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Fortis Healthcare Ltd.

BSE: 532843 Sector: Health care
NSE: FORTIS ISIN Code: INE061F01013
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VOLUME 21183
52-Week high 169.00
52-Week low 113.20
P/E
Mkt Cap.(Rs cr) 10,060
Buy Price 133.25
Buy Qty 1.00
Sell Price 136.00
Sell Qty 51.00
OPEN 135.35
CLOSE 134.55
VOLUME 21183
52-Week high 169.00
52-Week low 113.20
P/E
Mkt Cap.(Rs cr) 10,060
Buy Price 133.25
Buy Qty 1.00
Sell Price 136.00
Sell Qty 51.00

Fortis Healthcare Ltd. (FORTIS) - Auditors Report

Company auditors report

To the Members of Fortis Healthcare Limited

Report on the Audit of the Standalone Financial Statements QualifiedOpinion

We have audited the standalone financial statements of FortisHealthcare Limited ("the Company") which comprise the standalone balance sheetas at 31 March 2020 and the standalone statement of profit and loss (including othercomprehensive income) standalone statement of changes in equity and standalone statementof cash flows for the year then ended and notes to the standalone financial statementsincluding a summary of the significant accounting policies and other explanatoryinformation (hereinafter referred to as "the Standalone financial statements").

In our opinion and to the best of our information and according to theexplanations given to us except for the effects/ possible effects if any of the mattersdescribed in the "Basis for Qualified Opinion" paragraph of our report theaforesaid standalone financial statements give the information required by the CompaniesAct 2013 ("Act") in the manner so required and give a true and fair view inconformity with the accounting principles generally accepted in India of the state ofaffairs of the Company as at 31 March 2020 of its profit other comprehensive incomechanges in equity and its cash flows for the year ended on that date.

Basis for Qualified Opinion

(i) As explained in Note 29 of the standalone financial statementspursuant to certain events/transactions the erstwhile Audit and Risk Management Committee(the "ARMC") of the Company carried out an independent investigation and specialaudits by external professional firms on matters relating to systematic lapses/override ofinternal controls. As a result of investigation/ special audits the Company recordedadjustments in its books of accounts during the year ended 31 March 2018 which areexplained in Note 25 and 29 of the standalone financial statements. However the report ofsaid investigation was subject to limitations on the information available to the externalprofessional firms; and their qualifications and disclaimers including completeness ofrelated party transactions which relate to or which originated prior to loss of control oferstwhile promoters/directors in the year ended 31 March 2018. Further as explained inNote 29 and 30 of the standalone financial statements various regulatory authoritiesincluding Securities and Exchange Board of India ("SEBI") and Serious FraudInvestigation Office ("SFIO") are undertaking their own investigations on thesematters which are currently ongoing. As explained in Note 29(e) of the standalonefinancial statements the management has also initiated additional procedures/ enquirieswhich are ongoing of certain entities in the Group that were impacted in respect of thematters investigated by the external legal firm. Consequently an overall assessment ofthe impact of the additional procedures/ enquiries and/or investigations on the Standalonefinancial statements is yet to be concluded.

Also as explained in Note 12 of the standalone financial statements aCivil Suit claiming Rs 25344 lacs was filed by a third party against various entitiesincluding the Company relating to "Fortis SRL and La-Femme" brands. Based onlegal advice of external legal counsel the Management believes that the claims arewithout legal basis and not tenable. The matter is currently sub-judice.

In view of the above we are unable to comment on further adjustments/disclosures which may become necessary as a result of findings arising out of the ongoingadditional procedures/ enquiries/ investigations required if any and outcome of civilsuit on the statement including completeness/accuracy of the related party transactionswhich relate to or which originated prior to loss of control of erstwhile promoters/directors in the year ended 31 March 2018 the regulatory non-compliances if any and theconsequential impact of the above adjustments if any on the standalone financialstatements.

(ii) As explained in Note 32 of the standalone financial statementsduring the year ended 31 March 2018 the Company concluded that it had paid amountaggregating to Rs 2002.39 lacs to the erstwhile Executive Chairman in excess of theamounts approved by the Central Government under Section 197 of the Companies Act 2013 ashis remuneration and other reimbursements. This is accordingly a non-compliance with theprovisions of Section 197 of the Companies Act 2013. Due to the uncertainty involved onrecoverability of the said amounts a provision for this amount has also been recorded inthe year ended 31 March 2018. The matters stated above were subject matter ofqualification in our audit opinion on the standalone financial statements for the yearended 31 March 2019 also.

We conducted our audit in accordance with the Standards on Auditing(SAs) specified under section 143(10) of the Act. Our responsibilities under those SAs arefurther described in the Auditor's Responsibilities for the Audit of the StandaloneFinancial 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 together with the ethical requirements that are relevant to our audit of thestandalone financial statements under the provisions of the Act and the Rules thereunderand we have fulfilled our other ethical responsibilities in accordance with theserequirements and the Code of Ethics. We believe that the audit evidence we have obtainedis sufficient and appropriate to provide a basis for our qualified opinion on theStandalone financial statements.

Emphasis of matter

(i) We draw attention to Note 35 of the accompanying Standalonefinancial statements relating to the order dated 15 November 2019 of the Hon'bleSupreme Court where it is stated that the Hon'ble Supreme Court has issued suo-motocontempt notice to among others the Company and directed its Registry to register afresh contempt petition in regard to alleged violation of its order dated 14 December2018. In this respect the Hon'ble Supreme Court has sought an enquiry into (i)whether the subscription by Northern TK Venture Pte Ltd. Singapore a wholly ownedsubsidiary of IHH Healthcare Berhad Malaysia to the shares of the Company was undertakenafter the status quo order was issued by the Hon'ble Court on 14 December 2018 andaccordingly if such subscription was in violation of this status quo order; and (ii) theconsummation of the acquisition of healthcare assets from RHT Health Trust by the Company.As also explained in the said note the management believes that it has a strong case onmerits and as per the current position of the case the liability if any arising out ofthis contingency cannot be determined at this stage. Accordingly at present noadjustment is required in the Standalone financial statements.

(ii) We draw attention to Note 36 to the Standalone financialstatements which explains that due to a significant amount of dividend received duringthe year from a wholly owned overseas subsidiary the ‘income from financialassets' of the Company is more than 50 per cent of the gross income for the yearended 31 March 2020. Since the Company's financial assets as at that date are alsomore than 50 per cent of its total assets the Company meets the criteria forclassification as a Non-Banking Financial Company (NBFC) as per press release by ReserveBank of India (RBI) vide No. 1998-99/1269 dated 8-4-1999 as at 1 April 2020. As per theCompany such dividend is non-recurring in nature and does not represent income fromordinary activities of the Company and the Company does not intend to carry on thebusiness as a NBFC. The Company has made a representation to the RBI in this regard. TheCompany has not received any response from RBI in this regard till date. Our conclusion isnot modified in respect of the matters mentioned in paragraph (i) and (ii) above.

Key Audit Matters

Key audit matters are those matters that in our professional judgmentwere of most significance in our audit of the standalone financial statements of thecurrent period. These matters were addressed in the context of our audit of the standalonefinancial statements as a whole and in forming our opinion thereon and we do not providea separate opinion on these matters.

In addition to the matters described in the "Basis for QualifiedOpinion" paragraphs we have determined that the following are the key audit matters:

The key audit matter Going How the matter was addressed in our audit
concern See note 33 to the Standalone financial statements. As disclosed in note 33 the financial statements of the Company have been prepared on a going concern basis. As at 31 March 2020 the current liabilities of the Company exceeded its current assets by Rs 10979.49 lacs. The recent pandemic and decline in business has put further pressure on its projections. The Company has prepared budget/ cash flow forecast which involve judgement and estimation around sources of funds to meet the financial obligations and cash flow requirements over this period. Considering the above (and outcome of the pending litigations as explained below) we have identified the assessment of going concern assumption as a key audit matter. Our audit procedures included:
Assessing the cash flow requirements of the Company based on budgets and forecasts.
• Understanding what forecast expenditure is committed and what could be considered discretionary.
• Considering the liquidity of existing assets on the balance sheet.
• Considering the terms of the bank loan and trade finance facilities and the amount available for drawdown.
• Considering potential downside scenarios and the resultant impact on available funds.
Legal matters The Company is involved in several legal proceedings. In some of these cases the Company has counter claims against the other party. Management judgement is involved in assessing the accounting for claims and in particular considering the probability of a claim being successful. The risk related to the claims is mainly associated with the adequacy of disclosure and the completeness of the provisions in the standalone financial statements. Accordingly we have designated this as key audit matter. • Assessed the adequacy of disclosures in the financial statements relating to uncertainties and mitigation thereof.
Our audit procedures included on all significant legal matters assessment of correspondence with the Company's legal counsel (internal and / or external) accompanied by discussions and formal confirmations from that legal counsel.
We read the minutes of the board meetings and inspected the Company's legal expenses.
We also assessed whether the Company's disclosures detailing significant legal proceedings adequately disclose the potential liabilities of the Company.
The key audit matter How the matter was addressed in our audit
IND AS 116 "Leases"
Ind AS 116 replaces the existing standard Ind AS 17 and sets out the principles for the recognition measurement presentation and disclosure for both lessors and lessees. Through our discussions with Company's management we understood the process of identifying the lease contracts or contracts which contain leases.
The Company has adopted Ind AS 116 effective annual reporting period beginning 1 April 2019 and applied the standard to its leases retrospectively with the cumulative effect of initially applying the Standard recognized on the date of initial application. Accordingly the Company has not restated comparative information. We inspected the contracts for identification of leases under IND AS 116.
We obtained the Company's quanti_cation of ROU assets and lease liabilities and agreed the inputs used in the quanti_cation to the lease agreement challenged the calculations of the discount rate applied and performed computation checks.
As on April 1 2019 the Company has recognized a right of use asset at an amount equivalent to the lease liability and consequently there is no adjustment to the opening balance of retained earnings as on 1 April 2019. On application of Ind AS 116 the nature of expenses has changed from lease rent in previous periods to depreciation cost for the right-to-use asset and finance cost for interest accrued on lease liability. We considered the first-time implementation of Ind AS 116 as a key audit matter due to the material nature of the leases on the standalone financial statements and significance of the Company management's judgements needed in establishing the underlying key assumptions including lease term and discount rates. We also considered the adequacy of disclosures in Note 7 to the standalone financial statements.
Impairment of Goodwill and Investments
The Company is required to annually test the amount of Goodwill for impairment. Investments in subsidiary companies associates and joint ventures are tested for impairment incase an indicator of potential impairment is identified. There are inherent uncertainties involved in forecasting and discounting future cash flows which are the basis of the assessment of recoverability. Accordingly this is one of the key judgmental areas in our audit. In this area our audit procedures included testing of the Company's budgeting procedures upon which the forecasts are based; and the principles and integrity of the Company's discounted cashflow model. We used our valuation specialist to assist us in evaluating the assumptions and methodologies used by the Company. In particular this included those relating to the forecast revenue growth profit margins and discount rates. We compared the Company's assumptions to externally derived data as well as our own assessment in relation to key inputs such as projected economic growth cost inflation and discount rates. We also performed sensitivity analysis of the key assumptions. We also assessed the adequacy of related disclosures in note 5(ii) and note 5(xxix) of standalone financial statements and sensitivities of key assumptions.

Other Information

The Company's management and Board of Directors are responsiblefor the other information. The other information comprises the information included in theCompany's annual report but does not include the financial statements and ourauditors' report thereon.

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

In connection with our audit of the standalone financial statementsour responsibility 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 in the audit or otherwise appears to be materially misstated. Ifbased on the work we have performed we conclude that there is a material misstatement ofthis other information we are required to report that fact. We have nothing to report inthis regard.

Management's and Board of Directors' Responsibility for theStandalone Financial Statements

The Company's Management and Board of Directors are responsiblefor the matters stated in section 134(5) of the Act with respect to the preparation ofthese standalone financial statements that give a true and fair view of the state ofaffairs profit/loss and other comprehensive income changes in equity and cash flows ofthe Company in accordance with the accounting principles generally accepted in Indiaincluding the Indian Accounting Standards (Ind AS) specified under section 133 of the Act.This responsibility also includes maintenance of adequate accounting records in accordancewith the provisions of the Act for safeguarding of the assets of the Company and forpreventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; and design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring accuracy and completeness of theaccounting records relevant to the preparation and presentation of the standalonefinancial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.

In preparing the standalone financial statements the Management andBoard of Directors are responsible for assessing the Company's ability to continue asa going concern disclosing as applicable matters related to going concern and using thegoing concern basis of accounting unless the Board of Directors either intends toliquidate the Company or to cease operations or has no realistic alternative but to doso.

The Board of Directors is also responsible for overseeing theCompany's financial reporting process.

Auditor's Responsibilities for the Audit of the Standalone FinancialStatements

Our objectives are to obtain reasonable assurance about whether thestandalone financial statements as a whole are free from material misstatement whetherdue to fraud or error and to issue an auditor's report that includes our opinion.Reasonable assurance is a high level of assurance but is not a guarantee that an auditconducted in accordance with SAs will always detect a material misstatement when itexists. Misstatements can arise from fraud or error and are considered material ifindividually or in the aggregate they could reasonably be expected to influence theeconomic decisions of users taken on the basis of these standalone financial statements.As part of an audit in accordance with SAs we exercise professional judgment and maintainprofessional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of thestandalone financial statements whether due to fraud or error design and perform auditprocedures responsive to those risks and obtain audit evidence that is sufficient andappropriate to provide a basis for our opinion. The risk of not detecting a materialmisstatement resulting from fraud is higher than for one resulting from error as fraudmay involve collusion forgery intentional omissions misrepresentations or the overrideof internal control.

• Obtain an understanding of internal control relevant to theaudit in 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 with reference to financialstatements in place and the operating effectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures in the standalone financialstatements made by the Management and Board of Directors.

• Conclude on the appropriateness of the Management and Board ofDirectors use of the going concern basis of accounting and based on the audit evidenceobtained whether a material uncertainty exists related to events or conditions that maycast significant doubt on the Company's ability to continue as a going concern. If weconclude that a material uncertainty exists we are required to draw attention in ourauditor's report to the related disclosures in the standalone financial statementsor if such disclosures are inadequate to modify our opinion. Our conclusions are basedon the audit evidence obtained up to the date of our auditor's report. Howeverfuture events or conditions may cause the Company to cease to continue as a going concern.

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

We believe that except as stated in the "Basis for QualifiedOpinion" paragraphs the audit evidence obtained by us is sufficient and appropriateto provide a basis for our qualified audit opinion on the standalone financial statements.

We communicate with those charged with governance regarding amongother matters the planned scope and timing of the audit and significant audit findingsincluding any significant defficiencies in internal control that we identify during ouraudit.

We also provide those charged with governance with a statement that wehave complied with relevant ethical requirements regarding independence and tocommunicate with them all relationships and other matters that may reasonably be thoughtto bear on our independence and where applicable related safeguards.

From the matters communicated with those charged with governance wedetermine those matters that were of most significance in the audit of the standalonefinancial statements of the current period and are therefore the key audit matters. Wedescribe these matters in our auditors' report unless law or regulation precludespublic disclosure about the matter or when in extremely rare circumstances we determinethat a matter should not be communicated in our report because the adverse consequences ofdoing so would reasonably be expected to outweigh the public interest benefits of suchcommunication.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditors' Report) Order 2016("the Order") issued by the Central Government in terms of section 143 (11) ofthe Act we give in the "Annexure A" a statement on the matters specified inparagraphs 3 and 4 of the Order which is subject to the effects/ possible effects of thematters described in the "Basis for Qualified Opinion" paragraphs of our AuditReport and the material weakness described in the "Basis for Qualified Opinion"paragraph in our separate Report on the Internal Financial Controls with reference tofinancial statements.

2. (A) As required by Section 143(3) of the Act we report that:

a) We have sought and except for the matters described in the"Basis for Qualified Opinion" paragraphs above obtained all the information andexplanations which to the best of our knowledge and belief were necessary for the purposesof our audit.

b) Except for the effects/ possible effects of the matters described inthe "Basis for Qualified Opinion" paragraphs above in our opinion proper booksof account as required by law have been kept by the Company so far as it appears from ourexamination of those books.

c) The standalone balance sheet the standalone statement of profit andloss (including other comprehensive income) the standalone statement of changes in equityand the standalone statement of cash flows dealt with by this Report are in agreement withthe books of account. d) Except for effects/ possible effects of the matters described inthe "Basis for Qualified Opinion" paragraphs above in our opinion theaforesaid standalone financial statements comply with the Ind AS specified under section133 of the Act.

e) The matters described in the "Basis for Qualified Opinion"paragraphs and the "Emphasis of Matter" paragraphs above in our opinion mayhave an adverse effect on the functioning of the Company.

f) On the basis of the written representations received from thedirectors as on 31 March 2020 taken on record by the Board of Directors none of thedirectors is disqualified as on 31 March 2020 from being appointed as a director in termsof Section 164(2) of the Act.

g) The qualification relating to maintenance of accounts and othermatters connected therewith are as stated in the "Basis for Qualified Opinion"paragraphs above. h) With respect to the adequacy of the internal financial controls withreference to financial statements of the Company and the operating effectiveness of suchcontrols refer to our separate Report in "Annexure B".

(B) With respect to the other matters to be included in theAuditors' Report in accordance with Rule 11 of the Companies (Audit and Auditors)Rules 2014 in our opinion and to the best of our information and according to theexplanations given to us:

i. Except for the effects/ possible effects of matters described inparagraph 1 of the "Basis for Qualified Opinion" section above the Company hasdisclosed the impact of pending litigations as at 31 March 2020 on its financial positionin its standalone financial statements - Refer Note 11 and Note 12 to the standalonefinancial statements;

ii. Except for the effects/ possible effects of the matters describedin paragraph 1 of the "Basis for Qualified opinion" section above the Companydid not have any long-term contracts including derivative contracts for which there wereany material foreseeable losses;

iii. There were no amounts which were required to be transferred to theInvestor Education and Protection Fund by the Company;

iv. The disclosures in the standalone financial statements regardingholdings as well as dealings in specified bank notes during the period from 8 November2016 to 30 December 2016 have not been made in these financial statements since they donot pertain to the financial year ended 31 March 2020.

(C) With respect to the matter to be included in the Auditors'Report under section 197(16):

In our opinion and according to the information and explanations givento us the remuneration paid by the company to its directors during the current year is inaccordance with the provisions of Section 197 of the Act. The remuneration paid to anydirector is not in excess of the limit laid down under Section 197 of the Act. TheMinistry of Corporate Affairs has not prescribed other details under Section 197(16) whichare required to be commented upon by us.

ForB S R & Co. LLP
Chartered Accountants
Firm's Registration No.: 101248W/W-100022
Sd/-
Rajesh Arora
Partner
Place: Gurugram Membership No. 076124
Date: 17 June 2020 UDIN: 20076124AAAABC7924

Annexure A to the Independent Auditor's report on the standalonefinancial statements of Fortis Healthcare Limited for the year ended 31 March 2020(Referred to in paragraph (1) under ‘Report on Other Legal and RegulatoryRequirements' section of our Audit Report of even date and except for theeffects/possible effects of the matters described in the "Basis for QualifiedOpinion" paragraphs of our Audit Report and the material weakness described in the"Basis for Qualified Opinion" in our separate Report on the Internal FinancialControls with reference to financial statements)

(i) (a) According to the information and explanations given to us theCompany has maintained proper records showing full particulars including quantitativedetails and situation of fixed assets (Property plant and equipment).

(b) According to the information and explanations given to us theCompany has a regular programme of physical verification of its fixed assets (i.e.property plant and equipment) by which fixed assets are verified in a phased manner overa period of three years. In accordance with this programme certain fixed assets werephysically verified during the year. In our opinion this periodicity of physicalverification is reasonable having regard to the size of the Company and the nature of itsassets. As informed to us no material discrepancies were noticed on such verification.

(c) According to the information and explanations given to us and onthe basis of our examination of the books of accounts of the Company the title deeds ofimmovable property are held in the name of the Company.

(ii) The inventories have been physically verified by the managementduring the year. In our opinion the frequency of such verification is reasonable.According to the information and explanations given to us the discrepancies noticed onverification between the physical stocks and the book records were not material. (iii)Except for the effects/ possible effects of the matters described in paragraph 1 of the"Basis for Qualified Opinion" section the Company has granted loans secured orunsecured to companies covered in the register maintained under Section 189 of theCompanies Act 2013 in respect of which: (a) The terms and conditions of the grant ofsuch loans are in our opinion prima facie not prejudicial to the Company'sinterest.

(b) The schedule of repayment of principal and payment of interest hasbeen stipulated and repayments or receipts of principal amounts and interest have been asper stipulations.

(c) There is no amount overdue for more than 90 days in respect ofabove mentioned loans.

(iv) Except for the effects/ possible effects of the matters describedin the "Basis for Qualified Opinion" paragraph the Company has complied withthe provisions of Sections 185 and 186 of the Companies Act 2013 in respect of grant ofloans making investments and providing guarantees and securities as applicable. (v) Asper the information and explanations given to us the Company has not accepted anydeposits as mentioned in the directives issued by the Reserve Bank of India and provisionsof Sections_ 73 to 76 or any other relevant provisions of the Companies Act 2013 andrules framed there under. Accordingly the provisions of clause 3(v) of the Order are notapplicable.

(vi) The Central Government has prescribed the maintenance of costrecords under sub-section (1) of Section 148 of the Act for activities carried out by theCompany. We have broadly reviewed the books of account maintained by the Company pursuantto the Rules made by the Central Government for the maintenance of cost records underSection 148 of the Act and are of the opinion that prima facie the prescribed accountsand records have been made and maintained. However we have not made a detailedexamination of such records with a view to determine whether they are accurate orcomplete.

(vii) (a) According to the information and explanations given to us andon the basis of our examination of the records of the Company amounts deducted/ accruedin the books of account in respect of undisputed statutory dues including Provident FundEmployees' State Insurance Income-tax Duty of Customs Goods and Services tax Cessand other material statutory dues have been regularly deposited during the year by theCompany with the appropriate authorities. We are informed that the operations of theCompany during the period did not give rise to any liability for Excise duty Sales taxValue added tax and Service tax.

According to the information and explanations given to us noundisputed amounts payable in respect of Provident Fund Employees' State InsuranceIncome-tax Duty of customs Goods and Services Tax Cess and other material statutorydues were in arrears as at March 31 2020 for a period of more than six months from thedate they became payable. Also refer note 11(B) wherein it is explained that on accountof the uncertainty with respect to the applicability of the Hon'ble Supreme Courtjudgment on the provident fund matter management has not recognized and deposited anyadditional provident fund amount with respect to earlier years.

(b) According to the information and explanations given to us thefollowing dues of Income-tax Value added tax and Service tax have not been deposited bythe Company with the appropriate authorities on account of disputes:

Name of Statute Nature of dues Forumwheredisputeis pending Periodto which the amountrelates (Assessment year) Amount Involved (Lacs) Amount paid under protest (Lacs)
Income Tax Act 1961 Income Tax and Interest thereon Income Tax Appellate Tribunal Delhi 2012-13 332.00 332.00
Income Tax Act 1961 Income Tax and Interest thereon Commissioner of Income Tax (Appeals) 2012-13 2641.41 -
Income Tax Act 1961 Income Tax and Interest thereon Income Tax Appellate Tribunal Delhi 2016-17 and 2017-18 1251.00 -
Central Excise Act 1944 Value Added Tax Supreme Court 2010-11 1412.35 -
Central Excise Act 1944 Value Added Tax Supreme Court 2011-12 2208.82 -
Finance Tax 1994 Service Tax and penalty Custom Excise & Service Tax Appellate Tribunal 2008-09 to 2013-14 265.00 -
Finance Tax 1994 Service Tax and penalty CustomExcise&Service Tax Appellate Tribunal 2009-10 to 2013-14 294.00 -

We are informed that there are no dues in respect of Duty of CustomsExcise duty Sales tax and Goods and Services tax as at 31 March 2020 which have not beendeposited on account of any dispute.

(viii) According to the information and explanations given to us and onthe basis of our examination of the records of the Company the Company has not defaultedin repayment of loans or borrowings to banks and financial institutions and dues todebenture holders. The Company did not have any loans or borrowings from government duringthe year.

(ix) Except for the effects/ possible effects of the matters describedin paragraph 1 of the "Basis for Qualified Opinion" section in our opinion andaccording to the information and explanations given to us the term loans taken by theCompany during the year have been applied for the purpose for which they were raised.

As informed to us the Company has not raised any moneys by way ofinitial public offer or further public offer (including debt instruments).

(x) As explained in Note 29 of the Standalone Financial Statements:

(a) At this juncture the Board is unable to make a determination onwhether a fraud has occurred on the Company in respect of the matters covered in theinvestigation by the external legal firm considering the limitations on the informationavailable to the external legal firm and their qualifications and disclaimers as describedin their Investigation Report.

(b) Various regulatory authorities are currently undertaking their owninvestigation and it is likely that they may make a determination on whether any fraud orany other non-compliance/ illegalities have occurred in relation to the matters addressedin the Investigation Report.

Subject to the above 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) According to the information and explanations given to us andbased on our examination of the records of the Company managerial remuneration has beenpaid / provided by the company during the current year in accordance with the requisiteapprovals mandated by the provisions of Section 197 of the Act read with Schedule V to theAct.

(xii) According to the information and explanations given to us theCompany is not a Nidhi Company. Accordingly paragraph 3(xii) of the Order is notapplicable.

(xiii) Except for the effects/ possible effects of the mattersdescribed in paragraph 1 of the "Basis for Qualified Opinion" section of ourAudit Report all transactions with the related parties are in compliance with Section 177and 188 of the Act where applicable and the details of such transactions have beendisclosed in the standalone financial statements as required by the applicable accountingstandards.

(xiv) Based on our examination of the books of account and according tothe information and explanations given to us the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year. Accordingly paragraph 3(xiv) of the Order is not applicable. (xv) According tothe information and explanations given to us the Company has not entered into anynon-cash transactions with directors or persons connected with him. Accordingly paragraph3(xv) of the Order is not applicable.

(xvi) According to the information and explanations given to us theCompany is not required to be registered under section 45-IA of the Reserve Bank of IndiaAct 1934. Also refer to Note 36 to the standalone financial statements.

ForB S R & Co. LLP
Chartered Accountants
Firm's Registration No.: 101248W/W-100022
Sd/-
Rajesh Arora
Partner
Place: Gurugram Membership No. 076124
Date: 17 June 2020 UDIN: 20076124AAAABC7924

Annexure B to the Independent Auditor's report on the standalonefinancial statements of Fortis Healthcare Limited for the year ended 31 March 2020. Reporton the internal financial controls with reference to the aforesaid standalone financialstatements under Clause (i) of Sub-section 3 of Section 143 of the Companies Act 2013(Referred to in paragraph (2)(A)(h) under ‘Report on Other Legal and RegulatoryRequirements' section of our report of even date) Qualified Opinion

We have audited the internal financial controls with reference tostandalone financial statements of Fortis Healthcare Limited ("the Company") asof 31 March 2020 in conjunction with our audit of the standalone financial statements ofthe Company for the year ended on that date.

In our opinion except for the effects/possible effects of the materialweakness described below on the achievement of the objectives of the control criteria tothe best of our information and according to the explanations given to us the Company hasin all material respects maintained adequate internal financial controls with referenceto standalone financial statements and such internal financial controls were operatingeffectively as at 31 March 2020 based on the internal financial controls with referenceto standalone financial statements criteria established by the Company considering theessential components of such internal controls stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India (the "Guidance Note"). We have considered the materialweakness identified and reported below in determining the nature timing and extent ofaudit tests applied in our audit of the standalone financial statements of the Company forthe year ended 31 March 2020 and this material weakness has inter alia affected ouropinion on the said standalone financial statements and we have issued a qualified opinionon the said standalone financial statements.

Basis for Qualified opinion

As explained in paragraph 1 of "Basis for Qualified Opinion"section of our Audit Report on the standalone financial statements for the year ended 31March 2020 pursuant to certain events/transactions in earlier years the erstwhile Auditand Risk Management Committee (the "ARMC") of the Company had initiated anindependent investigation by an external legal firm and special audits by professionalfirms on matters relating to systemic lapses and override of controls. The report hassince been submitted and is subject to limitations on the information available to theexternal legal firm and their qualifications and disclaimers as described in theirInvestigation report. The management has also initiated additional procedures/ enquirieswhich are ongoing of certain entities in the Group that were impacted in respect of thematters investigated by the external legal firm. Consequently an overall assessment ofthe impact of the additional procedures/ enquiries and/or investigations on the standalonefinancial Statements is yet to be concluded. Further the investigation by differentregulatory authorities in these matters is still ongoing and an overall assessment of theimpact of the investigations is yet to be concluded. Pending final outcome of theregulatory investigations and additional procedures/ enquiries and/or investigations bymanagement completeness of identification of defficiencies cannot be ascertained. A‘material weakness' is a defficiency or a combination of defficiencies ininternal financial control over financial reporting such that there is a reasonablepossibility that a material misstatement of the company's annual or interim financialstatements will not be prevented or detected on a timely basis.

Management's Responsibility for Internal Financial Controls

The Company's management and the Board of Directors areresponsible for establishing and maintaining internal financial controls based on theinternal financial controls with reference to standalone financial statements criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note. 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 offrauds and errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Companies Act 2013(hereinafter referred to as "the Act").

Auditor's Responsibility

Our responsibility is to express an opinion on the Company'sinternal financial controls with reference to standalone financial statements based on ouraudit. We conducted our audit in accordance with the Guidance Note and the Standards onAuditing prescribed under section 143(10) of the Act to the extent applicable to anaudit of internal financial controls with reference to standalone financial statements.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 with reference to standalone financial statements were established andmaintained and whether such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence aboutthe adequacy of the internal financial controls with reference to standalone financialstatements and their operating effectiveness. Our audit of internal financial controlswith reference to standalone financial statements included obtaining an understanding ofsuch internal financial controls assessing the risk that a material weakness exists andtesting and evaluating the design and operating effectiveness of internal control based onthe assessed risk. The procedures selected depend on the auditor's judgmentincluding the assessment of the risks of material misstatement of the standalone financialstatements whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our qualified audit opinion on the Company'sinternal financial controls with reference to standalone financial statements.

Meaning of Internal Financial controls with Reference to FinancialStatements

A company's internal financial controls with reference tostandalone financial statements is a process designed to provide reasonable assuranceregarding the reliability of financial reporting and the preparation of standalonefinancial statements for external purposes in accordance with generally acceptedaccounting principles. A company's internal financial controls with reference tostandalone financial statements include those policies and procedures that (1) pertain tothe maintenance of records that in reasonable detail accurately and fairly reflect thetransactions and dispositions of the assets of the company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of standalonefinancial statements in accordance with generally accepted accounting principles and thatreceipts and expenditures of the company are being made only in accordance withauthorisations of management and directors of the company; and (3) provide reasonableassurance regarding prevention or timely detection of unauthorised acquisition use ordisposition of the company's assets that could have a material effect on thestandalone financial statements.

Inherent Limitations of Internal Financial controls with Reference toFinancial Statements

Because of the inherent limitations of internal financial controls withreference to standalone financial statements including the possibility of collusion orimproper management override of controls material misstatements due to error or fraud mayoccur and not be detected. Also projections of any evaluation of the internal financialcontrols with reference to standalone financial statements to future periods are subjectto the risk that the internal financial controls with reference to standalone financialstatements may become inadequate because of changes in conditions or that the degree ofcompliance with the policies or procedures may deteriorate.

ForB S R & Co. LLP
Chartered Accountants
Firm's Registration No.: 101248W/W-100022
Sd/-
Rajesh Arora
Partner
Place: Gurugram Membership No. 076124
Date: 17 June 2020 UDIN: 20076124AAAABC7924