The Members of
Fermenta Biotech Limited
(formerly known as DIL Limited)
Report on the Audit of the Standalone Financial Statements Opinion
We have audited the accompanying standalone financial statements of Fermenta BiotechLimited (formerly known as DIL Limited) ("the Company") which comprise theBalance Sheet as at March 31 2021 and the Statement of Profit and Loss (including OtherComprehensive Income) the Cash Flow Statement and the Statement of Changes in Equity forthe year then ended and a summary of significant accounting policies and otherexplanatory information.
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone financial statements give the information requiredby the Companies Act 2013 ("the Act") in the manner so required and give a trueand fair view in conformity with the Indian Accounting Standards prescribed under section133 of the Act read with the Companies (Indian Accounting Standards) Rules 2015 asamended ("Ind AS") and other accounting principles generally accepted in Indiaof the state of affairs of the Company as at March 31 2021 and its profit totalcomprehensive income its cash flows and the changes in equity for the year ended on thatdate.
Basis for Opinion
We conducted our audit of the standalone financial statements in accordance with theStandards on Auditing specified under section 143(10) of the Act (SAs). Ourresponsibilities under those Standards are further described in the Auditor'sResponsibility for the Audit of the Standalone Financial Statements section of our report.We are independent of the Company in accordance with the Code of Ethics issued by theInstitute of Chartered Accountants of India (ICAI) together with the ethical requirementsthat are relevant to our audit of the standalone financial statements under the provisionsof the Act and the Rules made thereunder and we have fulfilled our other ethicalresponsibilities in accordance with these requirements and the ICAI's Code of Ethics. Webelieve that the audit evidence obtained by us is sufficient and appropriate to provide abasis for our audit opinion on the standalone financial statements.
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.These matters were addressed in the context of our audit of the standalone financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters. We have determined the matters described below to bethe key audit matters to be communicated in our report.
|Sr. No. ||Key Audit Matter ||Auditor's Response |
|1 ||Recoverability of MAT credit entitlement - (See Notes 2.2(a) and 45C to the standalone financial statements) ||Our principal audit procedures performed included amona others: |
| ||Unused tax credits in the form of MAT credits is recognized to the extent it is reasonably certain that sufficient taxable profits will be available in the future against which such MAT credits can be utilized. ||1. Evaluated the design and implementation and tested the operating effectiveness of controls related to the assessment of recoverability of MAT credit entitlement. |
| ||The Company has recognised MAT credit entitlement amounting to H 5398.99 Lakhs (presented within deferred tax asset) as at March 312021. ||2. Evaluated and discussed with the Management the appropriateness of assumptions and evidences supporting the underlying profitability forecasts. Assessed the assumptions used in the profitability forecasts along with the Company's tax position including the timing of future taxable profits. We also performed retrospective review and sensitivity analysis on the key assumptions used in aforementioned profitability forecasts for recoverability of MAT credit entitlement. |
| ||The recoverability of such MAT credit entitlement is considered as a key audit matter as it involves significant management judgement including accounting estimates relating to profitability forecasts availability of sufficient taxable income in the future and recoverability within the specified period of time. ||3. Assessed the adequacy of disclosures made in the standalone financial statements of the Company. |
Information Other than the Financial Statements and Auditor's Report Thereon
The Company's Board of Directors is responsible for the other information.The other information comprises the information included in the Annual report forexample management discussion and analysis report of the Board of Directors 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 otherinformation and we do not express any form of assurance conclusion thereon.
In connection with our audit of the standalone financial statements ourresponsibility is to read the other information and in doing so consider whether theother information is materially inconsistent with the standalone financial statements orour knowledge obtained during the course of our audit or otherwise appears to bematerially misstated.
If based on the work we have performed we conclude that there is amaterial misstatement of this other information we are required to report that fact. Wehave nothing to report in this regard.
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 judgements 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 foroverseeing the Company's financial reporting 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 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 standalonefinancial 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 financial control relevant to the auditin order to design audit procedures that are appropriate in the circumstances. Undersection 143(3)(i) of the Act we are also responsible for expressing our opinion onwhether the Company has adequate internal financial controls system in place and theoperating effectiveness of such controls.
Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures made by the management.
Conclude on the appropriateness of management's use of the going concernbasis of accounting and based on the audit evidence obtained whether a materialuncertainty exists related to events or conditions that may cast significant doubt on theCompany's ability to continue as a going concern. If we conclude that a materialuncertainty exists we are required to draw attention in our auditor's report to therelated disclosures in the standalone financial statements or if such disclosures areinadequate to modify our opinion. Our conclusions are based on the audit evidenceobtained up to the date of our auditor's report. However future events or conditions maycause the Company to cease to continue as a going concern.
Evaluate the overall presentation structure and content of the standalonefinancial statements including the disclosures and whether the standalone financialstatements represent 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 our audit work and in evaluating the results of our work; and
(ii) to evaluate the effect of any identified misstatements in the standalone financialstatements.
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 alsoprovide those charged with governance with a statement that we have complied with relevantethical requirements regarding independence and to communicate with them allrelationships 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) 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 Cash Flow Statement and Statement of Changes in Equity dealt with by thisReport are in agreement with the books of account.
d) In our opinion the aforesaid standalone financial statements comply with the Ind ASspecified under Section 133 of the Act.
e) On the basis of the written representations received from the directors as on March31 2021 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2021 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". Our report expresses an unmodified opinion onthe adequacy and operating effectiveness of the Company's internal financial controls overfinancial reporting.
g) With respect to the other matters to be included in the Auditor's Report inaccordance with the requirements of section 197(16) of the Act as amended in our opinionand to the best of our information and according to the explanations given to us theremuneration paid by the Company to its directors during the year is in accordance withthe 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 as amended inour opinion and to the best of our information and according to the explanations given tous:
i. The Company has disclosed the impact of pending litigations on its financialposition in its standalone financial statements - See Note 40(ii) to the standalonefinancial 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 in transferring amounts required to be transferred tothe Investor Education and Protection Fund 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.
Annexure "A" to the Independent Auditor's Report
[Referred to in paragraph 1(f) under Report on Other Legal and RegulatoryRequirements' section of our report of even date to the members of Fermenta BiotechLimited (formerly known as DIL Limited)]
Report on the Internal Financial Controls Over Financial Reporting under Clause (i) ofSub-section 3 owf Section 143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls over financial reporting of FermentaBiotech Limited (formerly known as DIL Limited) ("the Company") as of March 312021 in conjunction with our audit of the standalone 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 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.
Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting of the Company based on our audit. We conducted ouraudit in accordance with the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting (the "Guidance Note") issued by the Institute of CharteredAccountants of India and the Standards on Auditing prescribed under Section 143(10) of theCompanies Act 2013 to the extent applicable to an audit of internal financial controls.Those Standards and the Guidance Note require that we comply with ethical requirements andplan and 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. Webelieve that the audit evidence we have obtained is sufficient and appropriate to providea basis for our audit opinion on the Company's internal financial controls system overfinancial 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 of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company;
(2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of 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) provide reasonable assurance regarding prevention or timely detection ofunauthorised acquisition use or disposition of the company's assets that could have amaterial 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 to the best of our information and according to the explanations givento us the Company has in all material respects an adequate internal financial controlssystem over financial reporting and such internal financial controls over financialreporting were operating effectively as at March 31 2021 based on the criteria forinternal financial control over financial reporting 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 Institute of CharteredAccountants of India.
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 Fermenta BiotechLimited (formerly known as DIL Limited)]
(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
(b) The Company has a programme of verification of fixed assets to cover all the itemsin a phased manner over a period of three years which in our opinion is reasonablehaving regard to the size of the Company and the nature of its assets. Pursuant to theprogramme certain fixed assets were physically verified by the management during theyear. According to the information and explanations given to us no material discrepancieswere noticed 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 of sale lease deeds andother documents provided to us by the Management of the Company and based on theconfirmation directly received by us from lender in case of the title deed and the leasedeed that have been pledged as security for loans taken by the Company we report thatthe title deeds and lease deeds comprising the immovable properties of land and buildingsdisclosed under Property Plant and Equipment' Right-of-use-asset' andInvestment Property' in the standalone financial statements are held in the name ofthe Company as at the balance sheet date except as described below:
|Particulars ||As at March 31 2021 ||Remarks || |
| ||Cost or deemed cost (in Lakhs) ||Carrying amount (in Lakhs) || |
|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 (now Executive Vice-Chairman) and one of the Directors of the Company who is also a relative of the Managing Director (now Executive Vice-Chairman) on behalf of the Company and as confirmed by them. |
(ii) As explained to us the inventories excluding inventories with third partieswere physically verified during the year by the Management at reasonable intervals and nomaterial discrepancies were noticed on physical verification. Inventories lying with thirdparties as at March 31 2021 have been confirmed by them to the Company.
(iii) According to the information and explanations given to us in respect of loansgranted by the Company secured or unsecured to companies firms Limited LiabilityPartnerships or other parties covered in the register maintained under section 189 of theCompanies Act 2013:
(a) The Company has not granted any loan during the year ended March 31 2021 and hencereporting under clause 3(iii)(a) of the Order is not applicable.
(b) The Company had in the earlier year granted an unsecured loan repayable on demandto a Company which is an associate. In the absence of repayment schedule of principal andinterest being stipulated we are unable to comment on the regularity of the repayments orreceipts of principal amounts and interest.
(c) As stated above the schedule of repayment of principal and payment of interest isnot stipulated. The Company during the earlier year made an allowance of Rs 37.00 Lakhsto fully impair the loan. Interest was not being accrued on this loan. As explained to usthe Company's management is not taking any steps for recovery of the principal andinterest.
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 making investments and providing guarantees and securities asapplicable. During the year the Company has not granted any loan covered under section185 of the Companies Act 2013.
(v) In our opinion and according to the information and explanations given to us theCompany has not accepted any deposit to which the provisions of sections 73 to 76 or anyother relevant provisions of the Companies Act 2013 and the Companies (Acceptance ofDeposits) Rules 2014 as amended are applicable and hence reporting under clause 3(v) ofthe Order is not applicable.
(vi) The maintenance of cost records has been specified by the Central Government undersection 148(1) of the Companies Act 2013. We have broadly reviewed the cost recordsmaintained by the Company pursuant to the Companies (Cost Records and Audit) Rules 2014as amended prescribed by the Central Government under section 148(1) of the CompaniesAct 2013 and are of the opinion that prime facie the prescribed cost records have beenmade and maintained. We have however not made a detailed examination of the cost recordswith a view to determine whether they are accurate or complete.
(vii) According to the information and explanations given to us in respect ofstatutory dues:
(a) The Company has been regular in depositing undisputed statutory dues includingProvident Fund Employees' State Insurance Income-tax Customs duty Goods and 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 Customs duty Goods and Services Tax and other materialstatutory dues in arrears as at March 31 2021 for a period of more than six months fromthe date they became payable.
According to the records of the Company the dues of Sales Tax and Service Tax onaccount of disputes as on March 31 2021 are given below:
|Statute ||Nature of Dues ||Forum where dispute is pending ||Period to which the amount relates ||Amount involved (Rs In Lakhs)* ||Amount paid under protest (Rs In 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 other than temporary deployment pendingapplication of proceeds. The Company has not raised money by way of initial public offeror 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 |
| ||Partner |
|Place: Mumbai ||(Membership No. 36920) |
|Date: June 29 2021 ||UDIN: 21036920AAAACP6782 |