith its directors or directors of its holding subsidiary or associate company or personsconnected with them and hence provisions of section 192 of the Companies Act 2013 are notapplicable.
(xvi) The Company is not required to be registered under section 45-IAof the Reserve Bank of India Act 1934.
|For Deloitte Haskins & Sells |
|Chartered Accountants |
|(Firm's Registration No. 008072S) |
|Jaideep S. Trasi |
|(Membership No. 211095) |
|(UDIN: 21211095AAAABW6440) |
|Place: Bengaluru |
|Date: 22 June 2021 |