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Astrazeneca Pharma India Ltd.

BSE: 506820 Sector: Health care
NSE: ASTRAZEN ISIN Code: INE203A01020
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NSE 00:00 | 23 Jul 3498.05 -1.45
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OPEN 3543.70
PREVIOUS CLOSE 3500.35
VOLUME 3005
52-Week high 4970.00
52-Week low 3000.00
P/E 95.36
Mkt Cap.(Rs cr) 8,747
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 3543.70
CLOSE 3500.35
VOLUME 3005
52-Week high 4970.00
52-Week low 3000.00
P/E 95.36
Mkt Cap.(Rs cr) 8,747
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Astrazeneca Pharma India Ltd. (ASTRAZEN) - Auditors Report

Company auditors report

To the members of AstraZeneca Pharma India Limited

Report on the audit of the financial statements

Opinion

1. We have audited the accompanying financial statements of AstraZeneca Pharma IndiaLimited ("the Company") which comprise the balance sheet as at March 312020 and the statement of profit and loss (including Other Comprehensive Income)statement of changes in equity and statement of cash flows for the year then ended andnotes to the financial statements including a summary of significant accounting policiesand other explanatory information.

2. In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid financial statements give the information required by theCompanies Act 2013 ("the Act") in the manner so required and give a true andfair view in conformity with the accounting principles generally accepted in India of thestate of affairs of the Company as at March 31 2020 and total comprehensive income(comprising of profit and other comprehensive income) changes in equity and its cashflows for the year then ended.

Basis for opinion

3. We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder Section 143(10) of the Act. Our responsibilities under those Standards are furtherdescribed in the ‘Auditor's responsibilities for the audit of the financialstatements' section of our report. We are independent of the Company in accordance withthe Code of Ethics issued by the Institute of Chartered Accountants of India together withthe ethical requirements that are relevant to our audit of the financial statements underthe provisions of the Act and the Rules thereunder and we have fulfilled our otherethical responsibilities in accordance with these requirements and the Code of Ethics. Webelieve that the audit evidence we have obtained is sufficient and appropriate to providea basis for our opinion.

Emphasis of matter

4. We draw attention to Note 47 to the financial statements which explains theuncertainties and the management's assessment of the financial impact due to the lockdownand other restrictions related to the COVID-19 pandemic situation for which a definitiveassessment of the impact in the subsequent period is highly dependent upon circumstancesas they evolve. As stated by management in the aforesaid Note the Company's operations(being classified as essential goods) have remained largely unaffected during thepandemic both before and after the year end. Further our attendance at the physicalinventory verification performed by the management at the Company's manufacturing plant(which represents 20% of total inventory by value) was impracticable on account of strictsafety protocols put in place by the Company and we have therefore relied on alternateaudit procedures to obtain comfort over the existence and condition of inventory for thatlocation. Our opinion is not modified in respect of this matter.

Key audit matters

5. Key audit matters are those matters that in our professional judgement were ofmost significance in our audit of the financial statements of the current period. Thesematters were addressed in the context of our audit of the financial statements as a wholeand in forming our opinion thereon and we do not provide a separate opinion on thesematters.

To the members of AstraZeneca Pharma India Limited

Report on the audit of the financial statements

Key audit matter How our audit addressed the key audit matter
Appropriateness of provisions recognised and contingent liabilities disclosed in respect of certain direct and indirect tax matters Our procedures included the following:
 

(Refer to the note 19 - "Provisions" note 20- "Current tax liabilities' and note 32(b) - "Contingent liabilities" to the financial statements).

• Understood evaluated and tested the design and operating effectiveness of controls in respect of identifying tax exposures its accounting and disclosures thereof.
There are certain direct and indirect tax cases pending against the Company. • Obtained a listing of the various tax cases and read the correspondence with tax authorities and the advice received by the management where relevant from its external tax consultant.
Direct tax cases include demands in respect of transfer pricing adjustments on transactions with overseas group companies disallowance of certain expenses incurred taxability of subvention receipt and certain expense reimbursements and certain other disallowances. Indirect tax cases include:
• Evaluated the objectivity competence and capabilities of the management's external tax consultant.
• Along with auditors' tax experts:
• service tax demands raised on expenses incurred in foreign currency reimbursements from overseas group companies recovery of notice period pay from former employees and ineligible input tax credit claimed on certain expenses and a. Gained an understanding of the current status of tax assessments through our discussion with management and determined impact if any based on recent rulings and latest developments in tax laws.
• goods and services tax demand pertaining to certain category of medicines supplied by the Company. b. Evaluated provisions for uncertain tax exposures based on case history and other available evidence to challenge the valuation and completeness of the provisions recognised by the Management.
As at March 312020 the Company has tax demands pertaining to the above direct and indirect tax matters aggregating to '700.6 million (including interest and penalties where applicable) of which Rs.41.0 million has been provided for and Rs.659.6 million has been disclosed as contingent liabilities which are significant to the financial statements. c. Examined the confirmation obtained from the Company's internal legal counsel to confirm our understanding of outstanding cases.
The Company has filed appeals against these demands with various appellate forums which are currently pending for adjudication. d. Evaluated the adequacy of disclosures made in the financial statements.
Management judgement is involved in evaluation of the likelihood of ultimate outcome of the tax disputes and the probable amount of the liability and is hence determined to be a key audit matter. Based on the above procedures we found the judgements made by the Management in recognising provisions and in determining and disclosing contingent liabilities in respect of the aforesaid tax matters to be reasonable.

Other Information

6. The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Management Discussion and AnalysisReport Board's Report including Annexures to Board's Report Business ResponsibilityReport and Report on Corporate Governance but does not include the financial statementsand our auditor's report thereon.

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

In connection with our audit of the financial statements our responsibility is to readthe other information and in doing so consider whether the other information ismaterially inconsistent with the financial statements or our knowledge obtained in theaudit or otherwise appears to be materially misstated. If based on the work we haveperformed we conclude that there is a material misstatement of this other information weare required to report that fact.

We have nothing to report in this regard.

Responsibilities of management and those charged with governance for the financialstatements

7. The Company's Board of Directors is responsible for the matters stated in Section134(5) of the Act with respect to the preparation of these financial statements that givea true and fair view of the financial position financial performance changes in equityand cash flows of the Company in accordance with the accounting principles generallyaccepted in India including the Accounting Standards specified under section 133 of theAct. This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding of the assets of the Companyand for preventing and detecting frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgements and estimates that arereasonable and prudent; and design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe financial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.

8. 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. Those Board of Directors are also responsible for overseeing theCompany's financial reporting process.

Auditor's responsibilities for the audit of the financial statements

9. Our objectives are to obtain reasonable assurance about whether the financialstatements as a whole are free from material misstatement whether due to fraud or errorand to issue an auditor's report that includes our opinion. Reasonable assurance is a highlevel of assurance but is not a guarantee that an audit conducted in accordance with SAswill always detect a material misstatement when it exists. Misstatements can arise fromfraud or error and are considered material if individually or in the aggregate theycould reasonably be expected to influence the economic decisions of users taken on thebasis of these financial statements.

10. As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional scepticism throughout the audit. We also:

a. Identify and assess the risks of material misstatement of the financial statementswhether due to fraud or error design and perform audit procedures responsive to thoserisks and obtain audit evidence that is sufficient and appropriate to provide a basis forour opinion. The risk of not detecting a material misstatement resulting from fraud ishigher than for one resulting from error as fraud may involve collusion forgeryintentional omissions misrepresentations or the override of internal control.

b. Obtain an understanding of internal control relevant to the audit in order to designaudit procedures that are appropriate in the circumstances. Under Section 143(3)(i) of theAct we are also responsible for expressing our opinion on whether the company hasadequate internal financial controls with reference to financial statements in place andthe operating effectiveness of such controls.

c. Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by management.

d. Conclude on the appropriateness of management's use of the going concern basis ofaccounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern.

If we conclude that a material uncertainty exists we are required to draw attention inour auditor's report to the related disclosures in the 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.

e. Evaluate the overall presentation structure and content of the financialstatements including the disclosures and whether the financial statements represent theunderlying transactions and events in a manner that achieves fair presentation.

11. We communicate with those charged with governance regarding among other mattersthe planned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.

12. We also provide those charged with governance with a statement that we havecomplied with relevant ethical requirements regarding independence and to communicatewith them all relationships and other matters that may reasonably be thought to bear onour independence and where applicable related safeguards.

13. From the matters communicated with those charged with governance we determinethose matters that were of most significance in the audit of the financial statements ofthe current period and are therefore the key audit matters. We describe these matters inour auditor's report unless law or regulation precludes public disclosure about the matteror when in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.

Report on other legal and regulatory requirements

14. As required by the Companies (Auditor's Report) Order 2016 ("theOrder") issued by the Central Government of India in terms of Section 143(11) of theAct we give in the "Annexure B" a statement on the matters specified inparagraphs 3 and 4 of the Order to the extent applicable.

15. 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 (including Other ComprehensiveIncome) the Statement of Changes in Equity and Statement of Cash Flows dealt with by thisReport are in agreement with the books of account.

d. In our opinion the aforesaid financial statements comply with the AccountingStandards specified under Section 133 of the Act.

e. On the basis of the written representations received from the directors as on March31 2020 taken on record by the Board of Directors none of the directors is disqualifiedas on March 312020 from being appointed as a director in terms of Section 164 (2) of theAct.

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 A".

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 financial statements - Refer Note 19 and 32(b) to the financialstatements.

ii. The Company has long-term contracts for which there were no material foreseeablelosses. The Company did not have any derivative contracts as at March 31 2020.

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

iv. The reporting on disclosures relating to Specified Bank Notes is not applicable tothe Company for the year ended March 31 2020.

16. The Company has paid/provided for managerial remuneration in accordance with therequisite approvals mandated by the provisions of Section 197 read with Schedule V to theAct.

For Price Waterhouse & Co
Chartered Accountants LLP
Firm Registration Number: 304026E/ E-300009
Pradip Kanakia
Partner
Place: Bengaluru Membership Number: 039985
Date: May 18 2020 UDIN: 20039985AAAABV1332

Annexure A to Independent Auditors' Report

Referred to in paragraph 15(f) of the Independent Auditors' Report of even date to themembers of AstraZeneca Pharma India Limited on the financial statements for the year endedMarch 31 2020

Report on the Internal Financial Controls with reference to financial statements underSection 143(3)(i) of the Act

1. We have audited the internal financial controls with reference to financialstatements of AstraZeneca Pharma India Limited ("the Company") as of March 312020 in conjunction with our audit of the financial statements of the Company for the yearended on that date.

Management's Responsibility for Internal Financial Controls

2. 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 Reporting (the"Guidance Note") issued by the Institute of Chartered Accountants of India(ICAI). These responsibilities include the design implementation and maintenance ofadequate internal financial controls that were operating effectively for ensuring theorderly and efficient conduct of its business including adherence to company's policiesthe safeguarding 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 Act.

Auditors' Responsibility

3. Our responsibility is to express an opinion on the Company's internal financialcontrols with reference to financial statements based on our audit. We conducted our auditin accordance with the Guidance Note and the Standards on Auditing deemed to be prescribedunder section 143(10) of the Act to the extent applicable to an audit of internalfinancial controls both applicable to an audit of internal financial controls and bothissued by the ICAI. 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 with reference to financial statements wasestablished and maintained and if such controls operated effectively in all materialrespects.

4. Our audit involves performing procedures to obtain audit evidence about the adequacyof the internal financial controls system with reference to financial statements and theiroperating effectiveness. Our audit of internal financial controls with reference tofinancial statements included obtaining an understanding of internal financial controlswith reference to financial statements assessing the risk that a material weaknessexists and testing and evaluating the design and operating effectiveness of internalcontrol based on the assessed risk. The procedures selected depend on the auditor'sjudgement including the assessment of the risks of material misstatement of the financialstatements whether due to fraud or error.

5. 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 systemwith reference to financial statements.

Meaning of Internal Financial Controls with reference to financial statements

6. A company's internal financial controls with reference to financial statements is aprocess 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 controlswith reference to financial statements includes those policies and procedures that (1)pertain to the maintenance of records that in reasonable detail accurately and fairlyreflect the transactions and dispositions of the assets of the company; (2) providereasonable assurance that transactions are recorded as necessary to permit preparation offinancial statements in accordance with generally accepted accounting principles and thatreceipts and expenditures of the company are being made only in accordance withauthorisations of management and directors of the company; and (3) provide reasonableassurance regarding prevention or timely detection of unauthorised acquisition use ordisposition of the company's assets that could have a material effect on the financialstatements.

Inherent Limitations of Internal Financial Controls with reference to financialstatements

7. Because of the inherent limitations of internal financial controls with reference tofinancial statements 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 withreference to financial statements to future periods are subject to the risk that theinternal financial controls with reference to financial statements may become inadequatebecause of changes in conditions or that the degree of compliance with the policies orprocedures may deteriorate.

Opinion

8. In our opinion the Company has in all material respects an adequate internalfinancial controls system with reference to financial statements and such internalfinancial controls with reference to financial statements were operating effectively as atMarch 312020 based on the internal control over financial reporting criteria establishedby the Company considering the essential components of internal control stated in theGuidance Note issued by the ICAI. Also refer paragraph 4 of the main audit report.

For Price Waterhouse & Co
Chartered Accountants LLP
Firm Registration Number: 304026E/ E-300009
Pradip Kanakia
Partner
Place: Bengaluru Membership Number: 039985
Date: May 18 2020 UDIN: 20039985AAAABV1332

AstraZeneca Pharma India Limited

Annexure B to Independent Auditors' Report

Referred to in paragraph 14 of the Independent Auditors' Report of even date to themembers of AstraZeneca Pharma India Limited on the financial statements as of and for theyear ended March 31 2020

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

(b) The fixed assets are physically verified by the management according to a phasedprogramme designed to cover all the items over a period of three years which in ouropinion is reasonable having regard to the size of the Company and the nature of itsassets. Pursuant to the programme a portion of the fixed assets has been physicallyverified by the management during the year and no material discrepancies have been noticedon such verification.

(c) The title deeds of immovable properties as disclosed in Note 3 on fixed assets tothe financial statements are held in the name of the Company.

ii. The physical verification of inventory (excluding stocks with third parties) havebeen conducted at reasonable intervals by the management during the year. In respect ofinventory lying with third parties these have substantially been confirmed by them. Thediscrepancies noticed on physical verification of inventory as compared to book recordswere not material. Further our attendance at the physical inventory verificationperformed by the management at the Company's manufacturing plant (which represents 20% oftotal inventory by value) was impracticable on account of strict safety protocols put inplace by the Company and we have therefore relied on alternate audit procedures to obtaincomfort over the existence and condition of inventory for that location. (refer Note 47 tothe financial statements and paragraph 4 of our report on the financial statements).

iii. The Company has not granted any loans secured or unsecured to companies firmsLimited Liability Partnerships or other parties covered in the register maintained underSection 189 of the Act. Therefore the provisions of Clause 3(iii) (iii)(a) (iii)(b) and(iii)(c) of the Order are not applicable to the Company.

iv. The Company has not granted any loans or made any investments or provided anyguarantees or security to the parties covered under Section 185 and 186. Therefore theprovisions of Clause 3(iv) of the Order are not applicable to the Company.

v. The Company has not accepted any deposits from the public within the meaning ofSections 73 74 75 and 76 of the Act and the Rules framed thereunder to the extentnotified.

vi. Pursuant to the rules made by the Central Government of India the Company isrequired to maintain cost records as specified under Section 148(1) of the Act in respectof its products. We have broadly reviewed the same and are of the opinion that primafacie the prescribed accounts and records have been made and maintained.

We have not however made a detailed examination of the records with a view todetermine whether they are accurate or complete.

vii.(a) According to the information and explanations given to us and the records ofthe Company examined by us in our opinion the Company is regular in depositing theundisputed statutory dues including provident fund employees' state insurance incometax sales tax duty of customs goods and services tax and other material statutory duesas applicable with the appropriate authorities. Also refer note 46 to the financialstatements regarding management's assessment on certain matters relating to providentfund.

(b) According to the information and explanations given to us and the records of theCompany examined by us the particulars of dues of income tax value-added tax centralsales tax duty of customs service tax goods and services tax as at March 31 2020 whichhave not been deposited on account of a dispute are as follows:

Name of the statute Nature of dues Gross amount (Rs.) Amount paid under protest (Rs.) Net amount (Rs.) Period to which the amount relates Forum where the dispute is pending
The Income Tax Income Tax 5077460 5077460

-

2009-10 Income Tax Appellate Tribunal
Act 1961 Income Tax* 6159181 6159181

-

2010-11 Income Tax Appellate Tribunal
Income Tax** 224055963 155945335 68110628 2013-14 Income Tax Appellate Tribunal
Income Tax 141385237 24000000 117385237 2014-15 Income Tax Appellate Tribunal
Punjab Value Added Tax Act 2005 Value Added Tax (VAT) 1771199 190482 1580717 2006-07 The Honourable High court of Punjab
Central Sales Tax Act 1950 Central Sales tax 1640422 - 1640422 2009-10 State Tax Officer Porur
19218403 - 19218403 2016-17 Assessment Circle Chennai
Customs Act 1962 Duty of customs 21248482 - 21248482 2005-06 Customs Excise & Service Tax Appellate Tribunal Mumbai
The Finance Act 1994 Service Tax 25648174 1764842 23883332 2006-07 to 2011-12 Central Excise and Service Tax Appellate Tribunal Bangalore
4883896 243700 4640196 2012-13 Central Excise and Service Tax Appellate Tribunal Bangalore
3422026 152769 3269257 2013-14 to 2015-16 Central Excise and Service Tax Appellate Tribunal Bangalore
10008434 750650 9257784 April 2016 to June 2017 Central Excise and Service Tax Appellate Tribunal Bangalore
Goods and Services Tax Act 2017 Goods and Services Tax 63616549 - 63616549 2017-18 Assistant Commissioner of State Tax (D-002) Investigation Thane
230062797 230062797 2018-19 Assistant Commissioner of State Tax (D-002) Investigation Thane

* The department has adjusted Rs.6159181 against refund of other assessment years andthis has been included under "amount paid under protest".

**The Company has paid Rs.40000000 under protest. Also the department has adjustedRs.115945335 against refund of other assessment years and this has been included under"amount paid under protest".

Annexure B to Independent Auditors' Report

Referred to in paragraph 14 of the Independent Auditors' Report of even date to themembers of AstraZeneca Pharma India Limited on the financial statements as of and for theyear ended March 31 2020

viii. As the Company does not have any loans or borrowings from any financialinstitution or bank or Government nor has it issued any debentures as at the balancesheet date the provisions of Clause 3(viii) of the Order are not applicable to theCompany.

ix. The Company has not raised any moneys by way of initial public offer furtherpublic offer (including debt instruments) and term loans. Accordingly the provisions ofClause 3(ix) of the Order are not applicable to the Company.

x. During the course of our examination of the books and records of the Companycarried out in accordance with the generally accepted auditing practices in India andaccording to the information and explanations given to us we have neither come across anyinstance of material fraud by the Company or on the Company by its officers or employeesnoticed or reported during the year nor have we been informed of any such case by themanagement.

xi. The Company has paid/ provided for managerial remuneration in accordance with therequisite approvals mandated by the provisions of Section 197 read with Schedule V to theAct. Also refer paragraph 16 of our main audit report.

xii. As the Company is not a Nidhi Company and the Nidhi Rules 2014 are not applicableto it the provisions of Clause 3(xii) of the Order are not applicable to the Company.

xiii. The Company has entered into transactions with related parties in compliance withthe provisions of Sections 177 and 188 of the Act. The details of such related partytransactions have been disclosed in the financial statements as required under IndianAccounting Standard (Ind AS) 24 Related Party Disclosures specified under Section 133 ofthe Act.

xiv. The Company has not made any preferential allotment or private placement of sharesor fully or partly convertible debentures during the year under review. Accordingly theprovisions of Clause 3(xiv) of the Order are not applicable to the Company.

xv. The Company has not entered into any non-cash transactions with its directors orpersons connected with him. Accordingly the provisions of Clause 3(xv) of the Order arenot applicable to the Company.

xvi. The Company is not required to be registered under Section 45-IA of the ReserveBank of India Act 1934. Accordingly the provisions of Clause 3(xvi) of the Order are notapplicable to the Company.

For Price Waterhouse & Co
Chartered Accountants LLP
Firm Registration Number: 304026E/ E-300009
Pradip Kanakia
Partner
Place: Bengaluru Membership Number: 039985
Date: May 18 2020 UDIN: 20039985AAAABV1332

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