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Bafna Pharmaceuticals Ltd.

BSE: 532989 Sector: Health care
NSE: BAFNAPH ISIN Code: INE878I01022
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OPEN 9.30
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VOLUME 100
52-Week high 9.98
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Buy Price 9.30
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OPEN 9.30
CLOSE 9.30
VOLUME 100
52-Week high 9.98
52-Week low 4.65
P/E
Mkt Cap.(Rs cr) 2
Buy Price 9.30
Buy Qty 18078.00
Sell Price 5.10
Sell Qty 2.00

Bafna Pharmaceuticals Ltd. (BAFNAPH) - Auditors Report

Company auditors report

INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF BAFNA PHARMACEUTICALS LIMITED

Report on the Audit of the Standalone Financial Statements Opinion

We have audited the accompanying standalone financial statements of BafnaPharmaceuticals Limited ("the Company") whichcomprise the Balance Sheet as atMarch 31 2019 the Statement of Profit and Loss (including Other Comprehensive Income)the Statement of Changes in Equity and the Statement of Cash Flows for the year ended onthat date notes to financial statements and the significant accounting policies and otherexplanatory information (hereinafter referred toas"the standalonefinancialstatements").

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone financial statements give the information requiredby the Companies Act 2013 ("the Act") in the manner so required and give a trueand fair view in conformity with the Indian Accounting Standards prescribed under section133 of the Act read with the Companies (Indian Accounting Standards) Rules 2015 asamended ("IndAS") and other accounting principles generally accepted in Indiaof the state of affairs of the Company as at March 31 2019 the profit and totalcomprehensive income changes in equity and its cash flows for the year ended on thatdate.

Basis for Opinion

We conducted our audit of the standalone financial statements in accordance with theStandards on Auditing specified under section 143(10) of the CompaniesAct 2013.Ourresponsibilities under those Standards are further described in the

Auditor's Responsibilities 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 ofIndia(ICAI) together with theindependence requirements that are relevant to our audit of the standalone financialstatements under the provisions of the Act and the Rules made thereunder and we havefulfilled our other ethical responsibilities in accordance with these requirements and theICAI's Code of Ethics. We believe that the audit evidencewe have obtained is sufficientand appropriate to provide a basis for our audit opinion on the standalonefinancialstatements.

Management's Responsibility for the Standalone FinancialStatements

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 standalone financial statementsthat give a true and fair view of the financial position financial performance totalcomprehensive income changes in equity and cash flows of the Company in accordance withthe IndAS and other accounting principles generally accepted in India. This responsibilityalso includes maintenance of adequate accounting records in accordance with the provisionsof the Act for safeguarding the assets of the Company and for preventing and detectingfrauds and other irregularities; selection and application of appropriate accountingpolicies; making judgments and estimates that are reasonable and prudent; and designimplementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the standalone financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud orerror.

In preparing the standalone financial statements management is responsible forassessing the Company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessmanagement either intends to liquidate the Company or to cease operations or has norealistic alternative but to doso.

The Board of Directors are responsible for overseeing the Company's financial reportingprocess.

Auditor's Responsibilities for the Audit of the Standalone Financial Statements

Our objectives are to obtain reasonable assurance about whether the standalonefinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions ofuserstaken on the basis of these standalone financialstatements.

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

• Identify and assess the risks of material misstatement of the standalonefinancialstatements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that issufficienand appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override ofinternalcontrol.

• Obtain an understanding of internal financial controls relevant to the auditinorder 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 system in place and theoperating effectiveness of suchcontrols.

• Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made bymanagement.

• Conclude on the appropriateness of management's use of the going concern basisof accounting and based on theaudit 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 existswe are required to draw attention in our auditor's report to the related disclosures inthe standalone financial statements or if such disclosures are inadequate to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor's report. However future events or conditions may causethe Company to cease tocontinue as a goingconcern.

• Evaluate the overall presentation structure and content of the standalonefinancial statements including the disclosures and whether the standalone financialstatements represent the underlying transactions and events in a manner that achievesfairpresentation.

We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significantaudit findings including anysignificant deficiencies in internal control that we identify during ouraudit.

We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable relatedsafeguards.

From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the standalone financial statementsof the current period and are therefore the key audit matters. We describe these mattersin our auditor's report unless law or regulation precludes public disclosure about thematter or 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 suchcommunication.

Key Audit Matter

Key Audit Matter Auditor's Response
Compliance with IND AS 36 and IND AS 113: With a view to resolve the Insolvency and Bankruptcy proceedings initiated on the Company the Promoter had submitted Resolution plan which was approved by NCLT Chennai bench. The Resolution plan had proposed restructuring and restating of all assets liabilities which would have resulted in write offs as well as write backs in the books of accounts. However due to appeal by an aggrieved party NCLAT has stayed the handing over of the Corporate Debtor to the Resolution applicant and has also instructed that the status of the corporate debtor be maintained as a Going concern. We have given a modified opinion in our "Independent Auditors' report on the standalone financial results pursu- ant to clause 33 of SEBI (Listing obligations and disclosure requirements) Regulations 2015 as follows: a. Major Components of Current Assets – Receivables outstanding for over one year Long outstanding Advances to suppliers besides Stock of spares and Stores which have all not been tested for recovery/ impairment as per IND AS 36 consequently not restated at fair values in accordance IND AS 113 and not provisioned in the accounts.
In view of the above the Company did not test the assets for recovery/impairment as per principles of IND AS 36 nor restated them at fair values as per IND AS 113. Similar is the case of non-restatement at fair values in the case of current liabilities. b. Major Components of Current Liabilities – Sundry creditors whose balances are yet to be confirmed hence not restated at fair values in accordance with IND AS 113.
The Company has deferred the above to be carried out in the ensuing financial year (Ref: Foot note no. 5 of Audited Financial results as well as Note No.3 of IND AS notes to Financial Statements)

Report on Other Legal and Regulatory Requirements

As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government of India in terms of sub-section (11) of section 143 ofthe Companies Act 2013 we give in the Annexure a statement on the matters specified inparagraphs 3 and 4 of the Order to the extent applicable.

1. As required by Section 143(3) of the Act based on our audit we reportthat: a) Wehave sought and obtained all the information and explanations which tothebestofourknowledgeand belief were necessary for the purposes of ouraudit. b) Inour opinion proper books of account as required by law have been kept by the Company sofar as it appears from our examination of thosebooks. c) The Balance Sheet theStatement of Profit and Loss including Other Comprehensive Income Statement of Changes inEquity and the Statement of Cash Flow dealt with by this Report are in agreement with therelevant books ofaccount. d) In our opinion the aforesaid standalone financialstatements comply with the IndAS specified under Section 133 of the Act read with Rule 7of the Companies (Accounts) Rules2014 except for the modified opinion expressed underKey Audit matter: c. Major Components of Current Assets – Receivables outstandingfor over one year Long outstanding Advances to suppliers besides Stock of spares andStores which have all not been tested for recovery/impairment as per IND AS 36consequently not restated at fair values in accordance IND AS 113 and not provisioned inthe accounts. d. Major Components of Current Liabilities – Sundry creditorswhose balances are yet to be confirmed hence not restated at fair values in accordancewith IND AS 113.

e) On the basis of the written representations received from the directors as onMarch 31 2019 taken on record by the Board of Directors none of the directors isdisqualified as on March 31 2019 from being appointed as a director in terms of Section164 (2) of theAct. f) With respect to the adequacy of the internal financialcontrols over financial reporting of the Company and the operating effectiveness of suchcontrols refer to our separate Report in "Annexure A". g) With respectto the other matters to be included in the Auditor's Report in accordance with therequirements of section 197(16) of the Act asamended: In our opinion and to the best ofour information and according to the explanations given to us the remuneration paid bythe Company to its directors during the year is in accordance with the provisions ofsection 197 ofthe 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) Rules2014 as amended in our opinion and to the best of our information and according to theexplanations given tous: i. The Company has disclosed the impact of pending litigations onits financial position in its standalone financialstatements. ii. The Company has madeprovision as required under the applicable law or accounting standards for materialforeseeable losses if any on long-term contracts including derivative contracts. iii.There has been no delay in transferring amounts required to be transferred to theInvestorEducation and Protection Fund by theCompany.

2. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government in terms of Section 143(11) of the Act we give in"Annexure B" a statement on the matters specified in paragraphs 3 and 4 of theOrder.

For R.SATHYANARAYANAN & CO
Chartered Accountants
(Firm's Registration No.003656S)
Sd/-
R. SATHYANARAYAN
Place : Chennai Partner
Date : 27.05.2019 (Membership No.028377)

ANNEXURE "A" to the Independent Auditors' Reporton the IND AS FinancialStatements of BAFNA PHARMACEUTICALS LIMITED

Report on the Internal Financial Controls Over Financial Reporting under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 ("the Act")

We have audited the internal financial controls over financial reporting of BAFNAPHARMACEUTICALS LIMITED ("the Company") as of March 31 2019 in conjunctionwith our audit of the standalone financial statements of the Company for the year ended onthat date.

Management's Responsibility for Internal Financial Controls

The Board of Directors of the Company is responsible for establishing and maintaininginternal financial controls based on the internal control over financial reportingcriteria established by the Company considering the essential components of internalcontrol stated in the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting 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 respective 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 Act2013.

Auditor's Responsibility

Our responsibility is to express an opinion on the internal financial controls overfinancial reporting of the Company based on our audit. We conducted our audit inaccordance with the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting (the "Guidance Note") issued by the Institute of Chartered Accountantsof India and the Standards on Auditing prescribed under Section 143(10) of the CompaniesAct2013to the extent applicable to an audit of internal financial controls.ThoseStandards and the Guidance Note require that we comply with ethical requirements and planand perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls over financial reporting was established and maintained and if suchcontrols 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 orerror.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the internal financial controls system overfinancial reporting of the Company.

Meaning of Internal Financial Controls Over Financial Reporting

A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regardingthe 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 authorisation 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 financialstatements.

Limitations of Internal Financial Controls OverFinancialReporting

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 of 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

Inouropiniontothebestofourinformationandaccordingtotheexplanationsgiventous theCompany has in all material respects an adequate internal financial controls system overfinancial reporting and such internal financial controls over financial reporting wereoperating effectively as at March 31 2019 except for the following areas: a. CertainBalances of Debtors Creditors and Deposits with Corporate bodies are subject toconfirmation. b. Balances pertaining to Advances given to suppliers for supply ofmaterials and others remain unconfirmed.

However the company has an established set of "internal control over financialreporting criteria" duly taking into consideration 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 ofIndia.

For R.SATHYANARAYANAN & CO
Chartered Accountants
(Firm's Registration No.003656S)
Sd/-
R. SATHYANARAYAN
Place : Chennai Partner
Date : 27.05.2019 (Membership No.028377)

ANNEXURE ‘B' TO the Independent Auditors' Reporton the IND AS Financial Statementsof BAFNA PHARMACEUTICALS LIMITED

On the basis of such checks as we considered appropriate and according to informationand explanations given to us during the course of audit we report that: i. In respect ofthe Company's fixedassets: (a) The Company has maintained proper records showing fullparticulars including quantitative details and situation of fixedassets.

(b) As explained to us fixed assets have been physically verified by the management atreasonable intervals; no material discrepancies were noticed on such verification. In ouropinion the frequency of verification is reasonable (c) According to the information andexplanations given to us the records examined by us we report that the title deedscomprising all theimmovablepropertiesoflandand buildingsare held in the name of theCompany as at the balance sheet date.

ii. a) As explained to us inventories have been physically verified during the year bythe management at reasonable intervals.

(b) In our opinion and according to the information and explanations given to us theprocedures of physical verification of inventories followed by the management arereasonable and adequate in relation to the size of the company and the nature of itsbusiness. The Company is generally maintaining proper records of its inventories. Nomaterial discrepancy was noticed on physical verification of stocks by the management ascompared to book records.

The maintenance of Stocks of Stores and spares requires to be assessed in respect ofusefulness and value carried in the books of accounts.

iii. According the information and explanations given to us the Company had grantedunsecured loans to its subsidiary listed in the Register maintained under section 189 ofthe companies act 2013. Since the subsidiary did not have any operations for the past fewyears and has not been a going concern the loan has been written off during the yearwith the approval of the Board.

iv. In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of Sections 185 and 186 of the Act in respect ofgrant of loans making investments and providing guarantees and securities asapplicable.

v. The Company has not accepted deposits during the year and does not have anyunclaimed deposits as at March 31 2019 and therefore the provisions of the clause 3 (v)of the Order are not applicable to the Company.

vi. We have broadly reviewed the cost records maintained by the Company pursuant to theRules prescribed by the Central Government under Section 148(1) 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 in respect ofstatutorydues:

(a) According to the information and explanations given to us and the records of theCompany examined by us in our opinion the Company has not been regular indepositing the undisputed statutory dues including Provident Fund Employees' StateInsurance Income Tax TDS and Service Tax.Howeverthe Company has has been regular inremittance of Goods & Service Tax Custom Duty Excise Duty Value Added Tax cess andother material statutory dues as applicable with the appropriate authorities. Duringthe course of our audit we observed certain instances of non-deduction of TDS on eligiblepayments made during the year.

(b) According to the information and explanations given to us and the records of theCompany examined by us the particulars of dues f income tax sales tax service tax dutyof customs and duty of excise duty value added tax as at 31st March 2019 whichhave not been deposited are as follows:

Name of the statue Nature of dues Amount (Rs.in Lakhs) Payment to which the amount relates Due date Date of payment
EPF & MP PF Contribution 233.14 Jan 2016 to 15th Day of the Not paid
Act 1952 March 2019 following month
ESI Act ESI 40.43 June 2016 to 21st Day of the Not paid
1948 Contribution March 2019 following month
Service Tax Service Tax 19.02 June 2016 to 05th Day of the Not paid
March 2019 following month
Income Tax TDS 14.83 April 2017 to 07th Day of the Not paid
Act 1961 March 2019 following month
Income Tax Income Tax 892.80 AY 2015-16 31st March 2015 Not paid
Act 1961 Dues

viii. According to the records of the Company examined by us and the information andexplanation given to us the Company has defaulted in repayment of loans or borrowings toState Bank of India and was classified as Non-performing asset as of March 31 2017itself and the same position continues as at the date of Balance sheet under audit. TheCompany has also availed facilities from other banks namely IDBI Bank Ltd and DevelopmentCredit Bank Bank of Ceylon and DBS Bank Limited for working capital purposes. The Companyhas not taken loans or borrowing from Government and has not issued debentures during theyear. ix. During the year an Operational Creditor filed under Section 9 of The Insolvencyand Bankruptcy Code 2016 a Petition with The National Company Law Tribunal (NCLT) SingleBench Chennai which was admitted as CP/682/IB/2017 against the Company. The Hon'ble NCLTSingle Bench Chennai passed an order on 16thJuly 2018 for initiation ofCorporate Insolvency Resolution Process (CIRP) against the Company. Committee of Creditors(COC) approved Resolution plan was submitted by the promoter was in turn approved by theHon'ble NCLT Chennai on 1st February 2019. However an aggrieved shareholderfiled an appeal with Hon'ble NCLAT (National Company Law Appellate Tribunal) and thehanding over of corporate debtor to the resolution applicant was stayed by them on 28thFebruary 2019. Post several hearing proceedings which were held between the financialyear end and the date of this report the final judgement is reserved to be passed bytheHon'ble NCLAT New Delhi. x. The Company has not raised moneys by way of initial publicoffer or further public offer (including debt instruments) or term loans and hencereporting under clause 3 (ix) of the Order is not applicable to the Company. xi. To thebest of our knowledge and according tothe information and explanations given to us nofraud by the Company or no material fraud on the Company by its officers or employees hasbeen noticed or reported during theyear. xii. In our opinion and according to theinformation and explanations given tousthe Companyhas paid/provided managerialremuneration in accordance with the requisite approvalsmandatedbythe provisions of section197 read with Schedule V to theAct.

xiii. The Company is not a Nidhi Company and hence reporting under clause 3 (xii) ofthe Order is not applicable to theCompany.

xiv. In our opinion and according to the information and explanations given to us theCompany is in compliance with Section 177 and 188 of the Companies Act 2013 whereapplicable for all transactions with the related parties and the details of related partytransactions have been disclosed in the standalone financial statements as required by theapplicable accountingstandards.

xv. As per the provisions of clause 3 (xiv) of the order and according to theinformation and explanations given to us the Company had made preferential allotment of5000000 equity shares or private placement of shares during the previous year and allthe requirements of section 42 of Companies Act 2013 were complied with and amount raisedhas been used for the purpose for which funds were raised. . The Company had alreadyobtained in principle approval and during the year have obtained final approval of5000000 equity shares which were allotted on preferential basis from both BSE Ltd andNational Stock Exchange of India Limited.

xvi. In our opinion and according to the information and explanations given to usduringthe year the Company has not entered into any non-cash transactions with itsDirectors or persons connected to its directors and henceprovisions of section 192 of theCompanies Act 2013 are not applicable to theCompany.

xvii. The Company is not required to be registered under section 45-IA of the ReserveBank of India Act1934. Accordingly the provisions of clause 3(xvi) of the Order is notapplicable to the Company.

For R.SATHYANARAYANAN & CO
Chartered Accountants
(Firm's Registration No.003656S)
Sd/-
R. SATHYANARAYAN
Place : Chennai Partner
Date : 27.05.2019 (Membership No.028377)