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Dishman Carbogen Amcis Ltd.

BSE: 540701 Sector: Health care
NSE: DCAL ISIN Code: INE385W01011
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OPEN 187.90
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VOLUME 241992
52-Week high 216.65
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OPEN 187.90
CLOSE 183.95
VOLUME 241992
52-Week high 216.65
52-Week low 63.45
P/E
Mkt Cap.(Rs cr) 3,035
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Dishman Carbogen Amcis Ltd. (DCAL) - Auditors Report

Company auditors report

To the Members of Dishman Carbogen Amcis Limited [DCAL]

(After merger of erstwhile Dishman Pharmaceuticals and Chemicals Limited into DCAL)

Report on the Audit of the Standalone Ind AS Financial Statements

Opinion

We have audited the accompanying standalone Ind AS financial statements of Dishman Carbogen Amcis Limited (the Company) which comprise the Balance Sheet as at March 31 2019 the Statement of Profit and Loss (including Other Comprehensive Income) the Statement of Changes in Equity and the Statement of Cash Flows for the year then ended and notes to the standalone Ind AS financial statements including a summary of significant accounting policies and other explanatory information (hereinafter referred to as standalone Ind AS financial statements).

In our opinion and to the best of our information and according to the explanations given to us the aforesaid standalone Ind AS financial statements give the information required by the Companies Act 2013 (the Act) in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India including the Indian Accounting Standards (Ind AS) of the state of affairs of the Company as at March 31 2019 its profit (including other comprehensive income) changes in equity and its cash flows for the year ended on that date.

Basis for Opinion

We conducted our audit in accordance with Standards on Auditing (SAs) specified under section 143(10) of the Act. Our responsibilities under those Standards are further described in the Auditor's Responsibilities for the Audit of the Standalone Ind AS Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India (ICAI) together with the ethical requirements that are relevant to our audit of the standalone Ind AS financial statements under the provisions of the Act and Rules thereunder and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Emphasis of Matter

We draw attention to Note 28(i) of the standalone Ind AS financial statements detailing the accounting treatment relating to the Scheme of Arrangement and Amalgamation (the Scheme) involving merger of Dishman Pharmaceuticals and Chemicals Limited and Dishman Care Limited with the Company which has been accounted in the previous year under the Purchase Method as per Accounting Standard 14 Accounting for Amalgamation (AS 14) in compliance with Scheme pursuant to Section 391 to 394 of Companies Act 1956 approved by Hon'ble High Court of Gujarat. In accordance with the Scheme the Company has recognized goodwill on amalgamation amounting to 1326.86 Crores which is amortised over its useful life. This accounting treatment is different from that prescribed under Indian Accounting Standard 103 `Business Combinations' (Ind AS 103). Had the goodwill not been amortised as required under Ind AS 103 the Depreciation and Amortisation expense for the year ended March 31 2019 would have been lower by 88.46 Crores and Profit before tax for the year ended March 31 2019 would have been higher by an equivalent amount. Our opinion is not modified in respect of this matter.

Key Audit Matters

Key audit matters are those matters that in our professional judgment were of most significance in our audit of the standalone Ind AS financial statements of the current period. These matters were addressed in the context of our audit of the standalone Ind AS financial statements as a whole and in forming our opinion thereon and we do not provide a separate opinion on these matters. We have determined the matters described below to be the key audit matters to be communicated in our report.

Key Audit MatterHow was the matter addressed in our audit
Impairment assessment of the carrying value of Goodwill (Refer Note 3 to the standalone financial statements) Goodwill is a significant item on the balance sheet and the management performs impairment assessment for goodwill annually.Our audit procedures on testing for goodwill impairment includes the following:
Evaluated the design and implementation of the processes and internal controls relating to impairment of non-financial assets including goodwill;
In performing such impairment assessments management compared the carrying value of each of the identifiable cash generating units (CGUs) to which goodwill had been allocated with their respective 'value in use' computed based on discounted cash flow method to determine if any impairment loss should be recognized.Evaluated management's identification of CGU's the carrying value of each CGU and the methodology followed by management for the impairment assessment in compliance with the prevailing accounting standards;
We considered this as a key audit matter due to significant judgement involved in estimating future cash flows in the Model prepared by the Management to support the carrying value of Goodwill and determining significant assumptions of discount rate terminal growth rate etc. adopted in the model.Evaluated appropriateness of key assumptions included in the cash flow forecasts used in computing recoverable amount of each CGU such as growth rates profitability discount rates etc. with reference to our understanding of their business and historical trends;
Considered the work of valuation specialists to evaluate the appropriateness of methodology used to compute the recoverable amount of the CGU and the key underlying assumptions;
 Evaluated the appropriateness of the disclosure in the financial statements and assessed the completeness and mathematical accuracy.
Impairment assessment of carrying value of investments in subsidiariesOur audit procedures on impairment assessment of investments in subsidiaries include the following :
(Refer Note 4(a) to the standalone financial statements) The Company has investments of ` 2739.56 Crores in equity shares of its wholly owned subsidiaries. Obtained understanding and evaluated the design and implementation of the processes and internal controls relating to impairment of investments in subsidiaries;
The Management has assessed the impairment of its investment in its subsidiaries by reviewing the business forecasts of subsidiaries using discounted cash flow valuation model (the Model) and concluded that no provision for impairment is required to be made in respect of these investments as they are considered good. Tested the operating effectiveness of the Company's controls over review of impairment assessment of investments in subsidiaries;
 Performed the following substantive procedures:
(i) Assessed reasonableness of the Management's historical business forecasts by comparing the business forecasts used in the prior year with the actual performance in the current year;
We considered this as a key audit matter due to significant judgement involved in estimating future cash flows in the Model prepared by the Management to support the carrying value of above investments and determining significant assumptions of discount rate terminal growth rate etc. adopted in the model.(ii) Tested the mathematical accuracy of the underlying Model reviewing reasonableness of the assumptions/ information considered in the Model by examining source data and supporting documentation and checking the impairment assessment prepared by the management.
(iii) Compared the business forecasts with the latest Board's approved budgets;
(iv) Considered the work of external independent valuation expert engaged by the Company;
(v) Assessed the independent valuation expert's methods competency and objectivity;
(vi) Obtained understanding of the operating parameters used in the Model and assessing consistency of our understanding of parameters with those considered in the model;
(vii) Performed sensitivity tests on the Model by analysing the impact of using alternate assumptions for discount rates terminal growth rates etc. within a reasonable and foreseeable range.
Evaluation of uncertain tax positionsOur audit procedures include the following substantive procedures:
(Refer Note 2.17 and Note 29 to the standalone financial statements) The Company operates in multiple jurisdictions and is subject to periodic challenges by local tax authorities on a range of tax matters during the normal course of business including transfer pricing and indirect tax matters. These involve significant management judgment to determine the possible outcome of the uncertain tax positions consequently having an impact on related accounting and disclosures in the standalone financial statements. Hence this has been considered as a key audit matter. Obtained understanding of key uncertain tax positions;
 Read and analysed select key correspondences external legal opinions / consultations by the management for key uncertain tax positions;
 Discussed with appropriate senior management and evaluated management's underlying key assumptions in estimating the tax provisions; and
 Assessed the management's estimate of the possible outcome of the disputed cases.
Accounting and valuation of Hedging Instrument
(Refer Note 25(D) to the standalone financial statements) The Company uses derivative financial instrument contracts to manage its exposure in foreign currency risk and interest rate risk. These contracts gave rise to derivative financial assets of ` 43.98 Crores and Cash Flow Hedge Reserve of ` 8.73 Crores as at March 31 2019.Our audit procedures on accounting and valuation of hedging instrument are summarised below:
 Obtained understanding and evaluated the design and implementation of the processes and internal controls relating to accounting and valuation of hedge instruments;
 Tested the Company's key internal financial controls over derivative financial instruments and hedge accounting;
These contracts are recorded at fair value and cash flow hedge accounting is applied such that gains and losses arising from fair value changes are deferred in equity and recognised in the standalone statement of profit and loss when hedges mature. The large number of contracts necessitates a sophisticated system to record and track each contract and calculate the related valuations at each financial reporting date. Verified on a sample basis hedge documentation and contracts;
 Re-performed on a sample basis the year-end valuations of derivative financial instruments and calculations of hedge effectiveness; and
The valuation of hedging instruments and consideration of hedge effectiveness has been identified as a key audit matter as it involves a significant degree of both complexity and management judgement and are subject to an inherent risk of error. Obtained confirmation of year-end derivative financial instruments from counterparties on a sample basis.

Other Information

The Company's Board of Directors is responsible for the other information. The other information comprises the information included in the Annual report but does not include the standalone Ind AS financial statements and our auditor's report thereon.

Our opinion on the standalone Ind AS financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the standalone Ind AS financial statements our responsibility is to read the other information and in doing so consider whether the other information is materially inconsistent with the standalone Ind AS financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If based on the work we have performed we conclude that there is a material misstatement of this other information we are required to report that fact. We have nothing to report in this regard.

Responsibilities of Management and Those Charged with Governance for the Standalone Ind AS Financial Statements

The Company's Board of Directors is responsible for the matters stated in section 134(5) of the Act with respect to the preparation of these standalone Ind AS financial statements that give a true and fair view of the financial position financial performance (including other comprehensive income) changes in equity and cash flows of the Company in accordance with the accounting principles generally accepted in India including Ind AS specified under section 133 of the Act read with relevant rules issued thereunder. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the accuracy and completeness of the accounting records relevant to the preparation and presentation of the standalone Ind AS financial statements that give a true and fair view and are free from material misstatement whether due to fraud or error.

In preparing the standalone Ind AS financial statements management is responsible for assessing the Company's ability to continue as a going concern disclosing as applicable matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations or has no realistic alternative but to do so.

Those Board of Directors are also responsible for overseeing the Company's financial reporting process.

Auditor's Responsibilities for the Audit of the Standalone Ind AS Financial Statements

Our objectives are to obtain reasonable assurance about whether the standalone Ind AS financial statements as a whole are free from material misstatement whether due to fraud or error and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if individually or in the aggregate they could reasonably be expected to influence the economic decisions of users taken on the basis of this standalone Ind AS financial statements. As part of an audit in accordance with SAs we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

 Identify and assess the risks of material misstatement of the standalone Ind AS financial statements whether due to fraud or error design and perform audit procedures responsive to those risks and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error as fraud may involve collusion forgery intentional omissions misrepresentations or the override of internal control.

 Obtain an understanding of internal control relevant to the audit in order to design 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 has adequate internal financial controls with reference to financial statements in place and the operating effectiveness of such controls.

 Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

 Conclude on the appropriateness of management's use of the going concern basis of accounting and based on the audit evidence obtained whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists we are required to draw attention in our auditor's report to the related disclosures in the standalone Ind AS 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's report. However future events or conditions may cause the Company to cease to continue as a going concern.

 Evaluate the overall presentation structure and content of the standalone Ind AS financial statements including the disclosures and whether the standalone Ind AS financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with those charged with governance regarding among other matters the planned scope and timing of the audit and significant audit findings including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence and where applicable related safeguards.

From the matters communicated with those charged with governance we determine those matters that were of most significance in the audit of the standalone Ind AS financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when in extremely rare circumstances we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

(1) As required by the Companies (Auditor's Report) Order 2016 (the Order) issued by the Central Government of India in terms of section 143(11) of the Act we give in Annexure 1 a statement on the matters specified in paragraphs 3 and 4 of the Order to the extent applicable.

(2) As required by section 143(3) of the Act we report that:

a. We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit;

b. In our opinion proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books;

c. The Balance Sheet the Statement of Profit and Loss (including Other Comprehensive Income) the Statement of Changes in Equity and the Statement of Cash Flows dealt with by this report are in agreement with the books of account;

d. In our opinion except for the effects of the matters described in the Emphasis of Matter section of our report the aforesaid standalone Ind AS financial statements comply with the Indian Accounting Standards specified under section 133 of the Act read with relevant rules issued thereunder;

e. On the basis of the written representations received from the directors as on March 31 2019 and taken on record by the Board of Directors none of the directors is disqualified as on March 31 2019 from being appointed as a director in terms of section 164(2) of the Act;

f. With respect to the adequacy of the internal financial controls with reference to financial statements of the Company and the operating effectiveness of such controls we give our separate report in Annexure 2.

g. With respect to the other matters to be included in the Auditor's Report in accordance with the requirements of section 197(16) of the Act; In our opinion and to the best of our information and according to the explanations given to us the remuneration paid by the Company to its directors during the year is in accordance with the provisions of section 197 of the Act; P>

h. With respect to the other matters to be included in the Auditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinion and to the best of our information and according to the explanations given to us:

(i) The Company has disclosed the impact of pending litigations on its financial position in its standalone Ind AS financial statements - Refer Note 29 on Contingent Liabilities to the standalone Ind AS financial statements;

(ii) The Company has made provision as required under the applicable law or accounting standards for material foreseeable losses if any on long-term contracts including derivative contracts - Refer Note 12 & 24 to the standalone Ind AS financial statements;

(iii) There has been no delay in transferring amounts required to be transferred to the Investor Education and Protection Fund by the Company.

For Haribhakti & Co. LLPFor V. D. Shukla & Co.
Chartered AccountantsChartered Accountants
ICAI Firm Registration No.103523W / W100048ICAI Firm Registration No.110240W
Hemant J. BhattVimal D. Shukla
PartnerProprietor
Membership No. 036834Membership No.036416
Place : AhmedabadPlace : Ahmedabad
Date : May 15 2019Date : May 15 2019

ANNEXURE 1 TO THE INDEPENDENT AUDITOR'S REPORT

[Referred to in paragraph 1 under `Report on Other Legal and Regulatory Requirements' in the Independent Auditor's Report of even date to the members of Dishman Carbogen Amcis Limited [DCAL] (After merger of erstwhile Dishman Pharmaceuticals and Chemicals Limited into DCAL) (the Company) on the standalone Ind AS financial statements for the year ended March 31 2019] (i) (a) The Company has maintained proper records showing full particulars including quantitative details and situation of Property Plant and Equipment.

(b) Property plant and Equipment of erstwhile DPCL were physically verified by the management in earlier year in accordance with a planned programme of verifying them once in three years which in our opinion is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verification.

(c) According to the information and explanation given to us the title deeds of immovable properties other than self-constructed properties recorded as Property Plant and Equipment in the books of account of the Company as on March 31 2019 are held in the name of the erstwhile Dishman Pharmaceuticals and Chemicals Limited. Subsequent to merger the transfer of immovable properties from Dishman Pharmaceuticals and Chemicals Limited into the name of the Company is under process. However in respect of one lease hold land with gross block of ` 104.70 Crores and net block of ` 100.03 Crores the lease deed has been executed but not registered with the relevant authorities.

(ii) The inventory (excluding stocks lying with third parties) has been physically verified by the management during the year.

In respect of inventory lying with third parties these have substantially been confirmed by them. In our opinion the frequency of verification is reasonable. As informed no material discrepancies were noticed on physical verification carried out during the year.

(iii) The erstwhile Dishman Pharmaceuticals and Chemicals Limited has granted unsecured loan in earlier years to one company covered in the register maintained under Section 189 of the Act whose outstanding balance as on March 31 2019 is ` 58.56 Crore.

(a) According to the information and explanations given to us the Company has not granted any loan during the year to companies firms Limited Liability Partnerships or other parties covered in the register maintained under Section 189 of the Act.

(b) The schedule of repayment of principal and payment of interest in respect of above loan granted in earlier years has been stipulated. As per the terms of agreement no repayment of principal or interest was due during the year. (c) In respect of the aforesaid loan no amount is overdue as per the terms of agreement.

(iv) Based on information and explanation given to us in respect of loans investments guarantees and securities the Company has complied with the provisions of sections 185 and 186 of the Act.

(v) In our opinion and according to the information and explanations given to us the Company has not accepted any deposits from the public within the provisions of sections 73 to 76 of the Act and the rules framed there under.

(vi) We have broadly reviewed the books of account maintained by the Company in respect of products where the maintenance of cost records has been specified by the Central Government under sub-section (1) of section 148 of the Act and the rules framed there under and we are of the opinion that prima facie the prescribed accounts and records have been made and maintained.

(vii) (a) The Company is generally regular in depositing with appropriate authorities undisputed statutory dues including provident fund employees' state insurance income tax sales tax service tax value added tax goods and service tax customs duty excise duty cess and any other material statutory dues applicable to it.

According to the information and explanations given to us no undisputed amounts payable in respect of provident fund employees' state insurance income tax sales tax service tax value added tax goods and service tax customs duty excise duty cess and any other material statutory dues applicable to it were outstanding at the year end for a period of more than six months from the date they became payable.

(b) According to the information and explanation given to us there are no disputed dues of value added tax goods and service tax and customs duty as at March 31 2019. The particulars of dues outstanding with respect to income tax sales tax service tax and excise duty which have not been deposited on account of disputes are as follows:

Name of the statuteNature of duesAmount (` in crores)Period to which the amount relatesForum where dispute is pending
Central Excise Act 1944Excise Duty and Service Tax0.142003-04High Court
0.982006-07Central Excise and Service Tax Appellate
2008-09Tribunal
_ 2009-10
2013-14
2.532006-07Commissioner of Central Excise (Appeals)
2009-10
Central Sales Tax Act 1956Sales tax0.242001-02Joint Commissioner Commercial Tax
1.182006-07Commercial Tax Gujarat VAT Tribunal
Gujarat Sales Tax ActSales tax0.072001-02Joint Commissioner Commercial Tax
2007-08
2.842006-07Commercial Tax Gujarat VAT Tribunal
Income Tax Act 1961Demand U/S - 143(3)1.84FY 2001-02High Court of Gujarat
Income Tax Act 1961Demand U/S - 143(3)4.41FY 2002-03High Court of Gujarat
Income Tax Act 1961Demand U/S - 143(3)1.51FY 2003-04High Court of Gujarat
Income Tax Act 1961Demand U/S - 143(3)7.22FY 2004-05High Court of Gujarat
Income Tax Act 1961Demand U/S - 143(3).r.w.s.14414.32FY 2005-06High Court of Gujarat
Income Tax Act 1961Demand U/S - 271(1) ( C )3.04FY 2005-06High Court of Gujarat
Income Tax Act 1961Demand U/S - 143(3).r.w.s.14414.28FY 2006-07High Court of Gujarat
Income Tax Act 1961Demand U/S - 271(1) ( C )4.73FY 2006-07High Court of Gujarat
Income Tax Act 1961Demand U/S - 143(3).r.w.s.1448.41FY 2007-08High Court of Gujarat
Income Tax Act 1961Demand U/S - 143(3).r.w.s.1440.24FY 2008-09High Court of Gujarat
Income Tax Act 1961Demand U/S - 271(1) ( C )0.47FY 2008-09Income Tax Appellate Tribunal
Income Tax Act 1961Demand U/S - 143(3).r.w.s.1471.52FY 2009-10Income Tax Appellate Tribunal and
Commissioner of Income Tax (Appeals)
Income Tax Act 1961Demand U/S - 143(3).r.w.s.14727.07FY 2010-11Commissioner of Income Tax (Appeals)
Income Tax Act 1961Demand U/S - 143(3).r.w.s.14741.86FY 2011-12Commissioner of Income Tax (Appeals)
Income Tax Act 1961Demand U/S - 143(3).r.w.s.14426.68FY 2012-13Commissioner of Income Tax (Appeals)
Income Tax Act 1961Demand U/S - 143(3).r.w.s.14413.89FY 2013-14Commissioner of Income Tax (Appeals)
Income Tax Act 1961Demand U/S - 143(3) r.w.s 144C0.005FY 2014-15Commissioner of Income Tax (Appeals)
Income Tax Act 1961Demand U/S - 143(3) r.w.s. 144C20.71FY 2014-15Commissioner of Income Tax (Appeals)

Out of above amount paid under protest by the Company for income tax is ` 55.76 Crores.

(viii) According to the information and explanations given to us the Company has not defaulted in repayment of loans or borrowings to banks or financial institutions. The Company has not borrowed any money from government or by issue of debentures.

(ix) The Company has neither raised money by way of public issue offer nor has obtained any term loans. Therefore clause 3(ix) of the Order is not applicable to the Company.

(x) During the course of our examination of the books and records of the Company carried out in accordance with the generally accepted auditing practices in India and according to the information and explanations given to us we have neither come across any instance of fraud by the Company or any fraud on the Company by its officers or employees noticed or reported during the year nor have we been informed of any such instance by the management.

(xi) According to the information and explanations given to us managerial remuneration has been paid / provided in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Act.

(xii) In our opinion and according to the information and explanations given to us the Company is not a Nidhi Company.

Therefore clause 3(xii) of the Order is not applicable to the Company.

(xiii) According to the information and explanation given to us and based on our examination of the records of the Company all transactions entered into by the Company with the related parties are in compliance with Sections 177 and 188 of Act where applicable and the details have been disclosed in the Standalone Ind AS Financial Statements etc. as required by the applicable accounting standards.

(xiv) The Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review. Therefore clause 3(xiv) of the Order is not applicable to the Company.

(xv) According to the information and explanations given to us the Company has not entered into any non-cash transactions with directors or persons connected with him during the year.

(xvi) According to the information and explanation given to us the Company is not required to be registered under section 45-IA of the Reserve Bank of India Act 1934.

For Haribhakti & Co. LLPFor V. D. Shukla & Co.
Chartered AccountantsChartered Accountants
ICAI Firm Registration No.103523W / W100048ICAI Firm Registration No.110240W
Hemant J. BhattVimal D. Shukla
PartnerProprietor
Membership No. 036834Membership No.036416
Place : AhmedabadPlace : Ahmedabad
Date : May 15 2019Date : May 15 2019

ANNEXURE 2 TO THE INDEPENDENT AUDITOR'S REPORT

[Referred to in paragraph 2 under `Report on Other Legal and Regulatory Requirements' in the Independent Auditor's Report of even date to the members of Dishman Carbogen Amcis Limited [DCAL] (After merger of erstwhile Dishman Pharmaceuticals and Chemicals Limited into DCAL) on the standalone Ind AS financial statements for the year ended March 31 2019]

Report on the Internal Financial Controls with reference to Financial Statements under clause (i) of sub-section 3 of section 143 of the Companies Act 2013 (the Act)

We have audited the internal financial controls with reference to financial statements of Dishman Carbogen Amcis Limited (the Company) as of March 31 2019 in conjunction with our audit of the standalone Ind AS financial statements of the Company for the year ended on that date.

Management's Responsibility for Internal Financial Controls

The Company's management is responsible for establishing and maintaining internal financial controls based on the internal control with reference to financial statements criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the Guidance Note) issued by the Institute of Chartered Accountants of India (ICAI). These responsibilities include the design implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business including adherence to company's policies the safeguarding of its assets the prevention and detection of frauds and errors the accuracy and completeness of the accounting records and the timely preparation of reliable financial information as required under the Act.

Auditors' Responsibility

Our responsibility is to express an opinion on the Company's internal financial controls with reference to financial statements based on our audit. We conducted our audit in accordance with the Guidance Note and the Standards on Auditing specified under section 143(10) of the Act to the extent applicable to an audit of internal financial controls both issued by the ICAI. Those

Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls with reference to financial statements was established and maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls with reference to financial statements and their operating effectiveness.

Our audit of internal financial controls with reference to financial statements included obtaining an understanding of internal financial controls with reference to financial statements assessing the risk that a material weakness exists and testing and evaluating the design and operating effectiveness of internal controls based on the assessed risk. The procedures selected depend on the auditor's judgement including the assessment of the risks of material misstatement of the financial statements whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company's internal financial controls with reference to financial statements.

Meaning of Internal Financial Controls with reference to Financial Statements

A company's internal financial control with reference to financial statements is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal financial control with reference to financial statements includes those policies and procedures that (1) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company;(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and that receipts and expenditures of the company are being made only in accordance with authorisations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition use or disposition of the company's assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls with reference to Financial Statements

Because of the inherent limitations of internal financial controls with reference to financial statements including the possibility of collusion or improper management override of controls material misstatements due to error or fraud may occur and not be detected. Also projections of any evaluation of the internal financial controls with reference to financial statements to future periods are subject to the risk that the internal financial control with reference to financial statements may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion the Company has in all material respects adequate internal financial controls with reference to financial statements and such internal financial controls with reference to financial statements were operating effectively as at March 31 2019 based on the internal control with reference to financial statements criteria established by the Company considering the essential components of internal control stated in the Guidance Note issued by the ICAI.

For Haribhakti & Co. LLPFor V. D. Shukla & Co.
Chartered AccountantsChartered Accountants
ICAI Firm Registration No.103523W / W100048ICAI Firm Registration No.110240W
Hemant J. BhattVimal D. Shukla
PartnerProprietor
Membership No. 036834Membership No.036416
Place : AhmedabadPlace : Ahmedabad
Date : May 15 2019Date : May 15 2019

   

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