Aurobindo Pharma Ltd.
|BSE: 524804||Sector: Health care|
|NSE: AUROPHARMA||ISIN Code: INE406A01037|
|BSE 00:00 | 24 Feb||862.15||
|NSE 00:00 | 24 Feb||862.00||
|Mkt Cap.(Rs cr)||50,513|
|Mkt Cap.(Rs cr)||50513.37|
Aurobindo Pharma Ltd. (AUROPHARMA) - Auditors Report
Company auditors report
To the Members of Aurobindo Pharma Limited
REPORT ON THE AUDIT OF THE STANDALONE FINANCIAL STATEMENTS
We have audited the standalone financial statements of Aurobindo PharmaLimited ("the Company") which comprise the standalone balance sheet as at 31March 2020 the standalone statement of profit and loss (including other comprehensiveincome) standalone statement of changes in equity and standalone statement of cash flowsfor the year then ended and notes to the standalone financial statements including asummary of the significant accounting policies and other explanatory information.
In our opinion and to the best of our information and according to theexplanations given to us the aforesaid standalone financial statements give theinformation required by the Companies Act 2013 ("Act") in the manner sorequired and give a true and fair view in conformity with the accounting principlesgenerally accepted in India of the state of affairs of the Company as at 31 March 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'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. We have determined the matters described below to bethe key audit matters to be communicated in our report.
Refer to Note 2.2(C) of the summary of significant accounting policiesto the standalone financial statements.
Revenue from sale of goods is recognised when a promise in a customercontract (performance obligation) has been satisfied by transferring control over thepromised goods to the customer. Control is usually transferred upon shipment delivery toupon receipt of goods by the customer in accordance with the delivery and acceptanceterms agreed with the customers. The amount of revenue to be recognised is based on theconsideration expected to be received in exchange for goods excluding trade discountsvolume discounts sales returns and taxes.
Revenue is one of the key performance indicators of the Company andthere could be a risk of revenue is recognized in the incorrect period or before thecontrol has been transferred to the customer.
The Company's management and Board of Directors are responsiblefor the other information. The other information comprises the information included in theCompany's annual report but does not include the financial statements and ourauditors' report thereon. The Company's annual report
Our audit procedures in respect of the recognition of revenue includedthe following:
Considering the Company's revenue recognition policies andassessed compliance with the applicable accounting standards.
Evaluating the design tested the implementation and operatingeffectiveness of the Company's internal controls over recognition and measurement ofrevenue in accordance with underlying customer contracts.
Performing substantive testing (including cutoff testingprocedures) by selecting samples of revenue transactions recorded during the year and forthe selected samples verifying the underlying documents such as sales invoices /contracts and dispatch/shipping documents.
Assessing manual journals posted to revenue to identify unusualitems not already covered by our audit testing;
Evaluating adequacy of disclosures given in the standalonefinancial statements.
is expected to be made available to us after the date of thisauditor's report.
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.
When we read the annual report if we conclude that there is a materialmisstatement therein we are required to communicate the matter to those charged withgovernance.
Management's and Board of Directors' Responsibility for theStandalone Financial Statements
The Company's Management and Board of Directors are responsiblefor the matters stated in section 134(5) of the Act with respect to the preparation ofthese standalone financial statements that give a true and fair view of the state ofaffairs profit/loss and other comprehensive income changes in equity and cash flows ofthe Company in accordance with the accounting principles generally accepted in Indiaincluding the Indian Accounting Standards (Ind AS) specified under section 133 of the Act.This responsibility also includes maintenance of adequate accounting records in accordancewith the provisions of the Act for safeguarding of the assets of the Company and forpreventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; and design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring accuracy and completeness of theaccounting records relevant to the preparation and presentation of the standalonefinancial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.
In preparing the standalone financial statements the Management andBoard of Directors are responsible for assessing the Company's ability to continue asa going concern disclosing as applicable matters related to going concern and using thegoing concern basis of accounting unless the Board of Directors either intends toliquidate the Company or to cease operations or has no realistic alternative but to doso.
The Board of Directors is also responsible for overseeing theCompany's financial reporting process.
Auditor's Responsibilities for the Audit of the StandaloneFinancial Statements
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:
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's report to the related disclosures in the standalone financial statementsor if such disclosures are inadequate to modify our opinion. Our conclusions are basedon the audit evidence obtained up to the date of our auditor's report. Howeverfuture events or conditions may cause the Company to cease to continue as a going concern.
Evaluate the overall presentation structure and content of thestandalone financial statements including the disclosures and whether the standalonefinancial statements represent the underlying transactions and events in a manner thatachieves fair presentation.
We communicate with those charged with governance regarding amongother matters the planned scope and timing of the audit and significant audit findingsincluding any significant deficiencies in internal control that we identify during ouraudit.
We also provide those charged with governance with a statement that wehave complied with relevant ethical requirements regarding independence and tocommunicate with them all relationships and other matters that may reasonably be thoughtto bear on our independence and where applicable related safeguards.
From the matters communicated with those charged with governance wedetermine those matters that were of most significance in the audit of the standalonefinancial statements of the current period and are therefore the key audit matters. Wedescribe these matters in our auditors' report unless law or regulation precludespublic disclosure about the matter or when in extremely rare circumstances we determinethat a matter should not be communicated in our report because the adverse consequences ofdoing so would reasonably be expected to outweigh the public interest benefits of suchcommunication.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditors' Report) Order 2016("the Order") issued by the Central Government in terms of section 143 (11) ofthe Act we give in the "Annexure A" a statement on the matters specified inparagraphs 3 and 4 of the Order to the extent applicable.
2. 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) I n our opinion proper books of account as required by law havebeen kept 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 such controls referto our separate Report in "Annexure B"; and
g) With respect to the other matters to be included in theAuditors' Report in accordance with Rule 11 of the Companies (Audit and Auditors)Rules 2014 in our opinion and to the best of our information and according to theexplanations given to us:
ii. The Company did not have any long-term contracts includingderivative contracts for which there were any material foreseeable losses;
iii. There has been no delay in transferring amounts required to betransferred to the Investor Education and Protection Fund by the Company; and
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.
3. With respect to the matter to be included in the Auditors'Report under section 197(16):
In our opinion and according to the information and explanations givento us the remuneration paid by the Company to its directors during the current year is inaccordance with the provisions of section 197 of the Act. The remuneration paid to anydirector is not in excess of the limit laid down under section 197 of the Act. TheMinistry of Corporate Affairs has not prescribed other details under section 197(16) whichare required to be commented upon by us.
to the Independent Auditor's Report on the Standalone FinancialStatements
With reference to "Annexure A" referred to in Report on OtherLegal and Regulatory Requirements of the Independent Auditor's Report to the Membersof the Company on the audit of 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 property plant andequipment.
(b) The property plant and equipment are physically verified by theManagement according to a phased programme designed to cover all the items over a periodof three years which in our opinion is reasonable having regard to the size of the
Company and the nature of its assets. Pursuant to the Programme aportion of the property plant and equipment has been physically verified by theManagement during the year and no material discrepancies have been noticed on suchverification.
(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 immovable properties included in the property plant and equipment except forthe following are held in the name of the Company. As explained to us registration oftitle deeds is in progress in respect of these immovable properties:
ii. The inventories except goods-in-transit and stock lying with thirdparties has been physically verified by the Management during the year. In our opinionthe frequency of such verification is reasonable. The discrepancies noticed onverification between the physical stock and the book records were not material.Inventories lying with third parties as at 31 March 2020 have been confirmed by them andno material discrepancies were noticed in respect of such confirmations.
iii. According to information and explanations given to us the Companyhas not granted any loans secured or unsecured to companies firms Limited LiabilityPartnerships or other parties covered in the Register maintained under Section 189 of theCompanies Act 2013 ("the Act"). Accordingly the Provisions of clause3(iii)(a) (b) and (c) of the Order are not applicable to the Company.
iv. In our opinion and according to the information and explanationsgiven to us the Company has not advanced loans to directors / to a Company in which thedirector is interested to which the provisions of Section 185 of the Act apply and hencenot commented upon. However in respect of loans given investments made and guaranteesgiven the Company is in compliance with the provisions of Section 186 of the Act.
v. As informed to us the Company has not accepted any deposits withinthe meaning of Sections 73 to 76 of the Act and the Rules framed thereunder. Accordinglythe provisions of clause 3(v) of the Order are not applicable.
vi. We have broadly reviewed the books of account maintained by theCompany pursuant to the Rules made by the Central
Government for the maintenance of cost records under Section 148(1) ofthe Act related to the manufacture of Active Pharmaceutical Ingredients and Formulationsand are of the opinion that prima facie the prescribed accounts and records have beenmade and maintained. We have not however made a detailed examination of the same.
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/accrued inthe books of account in respect of undisputed statutory dues including Provident FundEmployees' State Insurance Income-tax Duty of Customs Goods and Services tax Cessand other material statutory dues have generally been regularly deposited during the yearby the Company with the appropriate authorities.
According to the information and explanations given to us noundisputed amounts payable in respect of Provident Fund Employees' State InsuranceIncome- tax Duty of Customs Goods and Services tax Cess and any other materialstatutory dues were in arrears as at 31 March 2020 for a period of more than six monthsfrom the date they became payable.
(b) According to the information and explanations given to us and basedon our examination of the records of the Company there are no disputed dues of Goods andServices tax and Cess. According to the information and explanations given to us thefollowing dues of Income-tax Service tax Duty of Customs Duty of Excise have not beendeposited by the Company on account of disputes:
Customs Excise and Service Tax Appellate Tribunals
viii. In our opinion and according to the information and explanationsgiven to us the Company has not defaulted in repayment of loans or borrowings to bank.The Company did not have any dues to any financial institution government or debentureholder during the year.
ix. The Company has not raised any moneys by way of initial publicoffer further public offer (including debt instruments) and term loans. Accordinglyparagraph 3(ix) of the Order is not applicable to the Company.
x. During the course of our examination of the books and records of theCompany carried out in accordance with the generally accepted auditing practices inIndia and according to the information and explanations given to us we have neither comeacross any instance of material fraud by the Company or on the Company by its officers oremployees noticed or reported during the year nor have we been informed of any such caseby the Management.
xi. According to the information and explanations given to us and basedon our examination of the records of the Company the Company has paid/provided formanagerial remuneration in accordance with the requisite approvals mandated by theprovisions of Section 197 read with Schedule V of the Act.
xii. According to the information and explanations given to us theCompany is not a Nidhi Company and the Nidhi Rules 2014 are not applicable to it.Accordingly the provisions of Clause (xii) of the Order are not applicable to theCompany.
xiii. According to the information and explanations given to us and onthe basis of our examination of the records of the Company the transactions with relatedparties are in
compliance with the provisions of Section 177 and Section 188 of theAct other than few transactions during the year where audit committee approval has beenobtained subsequently. The details of related party transactions have been disclosed inthe standalone financial statements as required under Indian Accounting Standards.
xiv. Based on our examination of the records of the Company andaccording to the information and explanations given to us the Company has not made anypreferential allotment or private placement of shares or fully or partly convertibledebentures during the year. Accordingly the provisions of Clause (xiv) of the Order arenot applicable to the Company.
xv. According to the information and explanations given to us and onthe basis of our examination of the records of the Company the Company has not enteredinto any non-cash transactions with its directors or persons connected with him.Accordingly the provisions of Clause (xv) of the Order are not applicable to the Company.
xvi. According to the information and explanations given to us and onthe basis of our examination of the records of the Company the Company is not required tobe registered under Section 45-IA of the Reserve Bank of India Act 1934. Accordingly theprovisions of Clause (xvi) of the Order are not applicable to the Company.
to the Independent Auditors' report on the Standalone FinancialStatements of Aurobindo Pharma 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 clause (f) of paragraph 2 under Report on OtherLegal and Regulatory Requirements' section of our report of even date)
We have audited the internal financial controls with reference tofinancial statements of Aurobindo Pharma Limited ("the Company") as of 31 March2020 in conjunction with our audit of the standalone financial statements of the Companyfor 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's Responsibility for Internal Financial Controls
The Company's management and the Board of Directors areresponsible for establishing and maintaining internal financial controls based on theinternal financial controls with reference to financial statements criteria established bythe Company considering the essential components of internal control stated in theGuidance Note. These responsibilities include the design implementation and maintenanceof adequate internal financial controls that were operating effectively for ensuring theorderly and efficient conduct of its business including adherence to company'spolicies the safeguarding of its assets the prevention and detection of frauds anderrors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Companies Act 2013(hereinafter referred to as "the Act").
Our responsibility is to express an opinion on the Company'sinternal financial controls with reference to financial statements based on our audit. Weconducted our audit in accordance with the Guidance Note and the Standards on Auditingprescribed under section 143(10) of the Act to the extent applicable to an audit ofinternal financial controls with reference to financial statements. Those Standards andthe Guidance Note require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance about whether adequate internal financialcontrols with reference to financial statements were established and maintained andwhether such controls 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 reference tofinancial 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's judgement including the assessment ofthe risks 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 internalfinancial controls with reference to financial statements.
Meaning of Internal Financial controls with Reference to FinancialStatements
A company's internal financial controls with reference tofinancial statements is a process designed to provide reasonable assurance regarding thereliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles. Acompany's internal financial controls with reference to financial statements includethose policies and procedures that:
(1) pertain to the maintenance of records that 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 with Reference toFinancial Statements
Because of the inherent limitations of internal financial controls withreference to financial statements including the possibility of collusion or impropermanagement override of controls material misstatements due to error or fraud may occurand not be detected. Also projections of any evaluation of the internal financialcontrols with reference to 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.