To the Members of Bal Pharma Limited
Report on the Audit of the Standalone Financial Statements Opinion
We have audited the standalone financial statements of Bal Pharma Limited (theCompany) which comprise the balance sheet as at 31st March 2019 and the statementof Profit and Loss (including other comprehensive income) Statement of Changes in Equityand Statement of Cash Flows for the year then ended and notes to the financialstatements including a summary of significant accounting policies and other explanatoryinformation.
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 Act in the manner so required and give a true and fair view in conformity with theaccounting principles generally accepted in India of the state of affairs of the Companyas at March 31 2019 and profit (including other comprehensive income) changes in equityand its cash flows for the year ended on that date.
Basis for Opinion
We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder section 143(10) of the Companies Act 2013.
Our responsibilities under those Standards are further described in the Auditor'sResponsibilities for the Audit of the Standalone Financial Statements section of ourreport. We are independent of the Company in accordance with the Code of Ethics issued bythe Institute of Chartered Accountants of India together with the ethical requirementsthat are relevant to our audit of the financial statements under the provisions of theCompanies Act 2013 and the Rules thereunder and we have fulfilled our other ethicalresponsibilities in accordance with these requirements and the Code of Ethics. We believethat the audit evidence we have obtained is sufficient and appropriate to provide a basisfor our opinion.
Key Audit Matters
Key audit matters (KAM') 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.
|Key Audit Matters ||How our audit addressed the key audit matter |
|Inventory ||Our key audit procedures included the following: |
|The Company has inventories amounting to Rs. 6951.58 lakhs being carried at cost or NRV whichever is lower based on Ind AS 2 Inventories. || Assessing the appropriateness of the policies in respect of inventories by comparing with applicable accounting standards. |
|We identified the Inventories as a key audit matter because there is risk of being overstated or understated. Further given the nature of goods that is goods with shelf life it becomes imperative to ensure the same is excluded at time of valuation of inventories. || Evaluating the design testing the implementation and operating effectiveness of the Company's internal controls including general IT controls and key IT application controls over recognition and measurement of movement of inventory. |
| || Obtain sufficient appropriate audit evidence regarding the existence and condition of inventory by attending the physical inventory counting and evaluating managements instructions and procedures for the same. |
| || Performing test counts on the same by selecting samples of purchase and sales and tracing items from records to physical inventory. |
| || Test check of batches with expiration date and ensuring that expired obsolete goods are not included in the closing stock of inventory |
|Revenue Recognition || |
|Revenue from sale of goods is recognised when a promise in a customer contract (performance obligation) has been satisfied by transferring control over the promised goods to the customer. Control is usually transferred upon shipment delivery to in accordance with the delivery and acceptance terms agreed with the customers. The amount of revenue to be recognised is based on the consideration expected to be received in exchange for goods excluding trade discounts volume discounts sales returns and any taxes or duties collected on behalf of the government which are levied on sales such as sales tax value added tax goods and services tax etc. where applicable. ||In view of the significance of the matter we applied the following audit procedures in this area among others to obtain sufficient appropriate audit evidence: |
|Revenue is one of the key performance indicators of the Company and there could be a risk that revenue is recognized in the incorrect period or before the control has been transferred to the customer. || Assessed the appropriateness of the Company's revenue recognition accounting policies including those relating to discounts and sales return and assessed compliance with the policies in terms of applicable accounting standards. |
| || Tested the effectiveness of the Company's controls over measurement and recognition of revenue in accordance with customer contracts which includes control over transaction pricing including discounts and correct timing of revenue recognition. |
| || Assessed sales transactions taking place at either side of the balance sheet date as well as credit notes issued after the year end date to assess whether that revenue was recognised in the correct period. |
Information Other than the Financial Statements and Auditor's Report Thereon
The Company's management and Board of Directors are responsible for the otherinformation. The other information comprises the information included in the Company'sannual report but does not include the standalone financial statements and our auditors'report thereon. Our opinion on the standalone financial statements does not cover theother information and we do not express any form of assurance conclusion thereon. Inconnection with our audit of the standalone financial statements our responsibility is toread the other information and in doing so consider whether the other information ismaterially inconsistent with the standalone financial statements or our knowledge obtainedin the audit or otherwise appears to be materially misstated. If based on the work wehave performed we conclude that there is a material misstatement of this otherinformation we are required to report that fact. We have nothing to report in thisregard.
Responsibilities of Management for the Standalone Financial Statements
The Company's Board of Directors is responsible for the matters stated in section134(5) of the Companies Act 2013 (the Act) with respect to the preparation ofthese standalone financial statements that give a true and fair view of the financialposition financial performance changes in equity and cash flows of the Company inaccordance with the accounting principles generally accepted in India including theIndian Accounting Standards (Ind AS) specified under section 133 of the Act. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding of the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; anddesign implementation 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 financial statements thatgive a true and fair view and are free from material misstatement whether due 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 do so.
Those Board of Directors are also responsible for overseeing the Company's financialreporting process.
Auditor's Responsibilities for the Audit of the Standalone Financial Statements
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.
As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financialstatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentional omissions misrepresentations or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under section 143(3)(i)of the Companies Act 2013 we are also responsible for expressing our opinion on whetherthe company has adequate internal financial controls system in place and the operatingeffectiveness of such controls.
Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basisof accounting 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 existswe are required to draw attention in our auditor's report to the related disclosures inthe financial statements or if such disclosures are inadequate to modify our opinion.Our conclusions are based on the audit evidence obtained up to the date of our auditor'sreport. However future events or conditions may cause the Company to cease to continue asa going concern.
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.
We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.
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 related safeguards.
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 auditors' 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 such communication.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor's Report) Order 2016 (the Order)issued by the Central Government of India in terms of sub-section (11) of section 143 ofthe Companies Act 2013 we give in the Annexure A a statement on the mattersspecified in paragraphs 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 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 Changes in Equity the Statement of Profit andLoss (including other comprehensive income) and the Cash Flow Statement dealt with bythis Report are in agreement with the books of account.
d. In our opinion the aforesaid standalone financial statements comply with the IndianAccounting Standards (Ind AS) specified under Section 133 of the Act read with Rule 7 ofthe Companies (Accounts) Rules 2014.
e. On the basis of the written representations received from the directors as on 31stMarch 2019 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2019 from being appointed as a director in terms of Section164 (2) of the Act
f. With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate Report in Annexure B.
g. With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our information and according to the explanations given to us:
i. The Company has disclosed the impact of pending litigations on its financialposition in its standalone financial statements - Refer Note 35 to the standalonefinancial statements;
ii. the Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses.
iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.
iv. The disclosures in the standalone financial statements regarding holdings as wellas dealings in specified bank notes during the period from 8 November 2016 to 30 December2016 have not been made in these standalone financial statements since they do not pertainto the financial year ended 31 March 2019.
For N S V M & Associates
Firm registration number: 0I0072S
Membership No: 036508
30th May 2019
Annexure A to the Independent Auditor's Report of even date to the members of BalPharma Limited on the standalone financial statements for the year ended 31 March 2019
Based on the audit procedures performed for the purpose of reporting a true and fairview on the standalone financial statements of the Company and taking into considerationthe information and explanations given to us and the books of account and other recordsexamined by us in the normal course of audit and to the best of our knowledge and beliefwe report that
(i) a. The Company has maintained proper records showing full particulars includingquantitative details and Situation of Fixed assets.
b. The Company has a regular programme of physical verification of its fixed assets bywhich fixed assets are verified in a phased manner over a period of three years which Inour opinion is reasonable having regard to the size of the Company and the nature of itsfixed assets. No material discrepancies were noticed on such verification.
c. The title deeds of immovable properties (which are included under the headProperty Plant and Equipment') are held in the name of the Company.
(ii) As explained to us the inventories have been physically verified by theManagement at reasonable intervals during the year. In our opinion the frequency of suchverification is reasonable. The discrepancies noticed on such physical verificationbetween physical stock and book records were not material and have been adequately dealtwith in the books of account.
(iii) The Company has granted unsecured loans to companies covered in the registermaintained under Section 189 of the Act; and with respect to the same:
a. in our opinion the terms and conditions of grant of such loans are not prima facieprejudicial to the Company's interest;
b. the schedule of repayment of principal and payment of interest has not beenstipulated and we are unable to comment on the regularity of repayment/ receipts of theprincipal amount and the interest;
c. there is no overdue amount in respect of loans granted to such companies.
(iv) In respect of loans investments and guarantees the provisions of Section 185 and186 of the Companies Act 2013 have been complied with.
(v) The Company has not accepted any deposits to which the provisions of Section 73 to76 or any other relevant provisions of the Companies Act and the rules framed there underand the directions issued by the RBI are applicable. Hence paragraph 3(v) of CARO is notapplicable to the Company.
(vi) We have broadly reviewed the cost records maintained by the Company pursuant tothe Companies (Cost Accounting Records) Rules as amended specified by the CentralGovernment under Section 148(1) of the Companies Act and are of the opinion that primafacie the prescribed cost records have been maintained. We have however not made adetailed examination of the cost records with a view to determine whether they areaccurate or complete.
(vii) The Company has generally been regular in depositing with appropriate authoritiesundisputed statutory dues including Provident Fund Employees State Insurance Income TaxSales Tax Service Tax Customs Duty Excise Duty Cess and other material statutory duesapplicable to it.
a. According to the information and explanations given to us no undisputed amountspayable in respect of income tax service tax sales tax customs duty excise duty andcess were in arrears as at 31 March 2019 for a period of more than six months from thedate they became payable.
b. On the basis of our examination of the documents and records of the Company thereare no dues of Income Tax Sales Tax Service Tax Customs Duty Excise Duty and Cesswhich have not been deposited on account of an any dispute except as enumerated hereinbelow which are pending before respective authorities as mentioned there against:
|Name of the statute ||Nature of dues || ||Period to which the amount relates ||Forum where dispute is pending |
|Chapter V of Finance Act 1994 ||Service Tax and equivalent penalty ||3170397 ||Nov 2007 to March 2012 ||Commissioner of Central Excise |
|The Central Excise Act 1944 ||Central Excise Duty and Penalty ||288356 ||January to October 2010 ||Commissioner of Central Excise |
|The Central Excise Act 1944 ||Central Excise Duty and Penalty ||2491506 ||April to Oct 2006 January 2007 to December 2009 ||Assistant Commissioner of Central Excise |
|The Central Excise Act 1944 ||Central Excise Duty and Penalty ||8501823 ||Nov 2007 to July 2011 ||CESTAT |
|The Central Excise Act 1944 ||Central Excise Duty and Penalty ||191590 ||March -June 2012 ||Assistant Commissioner of Central Excise |
|Name of the statute ||Nature of dues || ||Period to which the amount relates ||Forum where dispute is pending |
|The Central Excise Act 1944 ||Central Excise Duty and Penalty ||1159254 ||July 2012 to January 2013 ||Assistant Commissioner of Central Excise |
|The Central Excise Act 1944 ||Central Excise Duty and Penalty ||2182891 ||FY 2010-112011-12 & 2012-13 ||Assistant Commissioner of Central Excise |
|The Central Excise Act 1944 ||Central Excise Duty and Penalty ||267151 ||FY2013-14 ||Assistant Commissioner of Central Excise |
|The Central Excise Act 1944 ||Central Excise Duty and Penalty ||306151 ||FY 2013-14 & 2014-15 ||Assistant Commissioner of Central Excise |
|The Central Excise Act 1944 ||Central Excise Duty and Penalty ||273898 ||FY2014-15 ||Assistant Commissioner of Central Excise |
|The Central Excise Act 1944 ||Central Excise Duty and Penalty ||153283 ||FY 2013-14 & 2014-15 ||Assistant Commissioner of Central Excise |
|The Central Excise Act 1944 ||Central Excise Duty and Penalty ||117741 ||FY 2013-14 & 2014-15 ||Assistant Commissioner of Central Excise |
|The Central Excise Act 1944 ||Penalty Imposed ||187609 ||FY2016-17 ||Commissioner Appeals-I |
|The Central Excise Act 1944 ||Penalty Imposed ||152527 ||FY2013-14 to 2015-16 ||Commissioner Appeals-I |
|The Central Excise Act 1944 ||Central Excise duty ||~985543 ||FY 2016-17 & FY 2017-18 ||Assistant Commissioner of Central Excise |
|The Central Excise Act 1944 ||Central Excise duty ||926141 ||FY 2016-17 ||Assistant Commissioner of Central Excise |
|Chapter V of Finance Act 1994 ||Service Tax ||2734320 ||FY 2012-13 to FY 2016-17 ||Audit Commissioner of Central Excise |
|Chapter V of Finance Act 1994 ||Service Tax ||.1551441 ||FY 2012-13 to FY2015-16 ||Audit Commissioner of Central Excise |
(viii) In our opinion and according to the information and explanations given to usthe Company has not defaulted in repayment of dues to its any banks and financialinstitutions.
(ix) According to the information and explanations given to us the term loans wereapplied for the purposes for which those are raised. The Company has not raised any moneyby way of public issue or further public offer (including debt instruments) during theyear.
(x) According to the information and explanations given to us no fraud by the Companyor on the Company by its officers or employees has been noticed or reported during thecourse of our audit.
(xi) According to the information & explanations given to us and based on ourexamination of the records of the Company the Company has paid / provided for managerialremuneration in accordance with the requisite approvals mandated by the provisions ofsection 197 read with schedule V to the act.
(xii) In our opinion and according to the information and explanations given to us theCompany is not a Nidhi company. Accordingly clause 3(xii) of the Order is not applicable.
(xiii) All transactions with the related parties are in compliance with Section 188 and177 (where applicable) of Companies Act 2013 and the details thereof have been disclosedin the standalone financial statements as required by the Accounting standards andCompanies Act 2013.
(xiv) According to the information and explanations give to us and based on ourexamination of the records of the Company the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year.
(xv) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not entered into non-cashtransactions with directors or persons connected with him. Accordingly paragraph 3(xv) ofthe Order is not applicable.
(xvi) The Company is not required to be registered under section 45- IA of the ReserveBank of India Act 1934.
For NSVM & Associates
Firm's registration number: 010072S
Membership number: 036508
Date: 30th May 2019
Annexure B to the Independent Auditors' Report
(Referred to paragraph 1(f) under Report on other Legal and Regulatoryrequirements' Section of our report to the members of Bal Pharma Limited of even date)
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 (the Act')
We have audited the internal financial controls over financial reporting of Bal PharmaLimited (the Company) as of 31 March 2019 in conjunction with our audit of thefinancial statements of the Company for the year ended on that date.
Management's Responsibility for Internal Financial Controls
The Company's Board of Directors 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 (the Guidance Note') issued by the Institute of Chartered Accountants ofIndia. 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 Companies Act 2013.
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 and theStandards on Auditing issued by Institute of Chartered Accountants of India and deemed tobe prescribed under Section 143(10) of the Companies Act 2013 to the extent applicableto an audit of internal financial controls. Those Standards and the Guidance Note requirethat we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether adequate internal financial controls over financialreporting was established and maintained and if such controls operated effectively in allmaterial respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgement including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls systemover financial reporting.
Meaning of Internal Financial Controls over Financial Reporting
A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedures that: (1) pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures of the company are being made only in accordance with authorizations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorized acquisition use or disposition of thecompany's assets that could have a material effect on the financial statements.
Limitations of Internal Financial Controls over Financial Reporting
Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.
In our opinion to the best of information and according to the explanations given tous the Company has in all material aspects an adequate internal financial control systemover financial reporting as at March 31 2019 based on the internal control overfinancial reporting criteria established by the company considering the essentialcomponents of internal control stated in the Guidance Note on Audit of Internal FinancialControls over Financial Reporting issued by the Institute of Chartered Accountants ofIndia.
for N S V M & Associates
Firm registration number: 0I0072S
Membership No: 036508
Date:30th May 2019