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Cipla Ltd.

BSE: 500087 Sector: Health care
NSE: CIPLA ISIN Code: INE059A01026
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OPEN 1046.70
PREVIOUS CLOSE 1038.40
VOLUME 29288
52-Week high 1083.15
52-Week low 850.00
P/E 28.34
Mkt Cap.(Rs cr) 82,907
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 1046.70
CLOSE 1038.40
VOLUME 29288
52-Week high 1083.15
52-Week low 850.00
P/E 28.34
Mkt Cap.(Rs cr) 82,907
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Cipla Ltd. (CIPLA) - Auditors Report

Company auditors report

To the Members of Cipla Limited

Report on the Audit of the Standalone Financial Statements

Opinion

1. We have audited the accompanying standalone financial statements of Cipla Limited('the Company') which comprise the Balance Sheet as at 31st March 2021 theStatement of Profit and Loss (including Other Comprehensive Income) the Cash FlowStatement and the Statement of Changes in Equity for the year then ended and a summary ofthe significant accounting 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 31st March 2021 its profit(including other comprehensive income) its cash flows and the changes in equity for theyear ended on 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 with theethical requirements that are relevant to our audit of the financial statements under theprovisions of the Act 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

4. Key audit matters are those matters that in our professional judgement were ofmost significance in our audit of the standalone financial statements of the currentperiod. 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.

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 (DPCO) matters:
The Company is regulated by National Pharmaceutical Pricing Authority Government of India (NPPA). There are number of legal and regulatory cases of which the most significant is under Drugs (Prices Control) Orders (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.3676.07 crore as at 31st March 2021 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.3456.39 crore relates to matters pending at Honourable Bombay High Court wherein the Company has deposited Rs.175.08 crore being 50% of the total demand of Rs.350.15 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.219.68 crore relates to other matters wherein based on facts and legal advice the Company has recorded a charge of Rs.6.89 crore (including interest) during the year ended 31st March 2021 and carries a total provision of Rs.111.15 crore (including interest) as at 31st March 2021. c) Inspected correspondence with the Company's external legal counsel in order to corroborate our
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 or not is inherently subjective and needs careful evaluation and significant judgement to be applied by the management. understanding of these matters accompanied by discussions with both internal and external legal counsels. Tested the objectivity and competence of such management experts involved;
Considering the materiality and the inherent subjectivity which involves significant management judgement in predicting the outcome of the matter DPCO matters have been considered to be a key audit matter for the current period audit. 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 are supported by sufficient legal rationale;
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)
Our audit included but was not limited to the following procedures:
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. a) Obtained an understanding of the management's process for revenue recognition (from sale to customers out-licensing arrangements and service fee) judgements in estimation and accounting treatment of discount schemes returns rebates and regulatory compliance requirements;
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. 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. 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;
Sales arrangements in certain jurisdictions lead to material deductions to gross sales in arriving at revenue. 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;
The Company also has development and commercialisation arrangements relating to research and development of new products. This includes inlicensing and out-licensing arrangements and other types of complex agreements. 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;
We identified the recognition of revenue from operations as a key audit matter because:
a) Accrual towards rebates discounts returns and allowances is complex and requires significant judgements and estimates in relation to contractual agreements/ commercial terms across various geographies. Any change in these estimates can have a significant financial impact. 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;
b) The nature of development and commercialisation arrangements are often inherently complex and unusual requiring significant management judgement to be applied in respect of revenue recognition. 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;
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. 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;
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 reassessed in certain geographies. 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.7671.38 crore in subsidiaries being carried at cost in accordance with Ind AS 27 Separate Financial Statements. Our audit included but was not limited to the following procedures:
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. 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;
The Company has recorded an impairment loss on investment in Cipla Biotec Limited (formerly known as Cipla Biotec Private Limited) of Rs.10.88 crore during the year ended 31st March 2021. Refer note 5 to the standalone financial statements. b) Involved auditor's experts to assess the appropriateness of the valuation methodologies used by the management;
c) Reconciled the cash flows to the business plans approved by the respective Board of Directors of the identified investee companies;
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 judgement 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. 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;
Considering the materiality of amounts involved and the inherent subjectivity involved in estimating future cash flows which required significant management judgement 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. 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.

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; makingjudgement 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. Those 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 judgement 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)0)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 31stMarch 2021 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 31st March 2021 in conjunction with our auditof the standalone financial statements of the Company for the year ended on that date andour report dated 14th May 2021 as per Annexure II expressed unmodifiedopinion; 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 31stMarch 2021;

ii. As detailed in note 51 to the standalone financial statements the Company did nothave any long-term contracts including derivative contracts for which there were anymaterial foreseeable losses as at 31st March 2021;

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 31stMarch 2021; and

iv. The disclosure requirements relating to holdings as well as dealings in specifiedbank notes were applicable for the period from 8th November 2016 to 30thDecember 2016 which are not relevant to these standalone financial statements. Hencereporting under this clause is not applicable.

For Walker Chandiok & Co LLP

Chartered Accountants

Firm's Registration No.: 001076N/N500013

Ashish Gupta

Partner

Membership No.: 504662

UDIN: 21504662AAAADJ4428

Place: New Delhi

Date: 14th May 2021

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 31st March2021

Annexure I

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 including quantitative details and situation of propertyplant 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 not granted any loan secured or unsecured to companies firmsLimited Liability Partnerships (LLPs) or other parties covered in the register maintainedunder Section 189 of the Act. Accordingly the provisions of clauses 3(iii)(a) 3(iii) (b)and 3(iii)(c) of the Order are not applicable.

(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 under sub-section (1) of Section 148 of the Act in respect of Company's products/services and areof the opinion that prima facie the prescribed accounts and records have been made andmaintained. However we have not made a detailed examination of the cost records with aview 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 sales tax service tax dutyof customs goods and service tax and value added tax on account of any dispute are asfollows:

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 31st March2021

Annexure I

Statement of Disputed Dues

Name of the statute Nature of dues Amount (in J 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 185.51 124.67 A.Y. 2008-09 A.Y. CIT Appeals
2009-10 A.Y. 2013-14 and A.Y. 2015-16
Income Tax Act 1961 Income tax 55.96 55.82 A.Y. 2014-15 Income Tax Appellate Tribunal
Central Goods and Service Tax (CGST) Act 2017 Central goods and service tax 1.21 0.60 2016- 2017 to 2017- 2018 Commissioner (Appeals)
Central Goods and Service Tax (CGST) Act 2017 Central goods and service tax 2.53 2.30 2017-2018 Additional Commissioner
Central Goods and Service Tax (CGST) Act 2017 Central goods and service tax 0.09 0.09 2017-2018 Superintendent
CustomsTariff Act 1975 Custom duty 1.40 0.11 2020-2021 Commissioner (Appeals)
CustomsTariff Act 1975 Custom duty 0.02 0.02 July 2017 - Dec 2018 Deputy Commissioner
CustomsTariff Act 1975 Custom duty 0.17 0.08 2017-2018 to 2019-2020 Additional Commissioner
CustomsTariff Act 1975 Custom duty 5.20 2.35 2016-2017 to 2017-2018 CESTAT (WZB)
CustomsTariff Act 1975 Custom duty 9.39 4.67 2009-2010 to 2014-2015 CESTAT (HYD)
Central Excise Act 1944 Excise duty 12.68 - 1999-2000 to 2005-2006 Commissioner
Central Excise Act 1944 Excise duty 67.93 3.42 1992-1993 to 20002001 and 2007-2008 to 2016-2017 CESTAT (WZB)
Central Excise Act 1944 Excise duty 17.30 1.95 2011-2012 to 2013-2014 and 2016-2017 CESTAT (EZB)
Central Excise Act 1944 Excise duty 65.47 3.26 2008-2009 to 2015-2016 CESTAT (SZB)
Central Excise Act 1944 Excise duty 3.63 0.24 2009-2010 to 20102011 and 2020-2011 to 2016-2017 Commissioner (Appeals)
Central Excise Act 1944 Excise duty 0.12 - 2015-2016 Revision Authority
Central Excise Act 1944 Excise duty 0.02 - 2000-2001 to 2003-2004 Supreme Court
Central Excise Act 1944 Excise duty 0.02 0.01 2001-2002 to 2006-2007 High Court

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 31st March 2021

Annexure I

Name of the statute Nature of dues Amount (in J crores) Amount paid under Protest (in J crores) Period to which the amount relates (F.Y. except otherwise stated) Forum where dispute is pending
Finance Act 1994 Service tax 0.59 - 2012-2013 to 2017-2018 Commissioner (Appeals)
Finance Act 1994 Service tax 37.34 1.40 2008-2009 to 2012-2013 CESTAT (WZB)
Andhra Pradesh Vat Act 2005 Value added tax 0.13 0.13 2005-2006 Telangana Vat Appellate Authority
Bihar Vat Act 2005 Value added tax 0.97 - 2014-2015 Appeal Court
Bihar Vat Act 2005 Value added tax 0.41 0.41 2013-2014 Commissioner
Bihar Vat Act 2005 Value added tax 0.98 - 2015-2016 Bihar Appellate Authority
Chattisgarh Vat Act 2005 Value added tax 0.01 0.01 2014-2015 Commissioner
The Central Sales Tax Act 1956 Central sales tax 0.12 2006-2007 Directorate of Commercial Taxes Govt. of Goa
Gujarat Value Added Tax Act 2003 Value added tax 0.38 0.13 2013-2014 GVAT TribunalGujarat
Karnataka Value Added Tax Act 2003 Value added tax 0.92 0.27 2012-2013 Joint Commissioner Appeals
Maharashtra Value Added Tax 2002 Value added tax 0.04 2002-2003 Joint Commissioner of Sales-Nagpur
Maharashtra Value Added Tax 2002 Value added tax 0.41 0.07 2007-2008 and 2013-2014 Deputy Commissioner of Sales Tax -LTU
Rajasthan Vat Act 2003 Value added tax 0.83 0.29 2002-2003 and 2011-2012 Rajashthan Tax Board - Ajmer
The Central Sales Tax Act 1956 Central sales tax 0.09 0.04 2011-2012 Appeal Court
The Central Sales Tax Act 1956 Value added tax 0.01 0.01 2011-2012 Commissioner
West Bengal Vat Act 2003 Value added tax 0.12 0.02 2001-02 and 2005-06 Tribunal
The Central Sales Tax Act 1956 Central sales tax 0.02 0.02 2002-03 Tribunal
West Bengal Vat Act 2003 Value added tax 2.58 0.24 2009-2010 and 2015-2016 Commissioner

(Note: F.Y. represents Financial Year and A.Y. represents Assessment Year)

(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) No material fraud by the Company or on the Company by its officers or employees hasbeen noticed or reported during the 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.

For Walker Chandiok & Co LLP

Chartered Accountants

Firm's Registration No.: 001076N/N500013

Ashish Gupta

Partner

Membership No.: 504662

UDIN: 21504662AAAADJ4428

Place: New Delhi

Date: 14th May 2021

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 31st March2021

Annexure II

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 31st March 2021 we haveaudited the internal financial controls with reference to financial statements of theCompany as at that 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 and maintenance ofadequate internal financial controls that were operating effectively for ensuring theorderly and efficient conduct of the Company's business including adherence to theCompany's policies the safeguarding of its assets the prevention and detection of fraudsand 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. Those

Standards and the Guidance Note require that we comply with ethical requirements andplan and 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 reasonable assuranceregarding prevention or timely detection of unauthorised acquisition use or dispositionof the company's assets that could have a material effect on the financial statements.

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.

Opinion

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 31st March 2021 based on 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 Control overFinancial Reporting issued by the ICAI.

For Walker Chandiok & Co LLP

Chartered Accountants

Firm's Registration No.: 001076N/N500013

Ashish Gupta

Partner

Membership No.: 504662

UDIN: 21504662AAAADJ4428

Place: New Delhi

Date: 14th May 2021.

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