To the Members of Cipla Limited
Report on the Audit of the Standalone Financial Statements
1. We have audited the accompanying standalone financial statements of Cipla Limited('the Company') which comprise the Balance Sheet as at 31 March 2020 the Statement ofProfit and Loss (including Other Comprehensive Income) the Cash Flow Statement and theStatement of Changes in Equity for the year then ended and a summary of the significantaccounting policies and other explanatory information.
2. 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 ('Act') in the manner so required and give a true and fair viewin conformity with the accounting principles generally accepted in India including IndianAccounting Standards ('Ind AS') specified under Section 133 of the Act of the state ofaffairs (financial position) of the Company as at 31 March 2020 its profit (includingother comprehensive income) its cash flows and the changes in equity for the year endedon that date.
Basis for Opinion
3. We conducted our audit in accordance with the Standards on Auditing specified underSection 143(10) of the Act. Our responsibilities under those standards are furtherdescribed in the Auditor's Responsibilities for the Audit of the 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 withthe ethical requirements that are relevant to our audit of the financial statements underthe provisions of the Act and the rules thereunder and we have fulfilled our otherethical responsibilities in accordance with these requirements and the Code of Ethics. Webelieve that the audit evidence we have obtained is sufficient and appropriate to providea basis for our opinion.
Key Audit Matters
4. Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone financial statements of the current period.These matters were addressed in the context of our audit of the standalone financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters.
5. We have determined the matters described below to be the key audit matters to becommunicated in our report.
|Key audit matter ||How our audit addressed the key audit matter |
|Drugs (Prices Control) Orders Act (DPCO) matters: || |
|The Company is regulated by National Pharmaceutical Pricing Authority Government of India (NPPA). There are a number of legal and regulatory cases of which the most significant is under Drugs (Prices Control) Orders Act (DPCO) as disclosed in Note 39 to the standalone financial statements relating to overcharging of certain drugs under DPCO. ||Our audit of DPCO matters included but was not limited to the following procedures: |
|According to NPPA's public disclosure the total demand against the Company aggregates to Rs. 2655.13 crore as at 31 March 2020 of which: ||a) Obtained an understanding of the management's process for updating the status of the matters assessment of accounting treatment in accordance with Ind AS 37 and for measurement of amounts involved; |
|a) Rs. 2447.39 crore relates to matters pending at Honourable Bombay High Court wherein the Company has deposited H175.08 crore being 50% of the total demand of H350.15 crore as at 1st August 2003 under protest pursuant to direction of Honourable Supreme Court of India; and ||b) Evaluated the design and tested the operating effectiveness of key controls around above process; |
|b) Rs. 207.74 crore relates to other matters wherein based on facts and legal advice the Company has recorded a charge of H7.00 crore (including interest) during the year ended 31 March 2020 and carries a total provision of Rs. 104.26 crore (including interest) as at 31 March 2020. ||c) Inspected correspondence with the Company's external legal counsel in order to corroborate our understanding of these matters accompanied by discussions with both internal and external legal counsels. Tested the objectivity and competence of such management experts involved; |
|The amounts involved are material and the application of accounting principles as given under Ind AS 37 Provisions Contingent Liabilities and Contingent Assets ('Ind AS 37') in order to determine the amounts to be recognised as liability or to be disclosed as a contingent liability is inherently subjective and needs careful evaluation and significant judgement to be applied by the management. ||d) Obtained direct confirmation from the external legal counsel handling DPCO matters with respect to the legal determination of the liability arising from such litigation conclusion of the matters in accordance with the requirements of Ind AS 37 and disclosures to be made in the financial statements. Evaluated the response received from the external legal counsel to ensure that the conclusions reached our supported by sufficient legal rationale; |
|Considering the materiality and the inherent subjectivity which involves significant management judgment in predicting the outcome of the matter DPCO matters have been considered to be a key audit matter for the current period audit. ||e) Assessed the appropriateness of methods used and the reliability of underlying data for the calculations made for quantifying the amounts involved. Tested the arithmetical accuracy of such calculations; and |
| ||f) Evaluated the Company's disclosures for adequate disclosure regarding the significant litigations of the Company. |
| ||Based on the audit procedures performed the judgements made by the management were reasonable and disclosures made in respect of these matters were appropriate in the context of the standalone financial statements taken as a whole. |
|Revenue from operations: (Refer note 1 and 27 to the Standalone financial statements) || |
|The Company recognises revenue from the sales of pharmaceutical products to resellers or distributors out licensing arrangements and service fee. The Company recognises revenue from product sales when control of the product transfers generally upon shipment or delivery to a customer. The Company records product sales net of estimated incentives/discounts returns rebates and other related charges. The actual point in time when revenue is recognised varies depending on the specific terms and conditions of the sales contracts entered with customers. ||Our audit included but was not limited to the following procedures: |
|Further the Company has a large number of customers operating in various geographies and sales contracts with customers have a variety of different terms relating to the recognition of revenue the entitlement to sales rebates the right to return and price adjustments. Sales arrangements in certain jurisdictions lead to material deductions to gross sales in arriving at revenue. ||a) Obtained an understanding of the management's process for revenue recognition (from sale to customers out-licensing arrangements and service fee) judgments in estimation and accounting treatment of discount schemes returns rebates and regulatory compliance requirements; |
|The Company also has development and commercialisation arrangements relating to research and development of new products in the pharmaceutical sector. This includes in-licensing and out-licensing arrangements and other types of complex agreements. ||b) Evaluated the design and tested the operating effectiveness of the Company's internal controls including general IT controls key IT application controls exercised by the management over recognition of revenue and measurement of various discount schemes returns and rebates; |
|We identified the recognition of revenue from operations as a key audit matter because: ||c) Evaluated the terms of the licensing arrangements to determine satisfaction of performance obligations under the contracts for appropriate revenue recognition and tested allocation of consideration between performance obligations to verify deferral of revenue in respect of unsatisfied performance obligations; |
|a) Accrual towards rebates discounts returns and allowances is complex and requires significant judgments and estimates in relation to complex contractual agreements/commercial terms across various geographies. Any change in these estimates can have a significant financial impact. ||d) Performed substantive testing by selecting samples of revenue transactions pertaining to sale of products during the year and verified the underlying supporting documents including contracts agreements sales invoices and dispatch/ shipping documents; |
|b) The nature of development and commercialisation arrangements are often inherently complex and unusual requiring significant management judgment to be applied in respect of revenue recognition. ||e) Performed cut-off testing procedures by testing samples of revenue transactions recorded during the year in specific periods before and after year end to conclude there has not been overstatement/ understatement of revenue recorded for the year; |
|c) The Company considers revenue as key benchmark for evaluating performances and hence there is risk of revenue being overstated due to pressure to achieve targets earning expectations or incentive schemes linked to performance for a reporting period. ||f) Obtained management workings for amounts recognised towards discount schemes returns and rebates during the year and as at year end. On a sample basis tested the underlying calculations for amounts recorded as accruals and provisions towards the aforementioned obligations as per the terms of related schemes contracts and regulations and traced the underlying data to source documents; |
|d) Considering the widespread impact of the outbreak due to COVID-19 point of transfer of goods control (transit days) and probability of collection from customers was required to be re-assessed in certain geographies. ||g) Evaluated historical accuracy of the Company's estimates of year-end accruals pertaining to aforesaid arrangements made in the previous years to identify any management bias; |
| ||h) Tested all the manual sales-related adjustments made to revenue comprising of variable consideration under Ind AS 115 to ensure the appropriateness of revenue recognition during the year; and |
| ||i) Evaluated the adequacy of disclosures in the standalone financial statements. |
| ||Based on audit procedures performed we determined that the revenue recognition and measurement is appropriate in the context of the standalone financial statements taken as a whole. |
|Recoverability of investments in subsidiaries: || |
|The Company has investments of Rs. 6354.76 crore in subsidiaries being carried at cost in accordance with Ind AS 27 Separate Financial Statements. The Company assesses the recoverable amounts of each investment when impairment indicators exist by comparing the fair value (less costs of disposal) and carrying amount of that investment as on the reporting date. ||Our audit included but was not limited to the following procedures: |
|The Company has recorded an impairment loss on investment in Cipla Biotec Limited (formerly known as Cipla Biotec Private Limited) of Rs. 32.36 crore during the year ended 31 March 2020. Refer note 5 to the standalone financial statements. ||a) Obtained an understanding of the management's process for identification of impairment indicators and tested the design and operating effectiveness of internal controls over such identification and impairment measurement through fair valuation of identified investments; |
|Management's assessment of whether there are impairment indications and estimate of the recoverable amounts of the identified investments determined through discounted cash flow valuation method requires significant management judgment in carrying out the impairment assessment. The key assumptions used in management's assessment of the recoverable amounts include but are not limited to projections of future cash flows growth rates discount rates estimated future operating and capital expenditure. Changes to these assumptions could lead to material changes in estimated recoverable amounts resulting in either impairment or reversals of impairment taken in prior years. ||b) Involved auditor's experts to assess the appropriateness of the valuation methodologies used by the management; |
|Considering the materiality of amounts involved and the inherent subjectivity involved in estimating future cash flows which required significant management judgment assessment of impairment losses to be recognised if any on the carrying value of aforesaid investments has been considered to be a key audit matter for the current period audit. ||c) Reconciled the cash flows to the business plans approved by the respective Board of Directors of the identified investee companies; |
| ||d) Evaluated and challenged management's assumptions such as implied growth rates during explicit period terminal growth rate targeting savings and discount rate for their appropriateness based on our understanding of the business of the respective investee companies past results and external factors such as industry trends and forecasts including the possible impact of COVID -19 pandemic on such assumptions; |
| ||e) Obtained and evaluated sensitivity analysis performed by the management on key assumptions of implied growth rates during explicit period terminal growth rates and discount rates; |
| ||f) Tested the mathematical accuracy of the management computations with regard to cash flows and sensitivity analysis; |
| ||g) Performed independent sensitivity analysis of aforesaid key assumptions to assess the effect of reasonably possible variations on the current estimated recoverable amount for each of the identified investments to evaluate sufficiency of headroom between recoverable value and carrying amount; and |
| ||h) Evaluated the adequacy of disclosures given in the standalone financial statements including disclosure of significant assumptions judgements and sensitivity analysis performed in accordance with applicable accounting standards. |
| ||Based on the audit procedures performed we determined that the management's assertion on the recoverability of investments in subsidiaries is appropriate in the context of the standalone financial statements taken as a whole. |
|Inventory existence: || |
|As at 31 March 2020 the Company held inventories of Rs. 3021.36 crore as disclosed in Note 10 to the standalone financial statements. Inventories mainly consist of raw and packing material work-in-progress stock-in-trade finished goods and stores spares and consumables. Due to inherent nature of the business and its widespread reach globally inventories are kept at a number of locations which include plants loan licensing facilities depots cold storages and third-party warehouses. As per the Company's annual inventory verification plan management has performed physical verification of the inventory at all locations with the help of third party experts where required under the supervision of finance team over the period from January 2020 to mid-March 2020. ||Our audit of existence of inventory included but was not limited to the following procedures: |
|Due to outbreak of the COVID-19 there has been a lockdown enforced in various geographies near year end and several restrictions were imposed by the respective governments across the globe on travel and movement considering public health and safety measures which resulted into complexities for us to observe the physical verification of inventory conducted by the management. This was resolved by applying alternate audit techniques with the help of audio/video devices and use of other auditors etc. as further described in our audit procedures. ||a) Obtained an understanding of the management's process for inventory counts including the changes required thereto as a result of COVID-19 related restrictions and evaluated the design and tested the operating effectiveness of key controls with respect to physical verification of inventory; |
|As a result of the above-mentioned complexities and due to the size number of locations and geographical spread of the inventories as at year end we determined the existence of inventory to be a key audit matter for the current period audit. ||b) Inspected the instructions given by supervisory teams to the management count teams; |
| ||c) Reviewed the management's process for ensuring that there was no movement of stock during the physical verification of inventory; |
| ||d) Appointed independent auditor's experts for observing inventory counts at certain locations; |
| ||e) Observed live video feeds of inventory counts for certain locations subsequent to year-end and gathered video evidence of warehouses inventory counts and other safeguarding procedures and performed roll-back procedures; |
| ||f) Performed roll-forward procedures on inventory counts performed on locations before the lockdown had commenced; |
| ||g) Recounted a sample of inventory items at each location to confirm management count; |
| ||h) Obtained direct confirmations from the third-party warehouses and loan licensing units with respect to the existence of the inventories; and |
| ||i) Ensured that the differences noted in management's physical verification of inventory from book records were adequately adjusted in books of account. |
| ||Based on the audit procedures performed the management's assertion on existence of inventories was determined to be appropriate in the context of the standalone financial statements taken as a whole. |
Information other than the Financial Statements and Auditor's Report thereon
6. The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Annual Report but does not includethe standalone financial statements and our auditor's report thereon.
Our opinion on the standalone financial statements does not cover the other informationand we do not express any form of assurance conclusion thereon.
In connection with our audit of the standalone financial statements our responsibilityis to read the other information and in doing so consider whether the other informationis materially inconsistent with the standalone financial statements or our knowledgeobtained in the audit or otherwise appears to be materially misstated. If based on thework we have 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 and Those Charged with Governance for the StandaloneFinancial Statements
7. The accompanying standalone financial statements have been approved by the Company'sBoard of Directors. The Company's Board of Directors is responsible for the matters statedin Section 134(5) of the Act with respect to the preparation of these standalone financialstatements that give a true and fair view of the financial position financial performanceincluding other comprehensive income changes in equity and cash flows of the Company inaccordance with the accounting principles generally accepted in India including the IndAS specified under Section 133 of the Act. This responsibility also includes maintenanceof adequate accounting records in accordance with the provisions of the Act forsafeguarding of 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 financial statements that give a true and fair viewand are free from material misstatement whether due to fraud or error.
8. In preparing the financial statements management is responsible for assessing theCompany's ability to continue as a going concern disclosing as applicable mattersrelated to going concern and using the going concern basis of accounting unless managementeither intends to liquidate the Company or to cease operations or has no realisticalternative but to do so.
9. Board of Directors is also responsible for overseeing the Company's financialreporting process.
Auditor's Responsibilities for the Audit of the Financial Statements
10. 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 withStandards on Auditing will always detect a material misstatement when it exists.Misstatements can arise from fraud or error and are considered material if individuallyor in the aggregate they could reasonably be expected to influence the economic decisionsof users taken on the basis of these financial statements.
11. As part of an audit in accordance with Standards on Auditing we exerciseprofessional judgment and maintain professional skepticism throughout the audit. We also:
o 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;
o Obtain an understanding of internal controls relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under Section 143(3)(i)of the Act we are also responsible for expressing our opinion on whether the Company hasadequate internal financial controls with reference to financial statements in place andthe operating effectiveness of such controls;
o Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by management;
o Conclude on the appropriateness of management's use of the going concern basis ofaccounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty 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; and
o 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.
12. We communicate with those charged with governance regarding among other mattersthe planned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.
13. We also provide those charged with governance with a statement that we havecomplied with relevant ethical requirements regarding independence and to communicatewith them all relationships and other matters that may reasonably be thought to bear onour independence and where applicable related safeguards.
14. From the matters communicated with those charged with governance we determinethose matters that were of most significance in the audit of the financial statements ofthe current period and are therefore the key audit matters. We describe these matters inour auditor's report unless law or regulation precludes public disclosure about the matteror when in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
15. Based on our audit we report that the Company has paid remuneration to itsdirectors during the year in accordance with the provisions of and limits laid down underSection 197 read with Schedule V to the Act.
16. As required by the Companies (Auditor's Report) Order 2016 ('the Order') issued bythe Central Government of India in terms of Section 143(11) of the Act we give in theAnnexure I a statement on the matters specified in paragraphs 3 and 4 of the Order.
17. Further to our comments in Annexure I as required by Section 143(3) of the Actbased on our audit we report to the extent applicable that:
a) We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purpose of our audit of theaccompanying standalone financial statements;
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 standalone financial statements dealt with by this report are in agreement withthe books of account;
d) In our opinion the aforesaid standalone financial statements comply with Ind ASspecified under Section 133 of the Act;
e) On the basis of the written representations received from the directors and taken onrecord by the Board of Directors none of the directors is disqualified as on 31 March2020 from being appointed as a director in terms of Section 164(2) of the Act;
f) We have also audited the internal financial controls with reference to financialstatements of the Company as on 31 March 2020 in conjunction with our audit of thestandalone financial statements of the Company for the year ended on that date and ourreport dated 15 May 2020 as per Annexure II expressed unmodified opinion; and
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 (as amended) inour opinion and to the best of our information and according to the explanations given tous:
i. The Company as detailed in note 39 to the standalone financial statements hasdisclosed the impact of pending litigations on its financial position as at 31 March 2020;
ii. As detailed in note 51 to the standalone financial statements the Company did nothave any long-term contracts for which there were material any material foreseeable lossesas at 31 March 2020;
iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company during the year ended 31 March2020; and
iv. The disclosure requirements relating to holdings as well as dealings in specifiedbank notes were applicable for the period from 8 November 2016 to 30 December 2016 whichare not relevant to these standalone financial statements. Hence reporting under thisclause is not applicable.
Annexure I to the Independent Auditor's Report of even date to the Members of CiplaLimited on the standalone financial statements for the year ended 31 March 2020
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 property plant and equipment.
(b) The Company has a regular program of physical verification of its property plantand equipment under which property plant and equipment are verified in a phased mannerover a period of three years which in our opinion is reasonable having regard to thesize of the Company and the nature of its assets. In accordance with this program certainproperty plant and equipment were verified during the year and no material discrepancieswere noticed on such verification.
(c) The title deeds of all the immovable properties (which are included under the head'property plant and equipment') are held in the name of the Company.
(ii) In our opinion the management has conducted physical verification of inventoriesat reasonable intervals during the year except for goods-in- transit. No materialdiscrepancies were noticed on the aforesaid verification discrepancies noticed on suchverification have been properly dealt with in the books of account.
(iii) The Company has granted interest free unsecured loans to one company covered inthe register maintained under Section 189 of the Act; and with respect to the same:
(a) In our opinion the terms and conditions of such loans are not prima facieprejudicial to the interest of the Company.
(b) The schedule of repayment of principal has been stipulated and the receipts of theprincipal amount are regular;
(c) There is no overdue amount in respect of loan granted to such company.
(iv) In our opinion the Company has complied with the provisions of Sections 185 and186 of the Act in respect of loans investments guarantees and security.
(v) In our opinion the Company has not accepted any deposits within the meaning ofSections 73 to 76 of the Act and the Companies (Acceptance of Deposits) Rules 2014 (asamended). Accordingly the provisions of clause 3(v) of the Order are not applicable.
(vi) We have broadly reviewed the books of account maintained by the Company pursuantto the Rules made by the Central Government for the maintenance of cost records undersub-section (1) of Section 148 of the Act in respect of Company's products/services andare of the opinion that prima facie the prescribed accounts and records have been madeand maintained. However we have not made a detailed examination of the cost records witha view to determine whether they are accurate or complete.
(vii) (a) The Company is regular in depositing\ undisputed statutory dues includingprovident fund employees' state insurance income-tax goods and service tax sales-taxservice tax duty of customs duty of excise value added tax cess and other materialstatutory dues as applicable to the appropriate authorities. Further no undisputedamounts payable in respect thereof were outstanding at the year- end for a period of morethan six months from the date they become payable.
(b) There are no dues in respect of sales-tax service tax and duty of customs thathave not been deposited with the appropriate authorities on account of any dispute. Thedues outstanding in respect of income-tax duty of excise goods and service tax and valueadded tax on account of any dispute are as follows:
|Name of the statute ||Nature of dues ||Amount (in Rs. crores) ||Amount paid under Protest (in J crores) ||Period to which the amount relates (F.Y. except otherwise stated) ||Forum where dispute is pending |
|Income Tax Act 1961 ||Income tax ||378.74 ||218.69 ||A.Y. 2008-09 A.Y. 2009-10 A.Y. 201314 A.Y. 2015-16 and A.Y. 2016-17 ||CIT Appeals |
|Income Tax Act 1961 ||Income tax ||55.96 ||55.82 ||A.Y. 2014-15 ||Income Tax Appellate Tribunal |
|The Central Excise Act 1944 ||Excise duty ||0.17 ||0.08 ||2016-17 to 2018-19 ||Additional Commissioner |
|The Central Excise Act 1944 ||Excise duty ||10.47 ||1.61 ||2011-12 to 2013-14 and 2016-17 ||CESTAT (EZB) |
|The Central Excise Act 1944 ||Excise duty ||74.85 ||3.61 ||2008-09 to 2015-16 ||CESTAT (SZB) |
|The Central Excise Act 1944 ||Excise duty ||66.47 ||3.33 ||1992-1993 to 19992000 and 2004-05 to 2016-17 ||CESTAT (WZB) |
|The Central Excise Act 1944 ||Excise duty ||12.68 || ||1999-00 to 2005-06 ||Commissioner (Common Adjudicating officer) |
|The Central Excise Act 1944 ||Excise duty ||3.69 ||0.24 ||2008-09 to 2016-17 ||Commissioner (Appeals) |
|The Central Excise Act 1944 ||Excise duty ||0.02 ||0.01 ||2001-02 to 2006-07 ||Hon'ble Bombay High Court |
|The Central Excise Act 1944 ||Excise duty ||0.94 ||0.04 ||2009-10 and 2011-12 ||Deputy Commissioner |
|The Central Excise Act 1944 ||Excise duty ||0.12 ||- ||2015-16 to 2016-17 ||Revision Authority |
|Bihar Vat Act 2005 ||VAT ||0.97 || ||2014-15 ||Patna Appellate Authority |
|Goa Vat Act 2005 ||VAT ||0.12 ||- ||2006-07 ||Directorate Goa |
|Gujarat Vat Act 2005 ||VAT ||0.38 ||0.13 ||2013-14 ||GVAT tribunal |
|Karnataka Vat Act 2003 ||VAT ||0.93 ||0.27 ||2012-13 ||Joint Commissioner in Appeal |
|Maharashtra Vat Act 2002 ||VAT ||0.04 ||- ||2002-03 ||Joint Commissioner. |
|Maharashtra Vat Act 2002 ||VAT ||0.41 ||0.07 ||2007-08 and 201314 ||Deputy Commissioner |
|Rajasthan Vat Act 2003 ||VAT ||0.83 ||0.29 ||2002-03 and 2011-12 ||Rajasthan Tax Board - Ajmer |
|Uttar Pradesh Vat Act 2008 ||VAT ||0.09 ||0.04 ||2011-12 ||Uttar Pradesh Appellate Authority |
|West Bengal Vat Act 2003 ||VAT ||2.72 ||0.26 ||2001-02 to 2015-16 ||Tribunal/ Commissioner |
(viii) The Company has not defaulted in repayment of loans or borrowings to any bank orfinancial institution or government during the year. The Company did not have anyoutstanding debentures during the year.
(ix) The Company did not raise moneys by way of initial public offer or further publicoffer (including debt instruments) and did not have any term loans outstanding during theyear. Accordingly the provisions of clause 3(ix) of the Order are not applicable.
(x) According to the information and explanation given to us no material fraud by theCompany or on the Company by its officers or employees has been noticed or reported duringthe period covered by our audit.
(xi) Managerial remuneration has been paid and provided by the Company in accordancewith the requisite approvals mandated by the provisions of Section 197 of the Act readwith Schedule V to the Act.
(xii) In our opinion the Company is not a Nidhi Company. Accordingly provisions ofclause 3(xii) of the Order are not applicable.
(xiii) In our opinion all transactions with the related parties are in compliance withSections 177 and 188 of Act where applicable and the requisite details have beendisclosed in the standalone financial statements as required by the applicable Ind AS.
(xiv) During the year the Company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures. Accordingly provision ofclause 3(xiv) of the Order are not applicable.
(xv) In our opinion the Company has not entered into any non-cash transactions withthe directors or persons connected with them covered under Section 192 of the Act.
(xvi) The Company is not required to be registered under Section 45-IA of the ReserveBank of India Act 1934.
Annexure II to the Independent Auditor's Report of even date to the members of CiplaLimited on the standalone financial statements for the year ended 31 March 2020
Independent Auditor's Report on the Internal Financial Controls under Clause (i) ofsubsection 3 of Section 143 of the Companies Act 2013 ('the Act')
1. In conjunction with our audit of the standalone financial statements of CiplaLimited ('the Company') as at and for the year ended 31 March 2020 we have audited theinternal financial controls with reference to financial statements of the Company as atthat date.
Responsibilities of Management and Those Charged with Governance for Internal FinancialControls
2. The Company's Board of Directors is responsible for establishing and maintaininginternal financial controls based on internal control financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the guidance note on audit of Internal Financial Control over Financial Reporting("the Guidance Note") issued by the Institute of Chartered Accountants of India("ICAI"). These responsibilities include the design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the orderly and efficient conduct of the Company's business including adherenceto the Company's policies the safeguarding of its assets the prevention and detection offrauds and errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Act.
Auditor's Responsibility for the Audit of the Internal Financial Controls withReference to Financial Statements
3. Our responsibility is to express an opinion on the Company's internal financialcontrols with reference to financial statements based on our audit. We conducted our auditin accordance with the Standards on Auditing issued by the ICAI prescribed under Section143(10) of the Act to the extent applicable to an audit of internal financial controlswith reference to financial statements and the Guidance Note issued by the ICAI. 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 with reference to financial statements were established and maintainedand if such controls operated effectively in all material respects.
4. Our audit involves performing procedures to obtain audit evidence about the adequacyof the internal financial controls with reference to financial statements and theiroperating effectiveness. Our audit of internal financial controls with reference tofinancial statements includes 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 of therisks of material misstatement of the financial statements whether due to fraud or error.
5. We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls withreference to financial statements.
Meaning of Internal Financial Controls with Reference to Financial Statements
6. A company's internal financial controls with reference to financial statements is aprocess designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles. A company's internal financial controlswith reference to financial statements include those policies and procedures that (1)pertain to the maintenance of records that in reasonable detail accurately and fairlyreflect the transactions and dispositions of the assets of the company; (2) providereasonable assurance that transactions are recorded as necessary to permit preparation offinancial statements in accordance with generally accepted accounting principles and thatreceipts and expenditures of the company are being made only in accordance withauthorisations of management and directors of the company; and (3) provide reasonableassurance regarding prevention or timely detection of unauthorised acquisition use ordisposition of the company's assets that could have a material effect on the financialstatements.
Inherent Limitations of Internal Financial Controls with Reference to FinancialStatements
7. Because of the inherent limitations of internal financial controls with reference tofinancial statements including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected. Also projections of any evaluation of the internal financial controls withreference to financial statements to future periods are subject to the risk that theinternal financial controls with reference to financial statements may become inadequatebecause of changes in conditions or that the degree of compliance with the policies orprocedures may deteriorate.
8. In our opinion the Company has in all material respects adequate internalfinancial controls with reference to financial statements and such controls were operatingeffectively as at 31 March 2020 based on 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 Control over FinancialReporting issued by the ICAI.
|For Walker Chandiok & Co LLP |
|Chartered Accountants |
|Firm's Registration No.: 001076N/N500013 |
|Ashish Gupta |
|Membership No.: 504662 |
|UDIN: 20504662AAAABP8396 |
|Place: New Delhi |
|Date: 15 May 2020 |