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Dishman Carbogen Amcis Ltd.

BSE: 540701 Sector: Health care
NSE: DCAL ISIN Code: INE385W01011
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OPEN 121.60
PREVIOUS CLOSE 120.75
VOLUME 3509
52-Week high 259.50
52-Week low 109.45
P/E
Mkt Cap.(Rs cr) 1,915
Buy Price 122.10
Buy Qty 143.00
Sell Price 122.45
Sell Qty 1.00
OPEN 121.60
CLOSE 120.75
VOLUME 3509
52-Week high 259.50
52-Week low 109.45
P/E
Mkt Cap.(Rs cr) 1,915
Buy Price 122.10
Buy Qty 143.00
Sell Price 122.45
Sell Qty 1.00

Dishman Carbogen Amcis Ltd. (DCAL) - Auditors Report

Company auditors report

To the Members of Dishman Carbogen Amcis Limited Report on the Audit of the StandaloneInd AS Financial Statements

OPINION

We have audited the accompanying standalone Ind AS financial statements of DishmanCarbogen Amcis Limited ("the Company") which comprise the Balance Sheet as atMarch 31 2021 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 thenended and notes to the standalone Ind AS financial statements including a summary ofsignificant accounting policies and other explanatory information (hereinafter referred toas "standalone Ind AS financial statements").

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 Companies Act 2013 ("the Act") in the manner so required andgive a true and fair view in conformity with the accounting principles generally acceptedin India including the Indian Accounting Standards ("Ind AS") prescribed undersection 133 of the Act of the state of affairs of the Company as at March 31 2021 itsloss (including other comprehensive income) changes in equity and its cash flows for theyear ended on that date.

BASIS FOR OPINION

We conducted our audit in accordance with Standards on Auditing (SAs) specified undersection 143(10) of the Act. Our responsibilities under those Standards are furtherdescribed in the Auditor's Responsibilities for the Audit of the Standalone Ind ASFinancial 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 on thestandalone Ind AS financial statements.

EMPHASIS OF MATTER

We draw attention to the following matters in the notes to the standalone Ind ASfinancial statements:

(a) Note 28 of the standalone Ind AS financial statements detailing the accountingtreatment relating to the Scheme involving merger of Dishman Pharmaceuticals and ChemicalsLimited and Dishman Care Limited with Dishman Carbogen Amcis Limited which has beenaccounted in the year 2016-17 under the "Purchase Method" as per the thenprevailing Accounting Standard 14 – Accounting for Amalgamation in compliance withthe Scheme of Amalgamation pursuant to Sections 391 to 394 of Companies Act 1956 approvedby the Hon'ble High Court of Gujarat. In accordance with the Scheme the Company hadrecognized Goodwill on Amalgamation amounting to 1326.86 crores which is amortised overits useful life. This accounting treatment is different from that prescribed under IndianAccounting Standard 103 - Business Combination (Ind AS 103). Had the goodwill not beenamortised as required under Ind AS 103 the Depreciation and Amortisation expense as wellas Loss before tax for the year ended March 31 2021 would have been lower by 88.45crores.

(b) Notes 39 of the standalone Ind AS financial statements explaining the impact ofCOVID–19 nationwide lockdown and Note 40 in relation to certain audit observationsissued by Swissmedic and European Directorate for the Quality of Medicines &Healthcare (EDQM) on account of joint inspection carried out by them for the Company'smanufacturing plant at Bavla and certain Certificate of Suitability (CEPs) were alsosuspended. As a result Company's operations production revenue and profitability wereadversely impacted during the year ended March 31 2021. The Company continues to monitorthe impact of COVID-19 on recoverability of receivables / advances assessment ofimpairment of goodwill and intangibles investments and inventory.

(c) Note 41 ofthe standalone IndAS financial statements which states that due tochange brought in by Finance Act 2021 the depreciation on goodwill will not be availableto the Company from Assessment Year 2021-2022 onwards. Due to this the balance ofgoodwill amounting to 275.51 crores as per tax books is treated as a non-deductibletemporary difference. As a result of that the deferred tax liability on the sameamounting to 96.28 crores has been recognized during the year ended March 31 2021.

Our opinion is not modified in respect of these matters.

KEY AUDIT MATTERS

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

Impairment assessment of the carrying value of Goodwill Our audit procedures on testing for goodwill impairment includes the following:
(Refer Note 3 to the standalone Ind AS financial statements) The Company carries goodwill amounting to 774.03 crores in its standalone Ind AS financial statements as at March 31 2021 which was recorded due to the merger of Dishman Pharmaceuticals and Chemical Limited and Dishman Care Limited into Dishman Carbogen Amcis Limited. • Obtained an understanding from the management with respect to process and controls followed by the Company to perform annual impairment test related to goodwill and performed necessary audit procedures to test the operating effectiveness of the relevant internal controls during the year ended and as of March 31 2021;
In terms with Ind AS 36 goodwill is tested for impairment annually at the CGU level whereby the carrying amount of the CGU (including goodwill) is compared with the recoverable amount of the CGU. However the goodwill generated on the merger is amortised over 15 years. The recoverable amount is determined on the basis of the value in use which is the present value of future cash flows of the CGU using discounted cash flow model (‘Model') which involves estimates pertaining to expected business and earnings forecasts and key assumptions including those related to discount and long-term growth rates. These estimates require high degree of management judgment resulting in inherent subjectivity. • 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 judgment and assumption involved in estimating future cash flows using 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; and comparing past projections with actual results including discussions with management relating to these projections;
• Considered the impairment testing valuation report for goodwill outstanding in standalone books carried on by independent valuer;
• Considered the fair value of Investment in subsidiaries based on the valuation certified by the subsidiary auditors;
• Performed sensitivity analysis on these key assumptions to assess potential impact of downside in the underlying cash flow forecasts and assessed the possible mitigating actions identified by management; and
• Evaluated the appropriateness of the disclosure in the standalone Ind AS 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 include the following :
(Refer Note 4(a) to the standalone Ind AS financial statements) The Company has equity investments in its unlisted wholly owned subsidiaries amounting to 2759.09 crores as at March 31 2021 ("Investments") which are carried at cost (net of provision) as per Ind AS 27 on ‘Separate Financial Statements'. • Obtained understanding of design and implementation of relevant internal controls with respect to Investments including its impairment assessment;
We considered the valuation of such Investments to be significant to the audit because of the materiality of the Investments to the standalone Ind AS financial statements of the Company. • Performed necessary audit procedures to test the operating effectiveness of the relevant internal controls with respect to valuation of Investments including impairment assessment thereof during the year ended as of March 31 2021;
The management assesses at least annually the existence of impairment indicators of each Investments. The Management has assessed the impairment of its Investments by reviewing the business forecasts of subsidiaries using discounted cash flow valuation model (the "Model"). The recoverable amounts of the Investments is determined based on the management's estimates of future cash flows and their judgment with respect to the investees' performance including key assumptions related to discount and long-term growth rates. • Performed the following substantive procedures:
Accordingly the impairment assessment of Investments was determined to be a key audit matter in our audit of the standalone Ind AS financial statements. Obtained management's evaluation of impairment analysis including future cash flows used by the management in the model to compute the recoverable value/ value in use.
Obtained the valuation report on Impairment testing of goodwill for consolidation covering the investments in standalone books.
Obtained the subsidiary auditors Impairment testing working file certifying the fair value of Investment at various subsidiaries.
Compared the impairment working certified by the independent valuer with the carrying value of Investments in standalone books of accounts to check whether any impairment is necessary.
Evaluated the appropriateness of the disclosure in the standalone Ind AS financial statements and assessed the completeness and mathematical accuracy.
Evaluation of uncertain tax positions Our audit procedures include the following substantive procedures:
(Refer Note 2.16 and Note 29 to the standalone Ind AS 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. This 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 detailed list of matters under dispute and other uncertain tax positions as at March 31 2021;
• Read and evaluated select key correspondences external legal opinions / consultations by the management;
• 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 Our audit procedures included but not limited to:
(Refer Note 25(D) to the standalone Ind AS financial statements) The Company hedges its foreign currency risk and interest rate risk through derivative instruments and applies hedge accounting principles for derivative instruments as prescribed by Ind AS 109. Asset pertaining to derivative instruments as at March 31 2021 is amounting to 53.21 crores and credit balance of Cash Flow Hedge Reserve of 27.12 crores as on that date. • Obtained understanding and evaluated the design and implementation of the processes and internal controls relating to accounting and valuation of hedge instruments;
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 recognized in the standalone statement of profit and loss when hedges mature and / or when the hedge item occurs. • Tested the Company's key internal financial controls for derivative financial instruments and hedge accounting;
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 complexity and management judgment and are subject to an inherent risk of error. • 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
• 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 otherinformation comprises the information included in the Directors Report and its Annexuresand Management Discussion and Analysis but does not include the standalone Ind ASfinancial statements consolidated Ind AS financial statements and our auditor's reportthereon.

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

In connection with our audit of the standalone Ind AS financial statements ourresponsibility is to read the other information and in doing so consider whether theother information is materially inconsistent with the standalone Ind AS financialstatements or our knowledge obtained in the audit or otherwise appears to be materiallymisstated.

If based on the work we have performed we conclude that there is a materialmisstatement of this other information we are required to report that fact. We havenothing to report in this regard.

RESPONSIBILITIES OF MANAGEMENT AND THOSE CHARGED WITH GOVERNANCE FOR THE STANDALONE INDAS FINANCIAL STATEMENTS

The Company's Board of Directors is responsible for the matters stated in section134(5) of the Act with respect to the preparation of these standalone Ind AS financialstatements 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 inaccordance with the accounting principles generally accepted in India including Ind ASprescribed under section 133 of the Act read with the Companies (Indian AccountingStandards) Rules 2015 as amended. This responsibility also includes maintenance ofadequate accounting records in accordance with the provisions of the Act for safeguardingof the assets of the Company and for preventing and detecting frauds and otherirregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the standalone Ind AS financial statements that give atrue 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 forassessing the Company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessmanagement either intends to liquidate the Company or to cease operations or has norealistic alternative but to do so.

Those Board of Directors are also responsible for overseeing the Company's financialreporting 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 ASfinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of this standalone Ind AS financial statements. As part of an audit inaccordance with SAs we exercise professional judgment and maintain professionalskepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the standalone Ind ASfinancial statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrol.

• Obtain an understanding of internal control relevant to the audit in order todesign 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 hasadequate internal financial controls with reference to financial statements in place andthe operating effectiveness of such controls.

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

• Conclude on the appropriateness of management's use of the going concern basisof accounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe standalone Ind AS financial statements or if such disclosures are inadequate tomodify our opinion. Our conclusions are based on the audit evidence obtained up to thedate of our auditor's report. However future events or conditions may cause the Companyto cease to continue as a going concern.

• Evaluate the overall presentation structure and content of the standalone IndAS financial statements including the disclosures and whether the standalone Ind ASfinancial statements represent the underlying transactions and events in a manner thatachieves fair presentation.

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

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

From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the standalone Ind AS financialstatements of the current year and are therefore the key audit matters. We describe thesematters in our auditor's report unless law or regulation precludes public disclosure aboutthe matter or when in extremely rare circumstances we determine that a matter should notbe communicated in our report because the adverse consequences of doing so wouldreasonably 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 givein "Annexure 1" a statement on the matters specified in paragraphs 3 and 4 ofthe 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 (including Other ComprehensiveIncome) the Statement of Changes in Equity and the Statement of Cash Flows dealt with bythis report are in agreement with the books of account;

d. In our opinion the aforesaid standalone Ind AS financial statements comply with theInd AS prescribed under section 133 of the Act read with the Companies (Indian AccountingStandards) Rules 2015 as amended;

e. On the basis of the written representations received from the directors as on March31 2021 and taken on record by the Board of Directors none of the directors isdisqualified as on March 31 2021 from being appointed as a director in terms of section164(2) of the Act;

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

g. With respect to the other matter to be included in the Auditor's Report inaccordance with the requirements of section 197(16) of the Act:

In our opinion and to the best of our information and according to the explanationsgiven to us the remuneration paid/ provided by the Company to its directors during theyear is in accordance with the provisions of section 197 of the Act;

h. With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 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 on ContingentLiabilities 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 Notes 12 and 25 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.

ANNEXURE 1 TO THE INDEPENDENT AUDITOR'S REPORT

[Referred to in paragraph 1 under ‘Report on Other Legal and RegulatoryRequirements' section in the Independent Auditor's Report of even date to the members ofDishman Carbogen Amcis Limited on the standalone Ind AS financial statements for the yearended March 31 2021]

Based on the audit procedures performed for the purpose of reporting a true and fairview on the standalone Ind AS financial statements of the Company and taking intoconsideration the information and explanations given to us and the books of account andother records examined by us in the normal course of audit we report that:

(i)

(a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.

(b) The Company has a regular programme of physical verification of the fixed assetswhich in our opinion is reasonable having regard to the size of the Company and thenature of its assets. Pursuant to the program certain fixed assets were physicallyverified by the management during the year and no material discrepancies were noticed onsuch verification.

(c) The title deeds of immovable properties other than self-constructed propertiesrecorded as Property Plant and Equipment in the books of account of the Company as onMarch 31 2021 are held in the name of the erstwhile Dishman Pharmaceuticals and ChemicalsLimited. Subsequent to merger the transfer of immovable properties from DishmanPharmaceuticals 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 blockof 97.83 Crores the lease deed has been executed but not registered with the relevantauthorities.

(ii) The inventory except goods-in-transit and stocks lying with third partieshave been physically verified by the management during the year. In our opinion thefrequency of verification is reasonable. For stocks lying with third parties at the yearend these have substantially been confirmed by them. No material discrepancies werenoticed on physical verification carried out during the year.

(iii) The erstwhile Dishman Pharmaceuticals and Chemicals Limited has grantedunsecured loan in earlier years to one company covered in the register maintained undersection 189 of the act whose outstanding balance as on March 31 2021 is 38.72 crores.Further the company has not granted during the year any loan secured or unsecured tocompanies firms Limited Liability

Partnerships or other parties covered in the register maintained under section 189 ofthe Act.

(a) The terms and conditions of the aforesaid loans granted by the Company are notprejudicial to the interest of the Company.

(b) The schedule of repayment of principal and payment of interest in respect of suchloans has been stipulated. As per the terms of agreement no repayment of principal orinterest was due during the year.

(c) In respect of the aforesaid loans there is no overdue amount as at year end.

(iv) The Company has complied with the provisions of sections 185 and 186 of theAct in respect of grant of loans making investments and providing guarantees andsecurities as applicable.

(v) In our opinion the Company has not accepted any deposits from the publicwithin the provisions of sections 73 to 76 of the Act and the rules framed there under.Accordingly the provisions of clause 3(v) of the Order are not applicable.

(vi) The maintenance of cost records has been specified by the Central Governmentunder subsection (1) of section 148 of the Act and rules thereunder. We have broadlyreviewed such records and are of the opinion that prima facie the prescribed accounts andrecords have been made and maintained. We have not however made a detailed examinationof the records with a view to determine whether they are accurate or complete.

(vii)

(a) The Company is generally regular in depositing with appropriate authoritiesundisputed statutory dues including provident fund employees' state insurance incometax goods and services tax (GST) customs duty cess and any other material statutorydues applicable to it. During the year 2017-18 sales tax value added tax service taxand duty of excise subsumed in GST and are accordingly reported under GST.

No undisputed amounts payable in respect of provident fund employees' state insuranceincome tax GST customs duty cess and any other material statutory dues applicable toit were outstanding at the year end for a period of more than six months from the datethey became payable.

(b) There are no dues with respect to income tax sales tax service tax value addedtax GST customs duty excise duty which have not been deposited on account of anydispute except as follows:

Nature of statue Nature of Dues Amount (in Period which the Forum where dispute is
Crores) Amount Relates pending
Central Excise Act 1944 Excise Duty and 1.50 2006-07 Central Excise and Service
Service Tax 2009-10 Tax Appellate Tribunal
2013-14
2017-18
4.95 2006-07 Commissioner of Central
To Excise (Appeals)
2016-17
Central Sales Tax Act Sales tax 0.24 2001-02 Joint Commissioner
1956 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
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 - 14.32 FY 2005-06 High Court of Gujarat
143(3).r.w.s.144
Income Tax Act 1961 Demand U/S - 3.04 FY 2005-06 High Court of Gujarat
271(1) ( C )
Income Tax Act 1961 Demand U/S - 14.28 FY 2006-07 High Court of Gujarat
143(3).r.w.s.144
Income Tax Act 1961 Demand U/S - 4.73 FY 2006-07 High Court of Gujarat
271(1) ( C )
Income Tax Act 1961 Demand U/S - 8.41 FY 2007-08 High Court of Gujarat
143(3).r.w.s.144
Income Tax Act 1961 Demand U/S - 0.24 FY 2008-09 High Court of Gujarat
143(3).r.w.s.144
Income Tax Act 1961 Demand U/S - 0.47 FY 2008-09 Income Tax Appellate
271(1) ( C ) Tribunal
Income Tax Act 1961 Demand U/S - 1.52 FY 2009-10 Income Tax Appellate
143(3).r.w.s.147 Tribunal and Commissioner
of Income Tax (Appeals)
Income Tax Act 1961 Demand U/S - 27.07 FY 2010-11 Commissioner of Income Tax
143(3).r.w.s.147 (Appeals)
Income Tax Act 1961 Demand U/S - 41.86 FY 2011-12 Commissioner of Income Tax
143(3).r.w.s.147 (Appeals)
Income Tax Act 1961 Demand U/S - 26.68 FY 2012-13 Commissioner of Income Tax
143(3).r.w.s.144 (Appeals)
Income Tax Act 1961 Demand U/S - 13.89 FY 2013-14 Commissioner of Income Tax
143(3).r.w.s.144 (Appeals)
Income Tax Act 1961 Demand U/S – 0.005 FY 2014-15 Commissioner of Income Tax
143(3) r.w.s 144C (Appeals)
Income Tax Act 1961 Demand U/S – 20.71 FY 214-15 Commissioner of Income Tax
143(3) r.w.s. 144C (Appeals)

Out of above amount paid under protest by the Company for income tax is 56.01 Crores.

(viii) During the year the Company has not defaulted in repayment of loans orborrowings to financial institutions. The Company has not borrowed any money fromgovernment nor has it issued any debentures.

(ix) The Company did not raise moneys by way of initial public offer or furtherpublic offer (including debt instruments). In our opinion the term loans were applied forthe purposes for which the loans were obtained.

(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 fraud by the Company or any fraud 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) Managerial remuneration has been paid / provided in accordance with therequisite approvals mandated by the provisions of section 197 read with Schedule V to theAct.

(xii) In our opinion the Company is not a Nidhi Company. Therefore clause 3(xii)of the Order is not applicable to the Company.

(xiii) All transactions entered into by the Company with the related parties are incompliance with sections 177 and 188 of Act where applicable and the details have beendisclosed in the standalone Ind AS financial statements as required by the applicableaccounting standards.

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

(xv) The Company has not entered into any non-cash transactions with directors orpersons connected with them during the year and hence provisions of section 192 of the Actare not applicable.

(xvi) The Company is not required to be registered under section 45-IA of theReserve Bank of India Act 1934.

ANNEXURE 2 TO THE INDEPENDENT AUDITOR'S REPORT

[Referred to in paragraph 2(f) under ‘Report on Other Legal and RegulatoryRequirements' section in our Independent Auditor's Report of even date to the members ofDishman Carbogen Amcis Limited on the standalone Ind AS financial statements for the yearended March 31 2021]

REPORT ON THE INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO FINANCIAL STATEMENTS UNDERCLAUSE _I_ OF SUB SECTION 3 OF SECTION 143 OF THE COMPANIES ACT 2013 _"THEACT"_

We have audited the internal financial controls with reference to financial statementsof Dishman Carbogen Amcis Limited ("the Company") as of March 31 2021 inconjunction with our audit of the standalone Ind AS financial statements of the Companyfor the year ended on 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 with reference to financial statementscriteria established by the Company considering the essential components of internalcontrol stated in the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting (the "Guidance Note") issued by the Institute of Chartered Accountantsof India ("ICAI"). These responsibilities include the design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the orderly and efficient conduct of its business including adherence toCompany's policies the safeguarding of its assets the prevention and detection of fraudsand errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Act.

AUDITORS' RESPONSIBILITY

Our responsibility is to express an opinion on the Company's internal financialcontrols with reference to financial statements based on our audit. We conducted our auditin accordance with the 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 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 about the adequacy ofthe internal financial controls with reference to financial statements and their operatingeffectiveness.

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

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls withreference 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 aprocess designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles. A company's internal financial control withreference to financial statements includes those policies and procedures that (1) pertainto the maintenance of records that in reasonable detail accurately and fairly reflectthe transactions and dispositions of the assets of the company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of financialstatements in accordance with generally accepted accounting principles and that receiptsand expenditures of the company are being made only in accordance with authorisations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised acquisition use or disposition of thecompany's assets that could have a material effect on the financial statements.

INHERENT LIMITATIONS OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO FINANCIALSTATEMENTS

Because of the inherent limitations of internal financial controls with reference tofinancial statements including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected. Also projections of any evaluation of the internal financial controls withreference to financial statements to future periods are subject to the risk that theinternal financial controls with reference to financial statements may become inadequatebecause of changes in conditions or that the degree of compliance with the policies orprocedures may deteriorate.

OPINION

In our opinion the Company has in all material respects adequate internal financialcontrols with reference to financial statements and such internal financial controls withreference to financial statements were operating effectively as at March 31 2021 basedon the internal control with reference to financial statements criteria established by theCompany considering the essential components of internal controls stated in the GuidanceNote issued by the ICAI.

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