To the Members of
EARUM PHARMACEUTICALS LIMITED
Report On the Financial Statements
We have audited the accompanying financial statements of EARUM PHARMACEUTICALS LIMITED(the Company) which comprise the Balance Sheet as at March 31 2020 and theStatement of Profit and Loss for the year then ended and the summary of significantaccounting policies and other explanatory information.
Management's Responsibility for the 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 preparationand presentation of these financial statements that give a true and fair view of thefinancial position financial performance of the Company in accordance with the accountingprinciples generally accepted in India including the Accounting Standards specified underSection 133 of the Act read with Rule 7 of the Companies (Accounts) Rules 2014. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; anddesign implementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the financial statements thatgive a true and fair view and are free from material misstatement whether due to fraud orerror.
Our responsibility is to express an opinion on these financial statements based on ouraudit. While conducting the audit we have taken into account the provisions of the Actthe accounting and auditing standards and matters which are required to be included in theaudit report under the provisions of the Act and the Rules made there under.
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 financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures in the financial statements. The procedures selected depend on the auditor'sjudgment including the assessment of the risks of material misstatement of the financialstatements whether due to fraud or error. In making those risk assessments the auditorconsiders internal financial control relevant to the Company's preparation of thefinancial statements that give a true and fair view in order to design audit proceduresthat are appropriate in the circumstances but not for the purpose of expressing an opinionon whether the Company has an adequate internal financial control system over financialreporting in place and the operating effectiveness of such controls. An audit alsoincludes evaluating the appropriateness of the accounting policies used and thereasonableness of the accounting estimates made by the Company's Board of Directors aswell as evaluating the overall presentation of the financial statements.
We believe that the audit evidence obtained by us is sufficient and appropriate toprovide a basis for our audit opinion on the financial statements.
In our opinion and to the best of our information and according to the explanationsgiven to us the financial statements give the information required by the Act in themanner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India; of the state of the affairs of the company as at3ist March 2020 and its profits for the year ended on that date.
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 subsection (11) of theAct The statement on the matters specified in the paragraphs 3 and 4 of the Order is notapplicable to the company.
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 purpose 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 Statement of Profit and Loss dealt with by this Report are inagreement with the books of account; d. In our opinion the aforesaid financial statementscomply with the Accounting Standards specified under section 133 of the Act read with theRule 7 of the Companies (Accounts) Rules 2014.
e. On the basis of written representations received from the directors as on MARCH 312020 and taken on record by the Board of Directors none of the directors is disqualifiedas on MARCH 31 2020 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 refer to ourseparate report in Annexure-A
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 accordance to the explanation given to us:
i. The company does not have any pending litigation which would impact its FinancialPositions.
ii. The company does not have any long term contracts including derivative contractsfor which there were any material foreseeable losses.
iii. There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company.
Annexure-A to the Auditors' Report
Report on the Internal Financial Controls under Clause (i) of Sub- section 3 of Section143 of the Companies Act 2013
We have audited the Internal Financial Controls over financial reporting of EARUMPHARMACEUTICALS LIMITED (the Company) as of 31 MARCH 2020 in conjunction withour audit of the financial statements of the Company for the year ended on that date.
Management's Responsibility for Internal Financial Controls
The Company's management is responsible for establishing and maintaining 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 safeguarding ofits 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 Act.
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 issued by ICAI and deemedto be prescribed under section 143(10) of the Companies Act 2013 to the extentapplicable to an audit of internal financial controls both applicable to an audit ofInternal Financial Controls and both issued by the Institute of Chartered Accountants ofIndia. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls over financial reporting was established andmaintained and if such controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgment including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls systemover financial reporting.
Meaning of Internal Financial Controls over Financial Reporting
A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedures that (1) pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures of the company are being made only in accordance with authorizations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorized acquisition use or disposition of thecompany's assets that could have a material effect on the financial statements.
Inherent Limitations of Internal Financial Controls over Financial Reporting
Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.
In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at
31 MARCH 2020 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.
For M/s. ] M PATEL & BROS. Chartered Accountants Firm Registration No.:107707W
CA JASHWANT M PATEL Partner Membership No. 030161 Place: Ahmedabad Date: 30/06/2020UDIN : 20030161AAAADW7118
EARUM PHARMACEUTICALS LIMITED
NOTE: 1 SIGNIFICANT ACCOUNTING POLICIES
(a) BASIS OF PREPARATION OF FINANCIAL STATEMENTS:
These financial statements have been prepared to comply with the Generally AcceptedAccounting Principles in India including the Accounting Standards notified under therelevant provisions of the Companies Act 2013. The financial statements are prepared onaccrual basis under the historical cost convention. The financial statements are presentedin Indian Rupees rounded off to the nearest rupees in lakhs unless wherever specificallymentioned otherwise.
(b) USE OF ESTIMATES:
The preparation of financial statement in conformity with Generally Accepted AccountingPrinciples require management to make estimate and assumptions that affect the reportedamount of assets and liabilities and the disclosure of contingent liabilities on the dateof financial statement. Actual result could differ from those estimates. Any revision toaccounting estimates is recognized prospectively in current and future periods.
(c) REVENUE RECOGNITION: Sales are net of excise duty. (d) FIXED ASSETS
The Gross Block of Fixed Assets is shown at historical cost which includes taxes andother identifiable direct Expenses less impairment loss. The cost of fixed assetsincludes the cost of acquisition including freight taxes duties and other identifiabledirect expenses except otherwise specifically excluded and expressed by way of noteattributable to acquisition of assets up to the date the asset put to use.
Depreciation is provided on straight-line method at the rates and in the mannerspecified in Schedule XII of the Companies Act 2013.
Investments are valued at cost
(g) VALUATION OF INVENTORIES:
Items of inventories are measured at lower of cost and net realizable value afterproviding for obsolescence if any except in case of by- products which are valued atnet realizable value. Cost of inventories comprises of cost of purchase cost ofconversion and other costs including manufacturing overheads incurred in bringing them totheir respective present location and condition.
(h) EARNING PER SHARE:
Basic earnings per share are calculated by dividing profit for the year attributable tothe equity shareholder by weighted average number of equity shares outstanding during theyear. The diluted EPS is the same as basic EPS.
(i) PROVISIONS CONTINGENT LIABILITIES AND CONTINGENT
Provisions are recognized in respect of obligations where based on the evidenceavailable their existence at the balance sheet date is considered probable.
Contingent liabilities are shown by way of notes to the accounts in respect ofobligations where based on the evidence available their existence at the Balance Sheetdate is considered not probable.
Any contingent asset is not recognized in the Accounts
G) TREATMENT OF RETIREMENT BENEFITS:
At present there is no eligible employee for payment of Gratuity. Leave encashmentpayable to employees is provided in the accounts on accrual basis.
Income taxes comprises of current & deferred taxes. Current taxes are measured atthe amount expected to be paid to the income tax authorities in accordance with the IncomeTax Act 1961. Deferred income tax reflect the impact of current year timing differencesbetween taxable income and accounting income for the year and reversal of timingdifferences of earlier years. Deferred tax is measured based on the tax rates and the taxlaws enacted or substantially enacted at the balance sheet date. Deferred tax assets arerecognized only to the extent that there is reasonable certainty that sufficient futuretaxable income will be available against which such deferred tax assets can be realized.
(1) BORROWING COSTS
Borrowing costs that are attributable to the acquisition construction or production ofa qualifying asset are capitalized as part of cost of such asset till such time as theasset is ready for its intended use or sale. A qualifying asset is an asset thatnecessarily requires a substantial period of time to get ready for its intended use orsale. All other borrowing costs are recognized as an expense in the period in which theyare incurred.
(m) CONTINGENCIES AND EVENTS OCCURRING AFTER THE
BALANCE SHEET DATE
All contingencies and events occurring after the Balance Sheet date which have amaterial effect on the financial position of the Company are considered for preparing thefinancial statements.
NOTE: 2 Additional Information to the Financial Statements:
1.The previous year figures have been regrouped/ reclassified wherever Necessary toconfirm with the figures of current year.
2.In the opinion of the Board and to the best of their knowledge and belief the valueon realization of the current Assets Loans and Advances in the ordinary course of thebusiness will not be less than the amount stated in the Balance Sheet.
3.Micro and Small Scale Business Enterprises :
The management has initiated the process on identifying enterprises which have beenproviding goods and services to the company and which qualify under the definition ofmicro and small enterprises as defined under Micro Small and Medium EnterpriseDevelopment Act 2006. Accordingly the disclosures requirement here under is notfurnished.
4.Debit & Credit balances of outside parties (Including Debtors Creditors LoansGiven and Loan taken) appearing in Balance Sheet is subject to confirmation by therespective parties.
5.The Company has taken unsecured loans/deposits from Directors Shareholders and otherparties as per the stipulations of loan/credit facilities taken from Bank.
6.Quantity of inventories is based upon physical verification by the management andvaluation is based on details of cost and realizable value (wherever applicable)considering the quality and other relevant factors ascertained by management. Thequantities of inventories sales and purchases are taken based on details worked out fromthe bills and the stock records maintained by the company (wherever applicable).
7.Wherever the sufficient supporting is not available for the expenditure incurred bythe company we have relied on the explanations given by the management.
8.Related Parties: As per AS-18 issued by ICAI there are no related party transactionsduring the year.
9.During the year the company does not have any foreign transactions/ exchange earningsor loss.
|For and on behalf of the Board of || |
|EARUM PHARMACEUTICALS LIMITED |
|BHUMISHTH ||PAYAL PATEL |
|PATEL || |
|(Director) ||(Director) |
For M/s. JM PATEL & BROS. Chartered Accountants Firm Registration No.:107707W
CA JASHWANT M PATEL
UDIN : 20030161AAAADW7118