Cadila Healthcare Ltd.
|BSE: 532321||Sector: Health care|
|NSE: CADILAHC||ISIN Code: INE010B01027|
|BSE 00:00 | 16 Jun||629.95||
|NSE 00:00 | 16 Jun||630.15||
|Mkt Cap.(Rs cr)||64,488|
|Mkt Cap.(Rs cr)||64487.98|
Cadila Healthcare Ltd. (CADILAHC) - Auditors Report
Company auditors report
The Members of
Cadila Healthcare Limited
REPORT ON THE AUDIT OF THE STANDALONE FINANCIAL
We have audited the accompanying standalone financial statements ofCadila Healthcare Limited (the Company) which comprise the BalanceSheet as at March 31 2020 and the Statement of Profit and Loss (including OtherComprehensive Income) the Cash Flow Statement and the Statement of Changes in Equity forthe year then ended and a summary of significant accounting policies and otherexplanatory information in which are incorporated the Returns for the year ended on thatdate audited by the branch auditor of the Company's branch located at Philippines.
In our opinion and to the best of our information and according to theexplanations given to us and based on the consideration of the report of the branchauditor on separate financial statements of the branch referred to in the Other Matterssection below the aforesaid standalone financial statements give the information requiredby the Companies Act 2013 (the Act) in the manner so required and givea true and fair view in conformity with the Indian Accounting Standards prescribed undersection 133 of the Act read with the Companies (Indian Accounting Standards) Rules 2015as amended (Ind AS) and other accounting principles generally acceptedin India of the state of affairs of the Company as at
March 31 2020 and its profit total comprehensive income its cashflows and the changes in equity for the year ended on that date.
BASIS FOR OPINION
We conducted our audit of the standalone financial statements inaccordance with the Standards on Auditing specified under section 143(10) of the Act(SAs). Our responsibilities under those Standards are further describedin the Auditor's Responsibility for the Audit of the Standalone Financial Statementssection of our report. We are independent of the Company in accordance with the Code ofEthics issued by the Institute of Chartered Accountants of India (ICAI)together with the ethical requirements that are relevant to our audit of the standalonefinancial statements under the provisions of the Act and the Rules made thereunder and wehave fulfilled our other ethical responsibilities in accordance with these requirementsand the ICAI's Code of Ethics. We believe that the audit evidence obtained by us andthe audit evidence obtained by the branch auditor in terms of their report referred to inthe Other Matters section below is sufficient and appropriate to provide a basis for ouraudit opinion on the standalone financial 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 year. These matters were addressed in the context of our audit of the standalonefinancial statements as a whole and in forming our opinion thereon we do not provide aseparate opinion on these matters. We have determined the matters described below to bethe key audit matters to be communicated in our report.
INFORMATION OTHER THAN THE FINANCIAL STATEMENTSAND AUDITOR'S REPORT THEREON
The Company's Board of Directors is responsible for theother information. The other information comprises the information included in theManagement Discussion and Analysis Business Responsibility Report Corporate GovernanceReport and Directors' Report but does not include the consolidated financialstatements the standalone financial statements and our audit reports thereon.
Our opinion on the standalone financial statements does notcover the other information and we do not express any form of assurance conclusionthereon.
In connection with our audit of the standalone financialstatements our responsibility is to read the other information and in doing so considerwhether the other information is materially inconsistent with the standalone financialstatements or our knowledge obtained during the course of our audit or otherwise appearsto be materially misstated.
If based on the work we have performed we conclude that thereis a material misstatement of this other information we are required to report that fact.We have nothing to report in this regard.
MANAGEMENT'S RESPONSIBILITY FOR THESTANDALONE FINANCIAL STATEMENTS
The Company's Board of Directors is responsible for the mattersstated in section 134(5) of the Act with respect to the preparation of these standalonefinancial statements that give a true and fair view of the
financial position financial performance including other comprehensiveincome cash flows and changes in equity of the Company in accordance with the Ind AS andother accounting principles generally accepted in India. This responsibility also includesmaintenance of adequate accounting records in accordance with the provisions of the Actfor safeguarding the assets of the Company and for preventing and detecting frauds andother irregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the standalone financial statements that give a true andfair view and are free from material misstatement whether due to fraud or error.
In preparing the standalone financial statements management isresponsible for assessing the Company's ability to continue as a going concerndisclosing as applicable matters related to going concern and using the going concernbasis of accounting unless management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so.
Those Board of Directors are also responsible for overseeing theCompany's financial reporting process.
AUDITOR'S RESPONSIBILITY FOR THE AUDIT OFTHE STANDALONE FINANCIAL 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 levelof assurance but is not a guarantee that an audit conducted in accordance with SAs willalways detect a material misstatement when it exists. Misstatements can arise from fraudor error and are considered material if individually or in the aggregate they couldreasonably be expected to influence the economic decisions of users taken on the basis ofthese 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 financial control relevantto the audit in order to design audit procedures that are appropriate in thecircumstances. Under section 143(3)(i) of the Act we are also responsible for expressingour opinion on whether the Company has adequate internal financial controls system inplace and the operating effectiveness of such controls.
Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures made by the management.
Conclude on the appropriateness of management's use of thegoing concern basis of accounting and based on the audit evidence obtained whether amaterial uncertainty exists related to events or conditions that may cast significantdoubt on the Company's ability to continue as a going concern. If we conclude that amaterial uncertainty exists we are required to draw attention in our auditor'sreport to the related disclosures in the standalone financial statements or if suchdisclosures are inadequate to modify our opinion. Our conclusions are based on the auditevidence obtained up to the date of our auditor's report. However future events orconditions may cause the Company to cease to continue as a going concern.
Evaluate the overall presentation structure and content of thestandalone financial statements including the disclosures and whether the standalonefinancial statements represent the underlying transactions and events in a manner thatachieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financialinformation of the Company and its branch to express an opinion on the standalonefinancial statements. We are responsible for the direction supervision and performance ofthe audit of the financial statements of the entity and its business activities includedin the standalone financial statements of which we are the independent auditors. For theother entity and its business activities included in the standalone financial statementswhich have been audited by the branch auditor such branch auditor remains responsible forthe direction supervision and performance of the audit carried out by them. We remainsolely responsible for our audit
opinion. Materiality is the magnitude of misstatements in thestandalone financial statements that individually or in aggregate makes it probable thatthe economic decisions of a reasonably knowledgeable user of the standalone financialstatements may be influenced. We consider quantitative materiality and qualitative factorsin (i) planning the scope of our audit work and in evaluating the results of our work; and(ii) to evaluate the effect of any identified misstatements in the standalone financialstatements.
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 year and are therefore the key audit matters. Wedescribe these matters in our auditor's report unless law or regulation precludespublic disclosure about the matter or when in extremely rare circumstances we determinethat a matter should not be communicated in our report because the adverse consequences ofdoing so would reasonably be expected to outweigh the public interest benefits of suchcommunication.
Due to COVID-19 related lockdown we were unable to observephysical verification of inventory carried out by the Management subsequent to theyear-end. We have performed alternate procedures to audit the existence and condition ofinventory as per the guidance provided in the Standard on Auditing 501 AuditEvidence - Specific Considerations for Selected Items which includes inspection ofsupporting documentation on test check basis relating to purchases production salesresults of cyclical counts performed by the Management through the year and such otherthird party evidences as applicable and have obtained sufficient appropriate auditevidence to issue an unmodified opinion on these Standalone Financial Statements.
As stated in Note 47 to the standalone financial statementspursuant to the Scheme of Amalgamation of certain wholly owned subsidiaries as stated inthe said Note (collectively the Transferor Companies) into theCompany becoming effective during the year ended March 31 2020 the correspondingfinancial information for the year ended March 31 2019 has been restated.
The financial information of the Transferor Companies for the yearended March 31 2019 included in restated corresponding financial information of theCompany for the year so ended is based solely on the financial statements for the yearended March 31 2019 of those companies which have not been audited by us. Those financialstatements were audited by other auditors on which they had issued an unmodified auditopinion.
We did not audit the financial statements of the branch includedin the standalone financial statements of the Company whose financial statements reflecttotal assets of ' 15.15 million as at December 31 2019 and total revenue of '0.02 million for the year ended on that date as considered in the standalone financialstatements. The financial statements of this branch have been audited by the branchauditor whose report has been furnished to us. The reporting date of the branch atDecember 31 2019 is different from the reporting date of the Company. No adjustments havebeen made by the Management of the Company in respect of financial information of thebranch for the periods from January 1 2019 to March 31 2019 and January 1 2020 to March31 2020 as the amounts are insignificant. Our opinion in so far as it relates to theamounts and disclosures included in respect of this branch and our report in terms ofsubsection (3) of section 143 of the Act in so far as it relates to the aforesaid branchis based solely on the report of such branch auditor.
Our opinion on the standalone financial statements and our report onOther Legal and Regulatory Requirements below is not modified in respect of these matters.
REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS
1. As required by section 143(3) of the Act based on our audit and onthe consideration of the report of the branch auditor on the separate financial statementsof the branch referred to in the Other Matters section above we report to the extentapplicable that:
a) We have sought and obtained all the information and explanationswhich to the best of our knowledge and belief were necessary for the purposes of ouraudit.
b) In our opinion proper books of account as required by law have beenkept by the Company so far as it appears from our examination of those books.
c) The report on the accounts of the branch office of the Companyaudited under section 143(8) of the Act by the branch auditor has been sent to us and hasbeen properly dealt with by us in preparing this report.
d) The Balance Sheet the Statement of Profit and Loss including OtherComprehensive Income the Cash Flow Statement and Statement of Changes in Equity dealtwith by this report are in agreement with the books of account.
e) In our opinion the aforesaid standalone financial statements complywith the Ind AS specified under section 133 of the Act.
of Directors none of the directors is disqualified as on March 312020 from being appointed as a director in terms of section 164(2) of the Act.
g) With respect to the adequacy of the internal financial controls overfinancial reporting of the Company and the operating effectiveness of such controls referto our separate Report in Annexure A Our report expresses an unmodifiedopinion on the adequacy and operating effectiveness of the Company's internalfinancial controls over financial reporting.
h) With respect to the other matters to be included in theAuditor's Report in accordance with the requirements of section 197(16) of the Actas amended in our opinion and to the best of our information and according to theexplanations given to us the remuneration paid by the Company to its directors during theyear is in accordance with the provisions of section 197 of the Act.
i) With respect to the other matters to be included in theAuditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors)Rules 2014 as amended in our opinion and to the best of our information and accordingto the explanations given to us:
i. The Company has disclosed the impact of pending litigations on itsfinancial position in its standalone financial statements.
ii. The Company did not have any long-term contracts includingderivative contracts for which there were any material foreseeable losses.
iii. There has been no delay in transferring amounts required to betransferred to the Investor Education and Protection Fund by the Company.
2. As required by the Companies (Auditor's Report) Order 2016(the Order) issued by the Central Government in terms of section143(11) of the Act we give in Annexure B a statement on the matters specifiedin paragraphs 3 and 4 of the Order.
ANNEXURE A TO THE INDEPENDENTAUDITOR'S REPORT
(Referred to in paragraph 1(g) under Report on Other Legal andRegulatory Requirements' section of our report of even date)
REPORT ON THE INTERNAL FINANCIAL CONTROLS OVER FINANCIAL REPORTINGUNDER CLAUSE (I) OF SUB-SECTION 3 OF SECTION 143 OF THE COMPANIES ACT 2013 (THEACT)
We have audited the internal financial controls over financialreporting of Cadila Healthcare Limited (the Company) as at March 312020 in conjunction with our audit of the standalone financial statements of the Companyfor the year ended on that date.
MANAGEMENT'S RESPONSIBILITY FOR INTERNALFINANCIAL CONTROLS
The Company's management is responsible for establishing andmaintaining internal financial controls based on the internal control over financialreporting criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting issued by the Institute of Chartered Accountants of India (ICAI).These responsibilities include the design implementation and maintenance of adequateinternal financial controls that were operating effectively for ensuring the orderly andefficient conduct of its business including adherence to 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 Act.
Our responsibility is to express an opinion on the Company'sinternal financial controls over financial reporting of the Company based on our audit. Weconducted our audit in accordance with the Guidance Note on Audit of Internal FinancialControls Over Financial Reporting (the Guidance Note) issued by theICAI and the Standards on Auditing prescribed under section 143(10) of the Act to theextent applicable to an audit of internal financial controls. Those Standards and theGuidance Note require that we comply with ethical requirements and plan and perform theaudit to obtain reasonable assurance about whether adequate internal financial controlsover financial reporting was established and maintained and if such controls operatedeffectively in all material respects.
Our audit involves performing procedures to obtain audit evidence aboutthe adequacy of the internal financial controls system over financial reporting and theiroperating effectiveness. Our audit of internal financial controls over financial reportingincluded obtaining an understanding of internal financial controls over financialreporting assessing the risk that a material weakness exists and testing and evaluatingthe design and operating effectiveness of internal control based on the assessed risk. Theprocedures selected depend on the auditor's judgement including the assessment ofthe risks of material misstatement of the financial statements whether due to fraud orerror.
We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the Company's internalfinancial controls system over financial reporting.
MEANING OF INTERNAL FINANCIAL CONTROLS OVERFINANCIAL REPORTING
A company's internal financial control over financial reporting isa process designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles. A company's internal financial controlover financial reporting includes those policies and procedures that (1) pertain to themaintenance of records that in reasonable detail accurately and fairly reflect thetransactions and dispositions of the assets of the company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of financialstatements in accordance with generally accepted accounting principles and that receiptsand expenditures of the company are being made only in accordance with authorisations 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 financial statements.
INHERENT LIMITATIONS OF INTERNAL FINANCIALCONTROLS OVER FINANCIAL REPORTING
Because of the inherent limitations of internal financial controls overfinancial reporting including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected. Also projections of any evaluation of the internal financial controls overfinancial reporting to future periods are subject to the risk that the internal financialcontrol over financial reporting may become inadequate because of changes in conditionsor that the degree of compliance with the policies or procedures may deteriorate.
In our opinion to the best of our information and according to theexplanations given to us the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at March 31 2020 based on thecriteria for internal financial control over financial reporting established by theCompany considering the essential components of internal control stated in the GuidanceNote on Audit of Internal Financial Controls Over Financial Reporting issued by the ICAI.
ANNEXURE B TO THE INDEPENDENTAUDITOR'S REPORT
(Referred to in paragraph 2 under Report onOther Legal and Regulatory Requirements' section of our report of even date)
(i) (a) The Company has maintained proper records showing fullparticulars including quantitative details and situation of fixed assets
(b) Some of the fixed assets were physically verified during the yearby the Management in accordance with a programme of verification which in our opinionprovides for physical verification of all the fixed assets at reasonable intervals.According to the information and explanations given to us no material discrepancies werenoticed on such verification.
(c) According to the information and explanations given to us and therecords examined by us and based on the examination of the registered sale deed / transferdeed / conveyance deed provided to us we report that the title deeds comprising all theimmovable properties of land and buildings which are freehold and leasehold are held inthe name of the Company as at the balance sheet date except the following:
(' In Million)
(ii) As explained to us the inventories were physically verifiedduring the year by the Management at reasonable intervals and no material discrepancieswere noticed on physical verification.
(iii) The Company has not granted any loans secured or unsecured tocompanies firms Limited Liability Partnerships or other parties covered in the registermaintained under section 189 of the Act.
(iv) In our opinion and according to the information and explanationsgiven to us the Company has complied with the provisions of sections 185 and 186 of theAct in respect of grant of loans making investments and providing guarantees andsecurities as applicable.
(v) According to the information and explanations given to us theCompany has not accepted any deposit during the year and does not have any unclaimeddeposits as at March 31 2020 and therefore the provision of the clause 3(v) of the Orderare not applicable to the Company.
(vi) The maintenance of cost records has been specified by the CentralGovernment under section 148(1) of the Act. We have broadly reviewed the cost recordsmaintained by the Company pursuant to the Companies (Cost Records and Audit) Rules 2014as amended prescribed by the Central Government under sub-section (1) of section 148 ofthe Act and are of the opinion that prima facie the prescribed cost records havebeen made and maintained. We have however not made a detailed examination of the costrecords with a view to determine whether they are accurate or complete.
(vii) According to the information and explanations given to us inrespect of statutory dues:
(a) The Company has generally been regular in depositing undisputedstatutory dues including Provident Fund Employees' State Insurance Income TaxGoods and Service Tax Customs Duty cess and other material statutory dues applicable toit to the appropriate authorities considering the relief provided to taxpayers by thegovernment vide Notification No. 31/2020 dated April 3 2020.
(b) There were no undisputed amounts payable in respect of ProvidentFund Employees' State Insurance Income Tax Goods and Service Tax Customs Dutycess and other material statutory dues in arrears as at March 31 2020 for a period ofmore than six months from the date they became payable.
(c) Details of dues of Income Tax Sales Tax Service Tax CustomsDuty Excise Duty and Value Added Tax which have not been deposited as on March 31 2020on account of disputes are given below:
(viii) In our opinion and according to the information and explanationsgiven to us the Company has not defaulted in the repayment of loans or borrowings tobanks and government. The Company has not taken any loans or borrowing from financialinstitutions and has not issued any debentures.
(ix) In our opinion and according to the information and explanationsgiven to us money raised by way of the term loans have been applied by the Company duringthe year for the purposes for which they were raised other than temporary deploymentpending application of proceeds. The Company has not raised money by way of further publicoffer (including debt instruments).
(x) To the best of our knowledge and according to the information andexplanations given to us no fraud by the Company and no material fraud on the Company byits officers or employees has been noticed or reported during the year.
(xi) In our opinion and according to the information and explanationsgiven to us the Company has paid managerial remuneration in accordance with the requisiteapprovals mandated by the provisions of section 197 read with Schedule V to the Act.
(xii) The Company is not a Nidhi Company and hence reporting underclause (xii) of the CARO 2016 Order is not applicable.
(xiii) In our opinion and according to the information and explanationsgiven to us the Company is in compliance with section 177 and 188 of the Act whereapplicable for all transactions with the related parties and the details of related partytransaction have been disclosed in the financial statements as required by the applicableaccounting standards.
(xiv) During the year the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures andhence reporting under clause (xiv) of CARO 2016 is not applicable to the Company.
(xv) In our opinion and according to the information and explanationsgiven to us during the year the Company has not entered into any non-cash transactionswith its directors or directors of its subsidiary companies or persons connected with themand hence provisions of section 192 of the Act are not applicable.
(xvi) The Company is not required to be registered under section45-IAof the Reserve Bank of India Act 1934.