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Dishman Carbogen Amcis Ltd.

BSE: 540701 Sector: Health care
NSE: DCAL ISIN Code: INE385W01011
BSE 00:00 | 18 Jan 227.00 -2.85
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NSE 00:00 | 18 Jan 227.75 -3.05
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OPEN 228.00
PREVIOUS CLOSE 229.85
VOLUME 3773
52-Week high 396.55
52-Week low 202.60
P/E 68.58
Mkt Cap.(Rs cr) 3,664
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 228.00
CLOSE 229.85
VOLUME 3773
52-Week high 396.55
52-Week low 202.60
P/E 68.58
Mkt Cap.(Rs cr) 3,664
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

Independent Auditors’ Report

To the Members of Dishman Carbogen Amcis Limited [DCAL] (After merger of erstwhileDishman Pharmaceuticals and Chemicals Limited into DCAL)

Report on the Standalone Ind AS Financial Statements

We have audited the accompanying standalone Ind AS financial statements of DishmanCarbogen Amcis Limited (“the Company”) which comprise the Balance Sheet as atMarch 31 2018 the Statement of Profit and Loss (including Other Comprehensive Income)the Cash Flow Statement and the Statement of Changes in Equity for the year then ended anda summary of significant accounting policies and other explanatory information(hereinafter referred to as “Ind AS Financial Statements”).

Management’s Responsibility for the Standalone Ind AS Financial Statements

The Company’s Board of Directors is responsible for the matters stated in Section134(5) of the Companies Act 2013 (“the Act”) with respect to the preparation ofthese standalone Ind AS financial statements that give a true and fair view of the stateof affairs (financial position) profit (financial performance including othercomprehensive income) cash flows and changes in equity of the Company in accordance withthe accounting principles generally accepted in India including the Indian AccountingStandards (Ind AS) specified under Section 133 of the Act read with relevant rules issuedthereunder. This responsibility also includes maintenance of adequate accounting recordsin accordance with the provisions of the Act for safeguarding of the assets of the Companyand 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 and ensuring their operating effectiveness and 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 IndAS financial statements management is responsible for assessing the Company’sability to continue as a going concern disclosing as applicable matters related togoing concern and using the going concern basis of accounting unless management eitherintends to liquidate the Company or to cease operations or has no realistic alternativebut to do so.

Auditor’s Responsibility

Our responsibility is to express an opinion on these standalone Ind AS financialstatements based on our audit.

We have taken into account the provisions of the Act the accounting and auditingstandards and matters which are required to be included in the audit report under theprovisions of the Act and the Rules made thereunder.

We conducted our audit in accordance with the Standards on Auditing specified underSection 143(10) of the Act. Those Standards require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetherthe standalone Ind AS financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures in the standalone Ind AS financial statements. The procedures selected dependon the auditors’ judgment including the assessment of the risks of materialmisstatement of the standalone Ind AS financial statements whether due to fraud or error.In making those risk assessments the auditor considers internal financial controlrelevant to the Company’s preparation of the standalone Ind AS financialstatements that give a true and fair view in order to design audit procedures that areappropriate in the circumstances. An audit also includes evaluating the appropriateness ofaccounting policies used and the reasonableness of the accounting estimates made by theCompany’s Directors as well as evaluating the overall presentation of the standaloneInd AS financial statements.

We are also responsible to conclude on the appropriateness of management’s use ofthe going 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 the auditor’sreport to the related disclosures in the standalone Ind AS financial statements or ifsuch disclosures are inadequate to modify the opinion. Our conclusions are based on theaudit evidence obtained up to the date of the auditor’s report. However futureevents or conditions may cause the Company to cease to continue as a going concern.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the standalone Ind AS financial statements.

Opinion

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone Ind AS financial statements give the informationrequired by the Act in the manner so required and give a true and fair view in conformitywith the accounting principles generally accepted in India including the Ind AS of thestate of affairs (financial position) of the Company as at 31st March 2018 its profit(financial performance including other comprehensive income) its cash flows and changesin equity for the year ended on that date.

Emphasis of Matter

We draw attention to Note 28(i) of the Ind AS Financial Statements detailing theaccounting treatment relating to the Scheme involving merger of Dishman Pharmaceuticalsand Chemicals Limited and Dishman Care Limited with the Company which has been accountedin the previous year under the “Purchase Method” as per Accounting Standard 14– Accounting for Amalgamation (AS 14) in compliance with scheme of Amalgamationpursuant to Section 391 to 394 of Companies Act 1956 approved by Hon’ble High Courtof Gujarat. In accordance with the Scheme the Company has recognized goodwill onamalgamation amounting to Rs. 1326.86 Crores which is amortised over its useful life.This accounting treatment is different from that prescribed under Indian AccountingStandard (Ind AS 103) – ‘Business Combinations’. Had the goodwill not beenamortised as required under Ind AS 103 the Depreciation and Amortisation expense for theyear ended March 31 2018 would have been lower by Rs. 88.46 Crores and Profit before taxfor the year ended March 31 2018 would have been higher by an equivalent amount. Ouropinion is not modified in respect of this matter.

Report on Other Legal and Regulatory Requirements

(1) As required by the Companies (Auditors’ Report) Order 2016 (“theOrder”) issued by the Central Government of India in terms of sub-section (11) ofSection 143 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. 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 account as required by law have been kept by theCompany so far as it appears from our examination of those books;

c. The Balance Sheet the Statement of Profit and Loss Cash Flow Statement and theStatement of Changes in Equity dealt with by this Report are in agreement with the booksof account;

d. In our opinion the aforesaid standalone Ind AS financial statements comply with theIndian Accounting Standards specified under Section 133 of the Act read with relevantrules issued thereunder; as referred to in the Emphasis of Matter paragraph above theCompany has given the accounting treatment of merger as per the Court approved Scheme incompliance with AS-14 “Accounting for Amalgamations” which is different fromthat prescribed under Ind AS-103 “Business Combinations”;

e. On the basis of written representations received from the directors as on March 312018 and taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2018 from being appointed as a director in terms of Section 164 (2) of theAct;

f. With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls we give ourseparate Report in “Annexure 2”.

g. With respect to the other matters to be included in the Auditor’s Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand 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 financialposition in its standalone Ind AS financial statements – Refer Note 29 onContingent Liabilities to the standalone Ind AS financial statements;

(ii) The Company has made provision as required under the applicable law or accountingstandards for material foreseeable losses if any on long-term contracts includingderivative contracts – Refer Note 12 and 24 to the standalone Ind AS financialstatements;

(iii) There has been no delay in transferring amounts required to be transferred tothe 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 16 2018 Date : May 16 2018

AANNEXURE 1 TO THE INDEPENDENT AUDITOR’S REPORT

[Referred to in paragraph 1 under ‘Report on Other Legal and RegulatoryRequirements’ in the Independent Auditor’s Report of even date to the members ofDishman Carbogen Amcis Limited [DCAL] (After merger of erstwhile Dishman Pharmaceuticalsand Chemicals Limited into DCAL) on the standalone Ind AS financial statements for theyear ended March 31 2018]

(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 physically verified by themanagement in earlier year in accordance with a planned programme of verifying them oncein three years which in our opinion is reasonable having regard to the size of theCompany and the nature of its assets. No material discrepancies were noticed on suchverification.

(c) According to the information & explanation given to us the title deeds ofimmovable properties other than self- constructed properties recorded as Property Plantand Equipment in the books of account of the Company as on March 31 2018 are held in thename of the erstwhile Dishman Pharmaceuticals and Chemicals Limited. Subsequent to mergerthe transfer of immovable properties from Dishman Pharmaceuticals and Chemicals Limitedinto the name of the Company is under process. However in respect of one lease hold landwith gross block of Rs. 104.70 crores and net block of Rs. 101.13 crores the lease deedhas been executed but not registered with the relevant authorities.

(ii) The inventory (excluding stocks lying with third parties) has been physicallyverified by the management during the year. In respect of inventory lying with thirdparties these have substantially been confirmed by them. In our opinion the frequency ofverification is reasonable. As informed no material discrepancies were noticed onphysical verification carried out during the year.

(iii) The erstwhile Dishman Pharmaceuticals and Chemicals Limited has granted unsecuredloan in earlier years to one company covered in the register maintained under Section 189of the Act whose outstanding balance as on March 31 2018 is Rs. 54.46 Crore.

(a) According to the information and explanations given to us the Company has notgranted any loan during the year to companies firms Limited Liability Partnerships orother 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 aboveloan granted in earlier years has been stipulated. As per the terms of agreement norepayment of principal or interest was due during the year.

(c) In respect of the aforesaid loan no amount is overdue as per the terms ofagreement.

(iv) Based on information and explanation given to us in respect of loans investmentsguarantees and securities the Company has complied with the provisions of Section 185 and186 of the Act.

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

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

(vii) (a) According to the information and explanation given to us and the records ofthe Company examined by us in our opinion the Company is generally regular in depositingwith appropriate authorities undisputed statutory dues including provident fund incometax sales tax service tax value added tax customs duty excise duty cess and anyother material statutory dues applicable to it.

According to the information and explanations given to us no undisputed amountspayable in respect of provident fund employees’ state insurance income tax salestax service tax value added tax customs duty excise duty cess and any other materialstatutory dues applicable to it were outstanding at the year end for a period of morethan six months from the date they became payable.

(b) According to the information and explanation given to us the dues outstanding withrespect to income tax sales tax service tax value added tax customs duty excise dutyon account of any dispute are as follows:

Name of the statute Nature of dues Amount (Rs. 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
1.25 2006-07 Central Excise and Service Tax Appel late
Tribunal
2008-09
2009-10
2.09 2006-07 Commissioner of Central Excise (Appeals)
2008-09 to
2015-16
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 Income Tax Appellate Tribunal
Income Tax Act 1961 Demand U/S - 271(1) (C) 3.04 FY 2005-06 Income Tax Appellate Tribunal
Income Tax Act 1961 Demand U/S - 143(3).r.w.s.144 14.28 FY 2006-07 Income Tax Appellate Tribunal
Income Tax Act 1961 Demand U/S - 271(1) (C) 4.73 FY 2006-07 Income Tax Appellate Tribunal
Income Tax Act 1961 Demand U/S - 143(3).r.w.s.144 8.41 FY 2007-08 Income Tax Appellate Tribunal
Income Tax Act 1961 Demand U/S - 143(3).r.w.s.144 0.24 FY 2008-09 Income Tax Appellate Tribunal
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)

Out of the above amount paid under protest by the Company for Income-tax is Rs. 48.73Crore.

(viii) According to the information and explanations given to us the Company has notdefaulted in repayment of loans or borrowings to financial institutions banks or dues todebenture holders.

(ix) The Company has not raised any money by way of initial public offer or furtherpublic offer (including debt instruments) during the year. In our opinion and according tothe information and explanations given to us the Company has utilised the money raised byway of term loans during the year for the purposes for which they were raised.

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

(xi) According to the information and explanations given to us the Company has paidmanagerial remuneration in accordance with the requisite approvals mandated by theprovisions of Section 197 read with Schedule V to the Act.

(xii) In our opinion and according to the information and explanations given to us theCompany is not a Nidhi Company. Therefore paragraph 3(xii) of the Order is not applicableto the Company.

(xiii) According to the information and explanation given to us and based on ourexamination of the records of the Company transactions entered into by the Company withthe related parties are in compliance with Sections 177 and 188 of Act where applicable.

The details of related party transaction have been disclosed in the Standalone Ind ASFinancial Statements as required under Indian Accounting Standards (Ind AS) 24 Relatedparty Disclosures specified under section 133 of the Act read with relevant Rulethereunder.

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

(xv) According to the information and explanations given to us the Company has notentered into any non-cash transactions with directors or persons connected with him duringthe year.

(xvi) According to the information and explanation given to us the Company is notrequired to be registered under Section 45-IA of the Reserve Bank of India Act 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 16 2018 Date : May 16 2018

ANNEXURE 2 TO THE INDEPENDENT AUDITOR’S REPORT

[Referred to in paragraph 2(f) under ‘Report on Other Legal and RegulatoryRequirements’ in the Independent Auditor’s Report of even date to the members ofDishman Carbogen Amcis Limited [DCAL] (After merger of erstwhile Dishman Pharmaceuticalsand Chemicals Limited into DCAL) on the standalone Ind AS financial statements for theyear ended March 31 2018]

Report on the Internal Financial Controls over Financial Reporting under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 (“the Act”)

We have audited the internal financial controls over financial reporting of DishmanCarbogen Amcis Limited (“the Company”) as of March 31 2018 in conjunction withour audit of the standalone Ind AS financial statements of the Company for the year endedon that date.

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 (“ICAI”). Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to company’s policies the safeguardingof its assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the Companies Act 2013.

Auditors’ Responsibility

Our responsibility is to express an opinion on the Company’s internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting(the “Guidance Note”) and the Standards on Auditing specified under section143(10) of the Act to the extent applicable to an audit of internal financial controlsboth issued by the ICAI. Those Standards and the Guidance Note require that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance aboutwhether adequate 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 judgement including the assessment of the risks of materialmisstatement of the standalone Ind AS 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 controlssystem over financial reporting.

Meaning of Internal Financial Controls Over Financial Reporting

A company’s internal financial control over financial reporting is a processdesigned to provide reasonable assurance regarding the reliability of financial reportingand the preparation of standalone Ind AS financial statements for external purposes inaccordance with generally accepted accounting principles. A company’s internalfinancial control over financial reporting includes those policies and procedures that (1)pertain to the maintenance of records that in reasonable detail accurately and fairlyreflect the transactions and dispositions of the assets of the company;(2) providereasonable assurance that transactions are recorded as necessary to permit preparation ofstandalone Ind AS financial statements in accordance with generally accepted accountingprinciples and that receipts and expenditures of the company are being made only inaccordance with authorisations of management and directors of the company; and (3) providereasonable assurance regarding prevention or timely detection of unauthorised acquisitionuse or disposition of the company’s assets that could have a material effect on thefinancial 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.

Opinion

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 2018 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting 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 16 2018 Date : May 16 2018