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Dishman Carbogen Amcis Ltd.

BSE: 540701 Sector: Health care
NSE: DCAL ISIN Code: INE385W01011
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NSE 00:00 | 05 Jun 71.95 -1.65
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OPEN 77.25
PREVIOUS CLOSE 73.55
VOLUME 81710
52-Week high 258.15
52-Week low 46.45
P/E 29.21
Mkt Cap.(Rs cr) 1,127
Buy Price 71.85
Buy Qty 500.00
Sell Price 72.95
Sell Qty 1000.00
OPEN 77.25
CLOSE 73.55
VOLUME 81710
52-Week high 258.15
52-Week low 46.45
P/E 29.21
Mkt Cap.(Rs cr) 1,127
Buy Price 71.85
Buy Qty 500.00
Sell Price 72.95
Sell Qty 1000.00

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 ChemicalsLimited into DCAL) Report on the Audit of the Standalone Ind AS Financial StatementsOpinion

We have audited the accompanying standalone Ind AS financial statementsof Dishman Carbogen Amcis Limited (“the Company”) which comprise the BalanceSheet as at March 31 2019 the Statement of Profit and Loss (including OtherComprehensive Income) the Statement of Changes in Equity and the Statement of Cash Flowsfor the year then ended and notes to the standalone Ind AS financial statements includinga 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 theexplanations given to us the aforesaid standalone Ind AS financial statements give theinformation required by the Companies Act 2013 (“the Act”) in the manner sorequired and give a true and fair view in conformity with the accounting principlesgenerally accepted in India including the Indian Accounting Standards (“IndAS”) 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 yearended 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 arefurther described in the Auditor's Responsibilities for the Audit of the StandaloneInd AS Financial Statements section of our report. We are independent of the Company inaccordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia (“ICAI”) together with the ethical requirements that are relevant to ouraudit of the standalone Ind AS financial statements under the provisions of the Act andRules thereunder and we have fulfilled our other ethical responsibilities in accordancewith these requirements and the Code of Ethics. We believe that the audit evidence we haveobtained 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 financialstatements detailing the accounting treatment relating to the Scheme of Arrangement andAmalgamation (“the Scheme”) involving merger of Dishman Pharmaceuticals andChemicals Limited and Dishman Care Limited with the Company which has been accounted inthe previous year under the “Purchase Method” as per Accounting Standard 14Accounting for Amalgamation (AS 14) in compliance with Scheme pursuant to Section 391 to394 of Companies Act 1956 approved by Hon'ble High Court of Gujarat. In accordancewith the Scheme the Company has recognized goodwill on amalgamation amounting to 1326.86Crores which is amortised over its useful life. This accounting treatment is differentfrom that prescribed under Indian Accounting Standard 103 ‘BusinessCombinations' (Ind AS 103). Had the goodwill not been amortised as required under IndAS 103 the Depreciation and Amortisation expense for the year ended March 31 2019 wouldhave been lower by 88.46 Crores and Profit before tax for the year ended March 31 2019would have been higher by an equivalent amount. Our opinion is not modified in respect ofthis matter.

Key Audit Matters

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

Key Audit Matter How 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 subsidiaries Our 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 positions Our 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 otherinformation. The other information comprises the information included in the Annualreport but does not include the standalone Ind AS financial statements and ourauditor's report thereon.

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

In connection with our audit of the standalone Ind AS financialstatements our responsibility is to read the other information and in doing so considerwhether the other information is materially inconsistent with the standalone Ind ASfinancial statements or our knowledge obtained in the audit or otherwise appears to bematerially misstated. If based on the work we have performed we conclude that there is amaterial misstatement of this other information we are required to report that fact. Wehave nothing to report in this regard.

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

The Company's Board of Directors is responsible for the mattersstated in section 134(5) of the Act with respect to the preparation of these standaloneInd AS financial statements that give a true and fair view of the financial positionfinancial performance (including other comprehensive income) changes in equity and cashflows of the Company in accordance with the accounting principles generally accepted inIndia including Ind AS specified under section 133 of the Act read with relevant rulesissued thereunder. This responsibility also includes maintenance of adequate accountingrecords in accordance with the provisions of the Act for safeguarding of the assets of theCompany and for preventing and detecting frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; and design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe standalone Ind AS financial statements that give a true and fair view and are freefrom material misstatement whether due to fraud or error.

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

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

Auditor's Responsibilities for the Audit of the Standalone Ind ASFinancial Statements

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

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

• Obtain an understanding of internal control relevant to theaudit in order to design audit procedures that are appropriate in the circumstances. Undersection 143(3)(i) of the Act we are also responsible for expressing our opinion onwhether the Company has adequate internal financial controls with reference to financialstatements in place and the operating effectiveness of such controls.

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

• Conclude on the appropriateness of management's use of thegoing concern basis of accounting and based on the audit evidence obtained whether amaterial uncertainty exists related to events or conditions that may cast significantdoubt on the Company's ability to continue as a going concern. If we conclude that amaterial uncertainty exists we are required to draw attention in our auditor'sreport to the related disclosures in the standalone Ind AS financial statements or ifsuch disclosures are inadequate to modify our opinion. Our conclusions are based on theaudit evidence obtained up to the date of our auditor's report. However futureevents or conditions may cause the Company to cease to continue as a going concern.

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

We communicate with those charged with governance regarding amongother matters the planned scope and timing of the audit and significant audit findingsincluding any significant deficiencies in internal control that we identify during ouraudit.

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

From the matters communicated with those charged with governance wedetermine those matters that were of most significance in the audit of the standalone IndAS financial statements of the current period and are therefore the key audit matters. Wedescribe these matters in our auditor's report unless law or regulation precludespublic disclosure about the matter or when in extremely rare circumstances we determinethat a matter should not be communicated in our report because the adverse consequences ofdoing so would reasonably be expected to outweigh the public interest benefits of suchcommunication.

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 section143(11) of the Act we give in "Annexure 1" a statement on the mattersspecified 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. Wehave sought and obtained all the information and explanations which to the best of ourknowledge and belief were necessary for the purposes of our audit; b. In our opinionproper books of account as required by law have been kept by the Company so far as itappears from our examination of those books;

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

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

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

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

g. With respect to the other matters to be included in theAuditor'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 givento 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 theAuditor'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 theexplanations given to us:

(i) The Company has disclosed the impact of pending litigations on itsfinancial position in its standalone Ind AS financial statements – Refer Note 29 onContingent Liabilities to the standalone Ind AS financial statements; (ii) The Company hasmade provision as required under the applicable law or accounting standards for materialforeseeable 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 betransferred to the Investor Education and Protection Fund by the Company.

For Haribhakti & Co. LLP For V. D. Shukla & Co.
Chartered Accountants Chartered Accountants
ICAI Firm Registration No.103523W / W100048 ICAI Firm Registration No.110240W
Hemant J. Bhatt Vimal D. Shukla
Partner Proprietor
Membership No. 036834 Membership No.036416
Place : Ahmedabad Place : Ahmedabad
Date : May 15 2019 Date : May 15 2019

ANNEXURE 1 TO THE INDEPENDENT AUDITOR'S REPORT

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

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

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

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

In respect of inventory lying with third parties these havesubstantially been confirmed by them. In our opinion the frequency of verification isreasonable. As informed no material discrepancies were noticed on physical verificationcarried out during the year.

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

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

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

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

(v) In our opinion and according to the information and explanationsgiven to us the Company has not accepted any deposits from the public within theprovisions 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 theCompany in respect of products where the maintenance of cost records has been specified bythe Central Government under sub-section (1) of section 148 of the Act and the rulesframed there under and we are of the opinion that prima facie the prescribed accounts andrecords have been made and maintained.

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

According to the information and explanations given to us noundisputed amounts payable in respect of provident fund employees' state insuranceincome tax sales tax service tax value added tax goods and service tax customs dutyexcise duty cess and any other material statutory dues applicable to it wereoutstanding at the year end for a period of more than six months from the date theybecame payable.

(b) According to the information and explanation given to us there areno disputed dues of value added tax goods and service tax and customs duty as at March31 2019. The particulars of dues outstanding with respect to income tax sales taxservice tax and excise duty which have not been deposited on account of disputes are asfollows:

Name of the statute Nature of dues Amount (` in crores) Period to which the amount relates Forum where dispute is pending
Central Excise Act 1944 Excise Duty and Service Tax 0.14 2003-04 High Court
0.98 2006-07 Central Excise and Service Tax Appellate
2008-09 Tribunal
_ 2009-10
2013-14
2.53 2006-07 Commissioner of Central Excise (Appeals)
2009-10
Central Sales Tax Act 1956 Sales tax 0.24 2001-02 Joint Commissioner Commercial Tax
1.18 2006-07 Commercial Tax Gujarat VAT Tribunal
Gujarat Sales Tax Act Sales tax 0.07 2001-02 Joint Commissioner Commercial Tax
2007-08
2.84 2006-07 Commercial Tax Gujarat VAT Tribunal
Income Tax Act 1961 Demand U/S - 143(3) 1.84 FY 2001-02 High Court of Gujarat
Income Tax Act 1961 Demand U/S - 143(3) 4.41 FY 2002-03 High Court of Gujarat
Income Tax Act 1961 Demand U/S - 143(3) 1.51 FY 2003-04 High Court of Gujarat
Income Tax Act 1961 Demand U/S - 143(3) 7.22 FY 2004-05 High Court of Gujarat
Income Tax Act 1961 Demand U/S - 143(3).r.w.s.144 14.32 FY 2005-06 High Court of Gujarat
Income Tax Act 1961 Demand U/S - 271(1) ( C ) 3.04 FY 2005-06 High Court of Gujarat
Income Tax Act 1961 Demand U/S - 143(3).r.w.s.144 14.28 FY 2006-07 High Court of Gujarat
Income Tax Act 1961 Demand U/S - 271(1) ( C ) 4.73 FY 2006-07 High Court of Gujarat
Income Tax Act 1961 Demand U/S - 143(3).r.w.s.144 8.41 FY 2007-08 High Court of Gujarat
Income Tax Act 1961 Demand U/S - 143(3).r.w.s.144 0.24 FY 2008-09 High Court of Gujarat
Income Tax Act 1961 Demand U/S - 271(1) ( C ) 0.47 FY 2008-09 Income Tax Appellate Tribunal
Income Tax Act 1961 Demand U/S - 143(3).r.w.s.147 1.52 FY 2009-10 Income Tax Appellate Tribunal and
Commissioner of Income Tax (Appeals)
Income Tax Act 1961 Demand U/S - 143(3).r.w.s.147 27.07 FY 2010-11 Commissioner of Income Tax (Appeals)
Income Tax Act 1961 Demand U/S - 143(3).r.w.s.147 41.86 FY 2011-12 Commissioner of Income Tax (Appeals)
Income Tax Act 1961 Demand U/S - 143(3).r.w.s.144 26.68 FY 2012-13 Commissioner of Income Tax (Appeals)
Income Tax Act 1961 Demand U/S - 143(3).r.w.s.144 13.89 FY 2013-14 Commissioner of Income Tax (Appeals)
Income Tax Act 1961 Demand U/S – 143(3) r.w.s 144C 0.005 FY 2014-15 Commissioner of Income Tax (Appeals)
Income Tax Act 1961 Demand U/S – 143(3) r.w.s. 144C 20.71 FY 2014-15 Commissioner of Income Tax (Appeals)

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

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

(ix) The Company has neither raised money by way of public issue offernor has obtained any term loans. Therefore clause 3(ix) of the Order is not applicable tothe Company.

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

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

(xii) In our opinion and according to the information and explanationsgiven 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 andbased on our examination of the records of the Company all transactions entered into bythe Company with the related parties are in compliance with Sections 177 and 188 of Actwhere applicable and the details have been disclosed in the Standalone Ind AS FinancialStatements etc. as required by the applicable accounting standards.

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

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

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

For Haribhakti & Co. LLP For V. D. Shukla & Co.
Chartered Accountants Chartered Accountants
ICAI Firm Registration No.103523W / W100048 ICAI Firm Registration No.110240W
Hemant J. Bhatt Vimal D. Shukla
Partner Proprietor
Membership No. 036834 Membership No.036416
Place : Ahmedabad Place : Ahmedabad
Date : May 15 2019 Date : May 15 2019

ANNEXURE 2 TO THE INDEPENDENT AUDITOR'S REPORT

[Referred to in paragraph 2 under ‘Report on Other Legal andRegulatory Requirements' in the Independent Auditor's Report of even date to themembers of Dishman Carbogen Amcis Limited [DCAL] (After merger of erstwhile DishmanPharmaceuticals and Chemicals Limited into DCAL) on the standalone Ind AS financialstatements for the year ended March 31 2019]

Report on the Internal Financial Controls with reference to FinancialStatements 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 tofinancial statements of Dishman Carbogen Amcis Limited ("the Company") asof March 31 2019 in conjunction with our audit of the standalone Ind AS financialstatements 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 andmaintaining internal financial controls based on the internal control with reference tofinancial statements criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note on Audit of Internal FinancialControls Over Financial Reporting (the "Guidance Note") issued by the Instituteof Chartered Accountants of India ("ICAI"). These responsibilities include thedesign implementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the orderly and efficient conduct of its businessincluding 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 Act.

Auditors' Responsibility

Our responsibility is to express an opinion on the Company'sinternal financial controls with reference to financial statements based on our audit. Weconducted our audit in accordance with the Guidance Note and the Standards on Auditingspecified under section 143(10) of the Act to the extent applicable to an audit ofinternal financial controls both issued by the ICAI. 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 with reference to financial statements wasestablished and maintained and if such controls operated effectively in all materialrespects.

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

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

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

Meaning of Internal Financial Controls with reference to FinancialStatements

A company's internal financial control with reference to financialstatements is a process designed to provide reasonable assurance regarding the reliabilityof financial reporting and the preparation of financial statements for external purposesin accordance with generally accepted accounting principles. A company's internalfinancial control with reference to financial statements includes those policies andprocedures that (1) pertain to the maintenance of records that in reasonable detailaccurately and fairly reflect the transactions and dispositions of the assets of thecompany;(2) provide reasonable assurance that transactions are recorded as necessary topermit preparation of financial statements in accordance with generally acceptedaccounting principles and that receipts and expenditures of the company are being madeonly in accordance with authorisations of management and directors of the company; and (3)provide reasonable assurance regarding prevention or timely detection of unauthorisedacquisition use or disposition of the company's assets that could have a materialeffect on the financial statements.

Inherent Limitations of Internal Financial Controls with reference toFinancial Statements

Because of the inherent limitations of internal financial controls withreference to financial statements including the possibility of collusion or impropermanagement override of controls material misstatements due to error or fraud may occurand not be detected. Also projections of any evaluation of the internal financialcontrols with reference to financial statements to future periods are subject to the riskthat the internal financial control with reference to financial statements may becomeinadequate because of changes in conditions or that the degree of compliance with thepolicies or procedures may deteriorate.

Opinion

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

For Haribhakti & Co. LLP For V. D. Shukla & Co.
Chartered Accountants Chartered Accountants
ICAI Firm Registration No.103523W / W100048 ICAI Firm Registration No.110240W
Hemant J. Bhatt Vimal D. Shukla
Partner Proprietor
Membership No. 036834 Membership No.036416
Place : Ahmedabad Place : Ahmedabad
Date : May 15 2019 Date : May 15 2019