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Fermenta Biotech Ltd.

BSE: 506414 Sector: Health care
NSE: N.A. ISIN Code: INE225B01021
BSE 00:00 | 31 Mar 212.75 35.45
(19.99%)
OPEN

187.85

HIGH

212.75

LOW

180.25

NSE 05:30 | 01 Jan Fermenta Biotech Ltd
OPEN 187.85
PREVIOUS CLOSE 177.30
VOLUME 29172
52-Week high 337.00
52-Week low 151.00
P/E 10.58
Mkt Cap.(Rs cr) 626
Buy Price 212.75
Buy Qty 1205.00
Sell Price 205.00
Sell Qty 2.00
OPEN 187.85
CLOSE 177.30
VOLUME 29172
52-Week high 337.00
52-Week low 151.00
P/E 10.58
Mkt Cap.(Rs cr) 626
Buy Price 212.75
Buy Qty 1205.00
Sell Price 205.00
Sell Qty 2.00

Fermenta Biotech Ltd. (FERMENTABIOTEC) - Auditors Report

Company auditors report

To The Members of DIL Limited

Report on the Audit of the Standalone Financial Statements

Qualified Opinion

We have audited the accompanying standalone financial statements of DIL Limited("the Company") which comprise the Balance Sheet as at March 31 2019 and theStatement of Profit and Loss (including Other Comprehensive Income) the Cash FlowStatement and the Statement of Changes in Equity for the year then ended and a summary ofsignificant accounting policies and other explanatory information.

In our opinion and to the best of our information and according to the explanationsgiven to us except for the possible effects of the matter described in the Basis forQualified Opinion section below the aforesaid standalone 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 Indian Accounting Standardsprescribed under section 133 of the Act read with the Companies (Indian AccountingStandards) Rules 2015 as amended ("Ind AS") and other accounting principlesgenerally accepted in India of the state of affairs of the Company as at March 31 2019and its loss total comprehensive loss its cash flows and the changes in equity for theyear ended on that date.

Basis for Qualified Opinion

The Company has given share application money of Rs. 597.00 Lakhs (as at March 312018: Rs. 597.00 Lakhs) to an entity whose accumulated losses (other equity) at Rs.4635.38 Lakhs substantially exceed its equity share capital of Rs. 1920.55 Lakhs as at31st March 2018 as per the latest available audited financial statements as at for theyear ended 31st March 2018. Further the independent auditors of that entity in theirmodified audit report dated 30th May 2018 on the aforesaid financial statements haveinter-alia reported that the entity's operations have been suspended since December 2006and have also expressed their inability to comment whether that entity can be consideredas a "Going Concern" and whether its assets would be adequate to meet itsliabilities [See note 49(b) to the standalone financial statements]. For the reasonsstated in the said note 49(b) the Management of the Company believes that no impairmentis deemed necessary. Having regard to the foregoing and in the absence of sufficientappropriate audit evidence we are unable to comment whether the aforesaid outstandingshare application money would be recoverable including the consequential impact if anyof such impairment that may be required to be made in the standalone financial statements.This matter was also qualified in our report on the standalone financial statements forthe year ended March 31 2018.

We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder section 143(10) of the Act. Our responsibilities under those Standards are furtherdescribed in the Auditor's Responsibility for the Audit of the Standalone FinancialStatements section of our report. We are independent of the Company in accordance with theCode of Ethics issued by the Institute of Chartered Accountants of India (ICAI) togetherwith the ethical requirements that are relevant to our audit of the standalone financialstatements under the provisions of the Act and the Rules made thereunder and we havefulfilled our other ethical responsibilities in accordance with these requirements and theICAI's Code of Ethics. We believe that the audit evidence obtained by us is sufficient andappropriate to provide a basis for our qualified opinion on the standalone financialstatements.

Emphasis of Matter

We draw attention to note 1A on the standalone financial statements regarding theCompany having filed an application seeking sanction of the scheme of amalgamation ofFermenta Biotech Limited its subsidiary with the Company to National Company LawTribunal Mumbai with the appointed date of April 01 2018. As stated in the said note 1Athe above Scheme shall be effective post receipt of required approvals.

Our opinion is not modified in respect of this matter.

Key Audit Matters

Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone financial statements of the current period. Wehave determined that there are no other key audit matters to communicate in our reportbeyond the matter addressed in the Basis for Qualified Opinion section of our report.

Information Other than the Financial Statements and Auditor's Report Thereon

The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Annual Report for exampleperformance highlights management discussion & analysis board's report etc. butdoes not include the consolidated financial statements standalone financial statementsand our auditor's report thereon.

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

In connection with our audit of the standalone financial statements our responsibilityis to read the other information and in doing so consider whether the other informationis materially inconsistent with the standalone financial statements or our knowledgeobtained during the course of our audit or otherwise appears to be materially misstated.

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.

Management's Responsibility for the Standalone 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 financial statementsthat give a true and fair view of the financial position financial performance includingother comprehensive income cash flows and changes in equity of the Company in accordancewith the Ind AS and other accounting principles generally accepted in India. 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 standalone financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.

In preparing the standalone 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 Responsibility for the Audit of the Standalone Financial Statements

Our objectives are to obtain reasonable assurance about whether the standalonefinancial 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 these standalone financial statements.

As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the standalone financialstatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentional omissions misrepresentations or the override of internal control.

Obtain an understanding of internal financial 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 system in place and the operating effectiveness ofsuch controls.

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

Conclude on the appropriateness of management's use of the going concern basis ofaccounting 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 financial statements or if such disclosures are inadequate to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor's report. However future events or conditions may cause the Company to cease tocontinue as a going concern.

Evaluate the overall presentation structure and content of the standalone financialstatements including the disclosures and whether the standalone financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.

Materiality is the magnitude of misstatements in the standalone financial statementsthat individually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the standalone financial statements may be influenced. Weconsider quantitative materiality and qualitative factors in (i) planning the scope of ouraudit work and in evaluating the results of our work; and (ii) to evaluate the effect ofany identified misstatements in the standalone financial statements.

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 financial statementsof the current period and are therefore the key audit matters. We describe these mattersin our auditor's report unless law or regulation precludes public disclosure about thematter or when in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

1. As required by Section 143(3) of the Act based on our audit we report that: a) Wehave sought and except for the matter described in the Basis for Qualified Opinion sectionabove obtained all the information and explanations which to the best of our knowledgeand belief were necessary for the purposes of our audit. b) In our opinion except for thepossible effects of the matter described in the Basis for Qualified Opinion section aboveproper books of account as required by law have been kept by the Company so far as itappeears from our examination of those books. c) The Balance Sheet the Statement ofProfit and Loss including Other Comprehensive Income the Cash Flow Statement andStatement of Changes in Equity dealt with by this Report are in agreement with the booksof account. d) In our opinion except for the possible effects of the matter described inthe Basis for Qualified Opinion section above the aforesaid standalone financialstatements comply with the Ind AS specified under Section 133 of the Act. e) The matterdescribed in the Basis for Qualified Opinion section above in our opinion may have anadverse effect on the functioning of the Company. f ) On the basis of the writtenrepresentations received from the directors as on March 31 2019 taken on record by theBoard of Directors none of the directors is disqualified as on March 31 2019 from beingappointed as a director in terms of Section 164 (2) of the Act. g) The qualificationrelating to the maintenance of accounts and other matters connected therewith are asstated in the Basis for Qualified Opinion section above.

h) 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". Our report expresses a qualified opinion on theadequacy and operating effectiveness of the Company's internal financial controls overfinancial reporting for the reasons stated therein. i) With respect to the other mattersto be included in the Auditor's Report in accordance with the requirements of section197(16) of the Act as amended in our opinion and to the best of our information andaccording to the explanations given to us the remuneration paid by the Company to itsdirectors during the year is in accordance with the provisions of section 197 of the Act.j) With respect to the other matters to be included in the Auditor's Report in accordancewith Rule 11 of the Companies (Audit and Auditors) Rules 2014 as amended in our opinionand to the best of our information and according to the explanations given to us: i. TheCompany has disclosed the impact of pending litigations on its financial position in itsstandalone financial statements – See Note 50 to the standalone financial statements.ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses. iii. There has been no delay intransferring amounts required to be transferred to the Investor Education and ProtectionFund by the Company.

2. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government in terms of Section 143(11) of the Act we give in"Annexure B" a statement on the matters specified in paragraphs 3 and 4 of theOrder.

For DELOITTE HASKINS & SELLS LLP
Chartered Accountants
(Firm's Registration No. 117366W/W-100018)
Rajesh K. Hiranandani
Place: Mumbai Partner
Date: May 24 2019 (Membership No. 36920)

Annexure "A" to the Independent Auditor's Report

(Referred to in paragraph 1 (h) under ‘Report on Other Legal and RegulatoryRequirements' of our report of even date to the members of DIL Limited)

Report on theInternal FinancialControls OverFinancial 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 DIL Limited("the Company") as of March 31 2019 in conjunction with our audit of thestandalone 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. These responsibilities includethe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to company's policies the safeguarding of its assets the preventionand detection of frauds and errors the accuracy and completeness of the accountingrecords and the timely preparation of reliable financial information as required underthe Companies Act 2013.

Auditor's Responsibility

Our responsibility is to express an opinion on the internal financial controls overfinancial reporting of the Company based on our audit. We conducted our audit inaccordance with the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting (the "Guidance Note") issued by the Institute of Chartered Accountantsof India and the Standards on Auditing prescribed under Section 143(10) of the CompaniesAct 2013 to the extent applicable to an audit of internal financial controls. ThoseStandards and the Guidance Note require that we comply with ethical requirements and planand perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls over financial reporting was established and maintained and if suchcontrols 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 judgement 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 qualified audit opinion on the Company's internal financialcontrols system over 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 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 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.

Basis for Qualified opinion

According to the information and explanations given to us and based on our audit amaterial weakness has been identified in the Company's internal financial controls overfinancial reporting in respect of the assessment of impairment in the carrying value ofshare application money given wherein the Company does not have relevant internalfinancial controls in place which could potentially result in recognising this financialasset at a value more than its recoverable amount and consequential understatement of lossand overstatement of other equity as at March 31 2019. A ‘material weakness' is adeficiency or a combination of deficiencies in internal financial control over financialreporting such that there is a reasonable possibility that a material misstatement of thecompany's annual or interim financial statements will not be prevented or detected on atimely basis.

Qualified Opinion

In our opinion to the best of our information and according to the explanations givento us except for the possible effects of the material weakness described in Basis forQualified Opinion paragraph above on the achievement of the objectives of the controlcriteria the Company has maintained in all material respects adequate internalfinancial controls over financial reporting and such internal financial controls overfinancial reporting were operating effectively as of March 31 2019 based on the internalcontrol over financial reporting criteria established by the Company considering theessential components of internal control stated in the Guidance

Note on Audit of Internal Financial Controls Over Financial Reporting issued by theInstitute of Chartered Accountants of India.

We have considered the material weakness identified and reported above in determiningthe nature timing and extent of audit tests applied in our audit of the standalonefinancial statements of the Company for the year ended March 31 2019 and the materialweakness has affected our opinion on the said standalone financial statements of theCompany and we have issued a qualified opinion on the standalone financial statements.

For DELOITTE HASKINS & SELLS LLP
Chartered Accountants
(Firm's Registration No. 117366W/W-100018)
Rajesh K. Hiranandani
Place: Mumbai Partner
Date: May 24 2019 (Membership No. 36920)

Annexure "B" to the Independent Auditor's Report

(Referred to in paragraph 2 under ‘Report on Other Legal and RegulatoryRequirements' section of our report of even date to the members of DIL Limited)

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

(b) The fixed assets were physically verified during the year by the Management of theCompany in accordance with a regular programme of verification which in our opinionprovides for physical verification of all the fixed assets at reasonable intervals.According to the information and explanation given to us no material discrepancies werenoticed on such verification.

(c) According to the information and explanations given to us and the records examinedby us and based on the examination of the registered indenture and other documents andwhere the title deeds have been pledged during the year and in the previous year assecurity for loans given to the Company copies of the registered indenture and otherdocuments duly acknowledged by the lenders provided to us by the Management of theCompany we report that the title deeds comprising all the immovable properties of landand buildings disclosed under ‘Property plant and equipment' and ‘InvestmentProperty' in the standalone financial statements are held in the name of the Company asat the balance sheet date except as described below: (Rs. In Lakhs)

Particulars As at March 31 2019 Remarks
Cost or deemed cost Carrying amount
Freehold land Located at Village Takwe (Budruk) Tal – Maval District - Pune admeasuring 21.39 Acres 8.06 8.06 The land is held in Trust in the name of the Managing Director and one of the directors of the Company and which has been confirmed by them as at the year end.

(ii) The Company does not have any inventory and hence reporting under clause 3(ii) ofthe Order is not applicable. (iii) According to the information and explanations given tous the Company has granted unsecured loans aggregating Rs.37.00 Lakhs repayable on demandto a Company which is an associate of the Company covered in the register maintainedunder Section 189 of the Companies Act 2013 in respect of which:

(a) The terms and conditions of the grant of such loan are in our opinion primafacie not prejudicial to the interest of the Company.

(b) The schedule of repayment of principal and payment of interest has not beenstipulated and in the absence of such schedule we are unable to comment on the regularityof the repayments or receipts of principal amounts and interest.

(c) As stated above the schedule of repayment of principal and payment of interest isnot stipulated. The Company has as at the year end made an allowance to fully impair theloan and as explained to us the Company is not taking any steps for recovery of theprincipal and interest.

According to the information and explanations given to us apart from the above theCompany has not granted loans secured or unsecured to firms Limited LiabilityPartnerships or other parties covered in the register maintained under section 189 of theCompanies Act 2013.

(iv) In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of section 186 of the Companies Act 2013 inrespect of grant of loans. The Company has not given any guarantee and has not made anyinvestments covered under section 186 of the Companies Act 2013 and has not granted anyloan covered under section 185 of the Companies Act 2013. (v) In our opinion andaccording to the information and explanations given to us the Company has not acceptedany deposit to which the provisions of sections 73 to 76 or any other relevant provisionsof the Companies Act 2013 and the Companies (Acceptance of Deposits) Rules 2014 asamended are applicable and hence reporting under clause 3(v) of the Order is notapplicable.

(vi) The maintenance of cost records has not been specified by the Central Governmentunder section 148(1) of the Companies Act 2013.

(vii) According to the information and explanations given to us in respect ofstatutory dues: (a) The Company has generally been regular in depositing undisputedstatutory dues including Provident Fund Employees' State Insurance Income-tax Goodsand Services Tax and other material statutory dues applicable to it with the appropriateauthorities.

(b) There were no undisputed amounts payable in respect of Provident Fund Employees'State Insurance Income-tax Goods and Services Tax and other material statutory dues inarrears as at March 31 2019 for a period of more than six months from the date theybecame payable.

(c) According to the records of the Company the dues of Sales Tax and Service Tax onaccount of disputes as on March 31 2019 are given below:

Statute Nature of Dues Forum where dispute is pending Period to which the amount relates Amount involved Rs. ( I n Lakhs)* Amount paid under protest (Rs.I n Lakhs)
(1) (2) (3) (4) (5) (6)
The Gujarat Sales Tax Act Sales tax and penalty Sales Tax Appellate Tribunal 1992-1994 4.63 -
Central Excise Act 1944 Service tax and penalty High Court Bombay 2000-2001 18.75 3.75

*Net of amount paid under protest disclosed in column (6)

(viii) In our opinion and according to the information and explanations given to usthe Company has not defaulted in the repayment of loans or borrowings to financialinstitutions and banks. The Company has not taken any loans or borrowings from governmentand has not issued any debentures.

(ix) In our opinion and according to the information and explanations given to usmoney raised by way of the term loans have been applied by the Company during the year forthe purposes for which they were raised. The Company has not raised money by way ofinitial public offer or further public offer (including debt instruments).

(x) To the best of our knowledge and according to the information and explanationsgiven to us no fraud by the Company and no material fraud on the Company by its officersor employees has been noticed or reported during the year.

(xi) In our opinion and according to the information and explanations given to us theCompany has paid / provided managerial remuneration in accordance with the requisiteapprovals mandated by the provisions of section 197 read with Schedule V to the CompaniesAct 2013.

(xii) The Company is not a Nidhi Company and hence reporting under clause 3(xii) of theOrder is not applicable.

(xiii) In our opinion and according to the information and explanations given to usthe Company is in compliance with sections 177 and 188 of the Companies Act 2013 whereapplicable for all transactions with the related parties identified by the Management ofthe Company and the details of related party transactions have been disclosed in thestandalone financial statements as required by the applicable Indian Accounting Standards.

(xiv) During the year the Company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures and hence reporting underclause 3(xiv) of the Order is not applicable.

(xv) In our opinion and according to the information and explanations given to usduring the year the Company has not entered into any non-cash transactions with itsdirectors or directors of its holding subsidiary or associate companies or personsconnected with them and hence provisions of section 192 of the Companies Act 2013 are notapplicable.

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

For DELOITTE HASKINS & SELLS LLP
Chartered Accountants
(Firm's Registration No. 117366W/W-100018)
Rajesh K. Hiranandani
Place: Mumbai Partner
Date: May 24 2019 (Membership No. 36920)