To The Members of Concord Drugs Limited.
Report on the Audit of the Standalone Financial Statements
We have audited the accompanying standalone financial statements of Concord DrugsLimited ("the Company") which comprise the Balance sheet as at March 31 2019the Statement of Profit and Loss (including Other Comprehensive Income) the Statement ofChanges in Equity and the Statement of Cash Flows for the year ended on that date and asummary of the significant accounting policies and other explanatory information ( hereinafter referred to as "the stand alone financial statements").
Ion our Opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone financial statements give the information requiredby the Companies Act 2013 ("the Act") in the manner so required and give a trueand fair view in conformity with the Indian Accounting Standardsprescribed under section133 of the Act read with the Companies (Indian Accounting Standards) Rules 2015 asamended ("Ind AS") and other accounting principles generally accepted in India of the state of affairs of the Company as at March 31 2019 the profit and totalcomprehensive income changes in equity and its cash flows for the year ended on that date.
Basis of Opinion
We conducted our audit of the standalone financial statements in accordance with theStandards on Auditing specified under section 143(10) of the Act (SAs). Ourresponsibilities under those standards are further described in the Auditorsresponsibility for the Audit of the Standalone Financial Statements section of our report.We are independent of the Company in accordance with the Code of Ethics issued by heInstitute of Chartered Accountants of India (ICAI) together with the independencerequirements that are relevant to our audit of the standalone financial statements underthe provisions of the Act and the rules made thereunder and we have fulfilled our otherethical responsibilities in accordance with these requirements and the ICAI's Code ofEthics. We believe that the audit evidence we have obtained is sufficient and appropriateto provide a basis for our audit opinion on the standalone financial statements.
Key Audit Matters:
Key audit matters are those matters that in our opinion professional judgement wereof most 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 asawholeand in forming our opinion thereon and we do not provide aseparate opinion on these matters.
We have determined the matters described below to be the key audit matters to becommunicated in our report. We have fulfilled the responsibilities described in the'Auditor's responsibilities for the audit of the standalone Ind AS financial statements'section of our report including in relation to these matters. Accordingly our auditincluded the performance of procedures designed to respond to our assessment of the risksof material misstatement of the standalone Ind AS financial statements. The results of ouraudit procedures including the procedures performed to address the matters below providethe basis for our audit opinion on the accompanying standalone Ind AS financialstatements.
|Key Audit Matter ||Key Audit Matter |
|Identification and disclosures of Related Parties ||Our audit procedures amongst others included the following: |
|1. The Company has related party transactions which include amongst others sale and purchase of goods/services to its subsidiaries associates joint ventures and other related parties and lending and borrowing to its subsidiaries associates and joint ventures. ||1. Evaluated the design and tested the operating effectiveness of controls over identification and disclosure of related party transactions. |
|2. We focused on identification and disclosure of related parties in accordance with relevant accounting standards as a key audit matter. ||2. Obtained a list of related parties from the Company's Management and traced the related parties to declarations given by directors where applicable and to Note 2.4 of the standalone Ind AS financial statements. |
| ||3. Read minutes of the meetings of the Board of Directors and Audit Committee. |
| ||4.Tested material creditors/debtors loan outstanding/loans taken to evaluate existence of any related party relationships; tested transactions based on declarations of related party transactions given to the Board of Directors and Audit Committee. |
| ||5. Evaluated the disclosures in the standalone Ind AS financial statements for compliance with Ind AS 24 |
Information other than the Standalone Financial Statements and Auditor's Report Thereon
The Company's Board of Directors is responsible for the preparation of the otherinformation. The other information comprises the information included in the ManagementDiscussion and Analysis. Board's report including Annexures to the Board's Report BusinessResponsibility Report Corporate Governance and Shareholder's information but does notinclude the 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 informationmaterially inconsistent with the standalone financial statements or our knowledge obtainedduring the course of our audit or otherwise appears to be materially misstated.
If based on the work we have performed we conclude that there is a materialmisstatement of this other information we are required to report that fact. We havenothing to report in this regard.
Management's Responsibility for the Standalone Financial Statements.
The Company's Board of Directors is responsible for the matters stated in section134(5) of the Act with respect to the preparation of these standalone financial statementsthat give a true and fair view of the financial position financial performance totalcomprehensive income changes in equity and cash flows of the Company in accordance withthe Ind AS and other accounting principles generally accepted in India. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies ; making judgements and estimates that are reasonable and prudent; anddesign implementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the standalone financialstatements that give a true and Fairview and are free from material misstatement whetherdue to fraud or error.
In preparing the standalone financial statements management is responsible forassessing the Company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessmanagement either intends to liquidate the Company or to cease operations or has norealistic alternative but to do so.
The Board of Directors are responsible for overseeing the Company's financial reportingprocess.
Auditor's Responsibilities for the Audit of the Standalone Financial Statements.
Our objectives are to obtain reasonable assurance about whether the standalonefinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurancebutis not a guarantee that an audit conducted in accordancewith SA's will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in the aggregatethey could reasonably be expected to influence the economic decisions of users taken onthe basis of these standalone financial statements.
Aspart of an audit in accordance with SA's we exercise professional judgement andmaintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the standalone financialstatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a Material misstatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentional omissions misrepresentations or the override of internal control.
Obtain an understanding of internal financial controls relevant to the audit in orderto design audit procedures that are appropriate in the circumstances. Under section143(3)(1) of the Act we are also responsible for expressing our opinion on whether theCompany has adequate internal financial controls system in place and the operatingeffectiveness of such control
Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by management.
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 standalone financial statement or if such disclosures are inadequate to modify ouropinion. Our conclusions are based on the audit evidence obtained upto the date of ourauditor's report. However future events or conditions may cause the company to cease tocontinue as a going concern.
Evaluate the overall presentation structure and content of the standalone financialstatements that individually or in aggregate makes it probable that the economicdecisions of a reasonably knowledgeable user of the financial statements may beinfluenced. We consider quantitative materiality and qualitative factors in (i) planningthe scope of our audit work and in evaluating the results of our work; and (ii) toevaluate the effect of any identified misstatements in the financial statements.
We communicate with those charged with governance regarding among other matters theplanned scope and timing of audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.
From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the standalone financial statementsof the current period and are therefore the key audit matters. We describe these mattersin our auditor's report unless law or regulation precludes public disclosure about thematter or when in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements.
1. As required by section 143 (3) of the Act based on our audit we report that:
a) We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit.
b) In our opinion proper books of accounts as required by law have been kept by theCompany so far as it appears from our examination of the books.
c) The Balance Sheet the Statement of Profit & Loss including other ComprehensiveIncome Statement of Changes in Equity and the Statement of Cash Flow dealt with by thusReport are in agreement with the relevant books of accounts.
d) In our opinion the afore said Ind AS financial statements comply with the IndASspecified under section 133 of the Act read with rule 7 of the Companies (Accounts)Rules 2014.
e) On the basis of the written representative received from the directors as on 31stMarch 2019 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2019 from being appointed as a director in terms of section164(2) of the Act.
f) With respect to the adequacy of the internal financial controls over financialreporting of the company and the operating effectiveness of such controls refer to ourseparate Report in "Annexure A"
g) With respect to other matters to be included in the Auditors report in accordancewith the requirements of section 197(16) of the Act as amended
In our opinion and to the best of our information and according tothe explanationsgiven to us the remuneration paid by the company to its directors during the year is inaccordance with the provisions of section 197 of the Act.
h) 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 has disclosed the pending litigations on its financial position inits standalone financial statements in Note no 2.1
ii. The Company has made provision as required under the applicable law oraccounting standards for material foreseeable losses if any on log-term contracts.
iii. There were no amounts which were required to be transferred to the investorEducation and Protections Fund by the company
As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government in terms of Section 143 (11) of the Act we give in"Annexure B" a statement on the matters specified in paragraphs 3 and 4 of theOrder.
For N G Rao & Associates
Firm Registration No.:009399S
(N Nageswara Rao)
Membership No: 207300
Annexure-A to the Auditors' Report
The Annexure-A referred to in our Independent Auditors' Report to the members of theCompany on the financial statements for the Year ended 31 March 2018 we report that:
1. a. The Company has not maintained proper records showing fullparticularsincludingquantitative details and situation of fixed assets.
b. The title deeds of the immovable property are held in the name of the company.
c. The management has not performed physical verification of the Fixed assets duringthe year.
2. The physical verification of the inventory excluding stocks with third parties hasnot been conducted at reasonable intervals by the management. However the physicalverification report if done by any third party has been not shared with us.
3. The Company has not granted any loans to bodies corporate covered in the registermaintained under section 189 of the Companies Act 2013 ('the Act').
4. In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of Sections 185 and 186 of the Act in respect ofgrant of loans making investments and providing guarantees and securities as applicable.
5. The Company has accepted loans from other than directors and the relevant complianceunder companies act are not shared with us. Further the company has accepted unsecuredloans from the directors and promoters.
6. The Central Government has not prescribed the maintenance of cost records undersection 148(1) of the Act for any of the services rendered by the Company.
7. a. According to the information and explanations given to us and on the basis of ourexamination of the records of the Company amounts deducted / accrued in the books ofaccount in respect of undisputed statutory dues including duty of excise sales taxwealth tax service tax duty of customs value added tax cess and other materialstatutory dues except as reported below have been regularly deposited during the year.
The company has not complied the provisions under income tax such as ProvidentfundEmployees State Insurance and TDS
|SL.No ||Particulars ||Amount |
|1 ||Provident Fund ||595331 |
|2 ||Employee state insurance ||794963 |
| ||Total ||1390294 |
b. According to the information and explanations given to us no undisputed amountspayable in respect of provident fund sales tax wealth tax duty of customs value addedtax cess and other material statutory dues were in arrears as at 31 March 2019 exceptbelow table
|Financial Year ||Section under which TDS due ||Amount |
|2014-15 ||194J ||210000 |
|2014-15 ||194C ||3964 |
|2015-16 ||194J ||62800 |
|2015-16 ||194C ||1036 |
|2016-17 ||194J ||296400 |
|2016-17 ||194C ||27900 |
|2017-18 ||194J ||388980 |
|2017-18 ||194C ||27112 |
|2017-18 ||194H ||25000 |
|2017-18 ||194A ||22339 |
c. According to the information and explanations given to us there are no materialdues of sales tax service tax and value added tax wealth tax duty of customs and cesswhich have not been deposited with the appropriate authorities on account of any dispute.However according to information and explanations given to us the following dues ofincome tax have not been deposited by the Company on account of disputes:
|Particulars ||Demand U/s ||Period to which the amount relates ||Forum where the dispute is pending ||Amount in Rs. ||Previous year |
|Income Tax Act 1961 ||143(1)a ||A.Y.2010-11 ||Jurisdictional AO ||1677610 ||1677610 |
|Income Tax Act 1961 ||250 ||A.Y.2011-12 ||Commissioner of income ||25882270 ||38128810 |
|Income Tax Act 1961 ||143(1)a ||A.Y.2013-14 ||Jurisdictional AO ||1183700 ||1183700 |
|Income Tax Act 1961 ||143(3) ||A.Y.2014-15 ||Commissioner of income ||39064488 ||39384045 |
|Income Tax Act 1961 ||Others ||A.Y.2015-16 ||Jurisdictional AO ||1263500 ||1263500 |
8. In our opinion and according to the information and explanations given to us theCompany is generally regular in repayment of loans or borrowings to banks financialinstitutions.The Company has not issued any debentures.
9. The company did not raise any money by way of initial public offer or further publicoffer (including debt instruments) and terms loans during the year.
10. According to the information and explanations given to us no material fraud on orby the Company has been noticed or reported during the course of our audit Except IssuesReported Under Matters Emphasis.
11. The company has paid/ provided managerial remuneration in accordance with requisiteapprovals mandated by the provisions of section 197 read with schedule V to the act.
12. The company is not Nidhi Company and the Nidhi Rules 2014 not applicable to it.Accordingly the provisions of Clause 3(Xii) of order not applicable to the company.
13. The company has entered transactions with the related parties and complied withSection 188 and 177 of Companies Act 2013 will apply. The details have been disclosed inthe Financial Statements etc as required by the accounting standards.However thesecretarial compliances against such transactions were not made available for ourverification.
14. During the year the Company hasnot made any preferential allotment or privateplacement of shares.The company has not issued any fully or partly convertible debenturesand hence reporting under clause 3(xiv)of the Orderwith respect to debentures is notapplicable to the Company.
15. The company has not entered into any non-cash transactions with directors orpersons connected with him. Accordingly the provisions of Clause 3(xv) of order notapplicable to the company.
16. The company is not required to be registered under section 45-IA of the
Reserve Bank of India Act 1934.
| ||For N G RAO & ASSOCIATES. |
| ||Chartered Accountants |
| ||FRNo.: 009399S |
| ||Sd/- |
| ||G. Nageswara Rao |
|Place: Hyderabad ||Partner |
|Date: 30thMay 2019 ||Membership No. 207300 |
ANNEXURE B TO THE INDEPENDENT AUDITOR'S REPORT OF EVEN DATE ON THE FINANCIAL STATEMENTSOF CONCORD DRUGS LIMITED
Report on the Internal Financial Controls under Clause (i) of Subsection 3 of Section143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls over financial reporting of CONCORDDRUGS LIMITED ("the Company") as of March 31 2019 in conjunction with ouraudit of the standalone financial statements of the Company for the year ended on thatdate.
Management's Responsibility for Internal Financial Controls
The Company's management is responsible for establishing and maintaining internalfinancial controls based on "the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls over Financial Reportingissued by the Institute of Chartered Accountants of India". These responsibilitiesinclude the design implementation and maintenance of adequate internal financial controlsthat were operating effectively for ensuring the orderly and efficient conduct of itsbusiness including adherence to company's policies the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the Companies Act 2013.
Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on my / our audit. We conducted our audit inaccordance with the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting (the "Guidance Note") and the Standards on Auditing issued by ICAIand deemed to be prescribed under section 143(10) of the Companies Act 2013 to theextent applicable to an audit of internal financial controls both applicable to an auditof Internal Financial Controls and both issued by the Institute of Chartered Accountantsof India. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls over financial reporting was established andmaintained and if such controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness.
Our audit of internal financial controls over financial reporting included obtaining anunderstanding of internal financial controls over financial reporting assessing the riskthat a material weakness exists and testing and evaluating the design and operatingeffectiveness of internal control based on the assessed risk. The procedures selecteddepend on the auditor's judgment including the assessment of the risks of materialmisstatement of the financial statements whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls systemover financial reporting.
Meaning of Internal Financial Controls over Financial Reporting
A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedures that
(1) pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company;
(2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accountingprinciples and that receipts and expenditures of the company are being made only inaccordance with authorizations of management and directors of the company; and
(3) provide reasonable assurance regarding prevention or timely detection ofunauthorized acquisition use or disposition of the company's assets that could have amaterial effect on the financial statements.
Inherent Limitations of Internal Financial Controls over Financial Reporting
Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.
In our opinion 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 2019 based on"the internal control over financial reporting criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Note onAudit of Internal Financial Controls Over Financial Reporting issued by the Institute ofChartered Accountants of India".
| ||For N G RAO & ASSOCIATES. |
| ||Chartered Accountants |
| ||FRNo.: 009399S |
| ||Sd/- |
| ||G. Nageswara Rao |
|Place: Hyderabad ||Partner |
|Date: 30thMay 2019 ||Membership No. 207300 |