To the Members of Fortis Malar Hospitals Limited
Report on the Audit of the Standalone Financial Statements
We have audited the standalone financial statements of Fortis Malar HospitalsLimited ("the Company") which comprise the standalone balance sheet as atMarch 31 2021 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 the explanationsgiven to us the aforesaid standalone financial statements give the information requiredby the Companies Act 2013 ("Act") in the manner so required and give a true andfair view in conformity with the accounting principles generally accepted in India of thestate of affairs of the Company as at March 31 2021 and loss and other comprehensiveincome changes in equity and its cash flows for the year ended on that date.
BASIS FOR OPINION
We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder section 143(10) of the Act. Our responsibilities under those SAs are furtherdescribed in the Auditor's Responsibilities for the Audit of the Standalone FinancialStatements section of our report. We are independent of the Company in accordance withthe Code of Ethics issued by the Institute of Chartered Accountants of India together withthe ethical requirements that are relevant to our audit of the standalone financialstatements under the provisions of the Act and the Rules thereunder and we have fulfilledour other ethical responsibilities in accordance with these requirements and the Code ofEthics. We believe that the audit evidence we have obtained is sufficient and appropriateto provide a basis for our opinion on the Standalone financial statements.
EMPHASIS OF MATTER
We draw attention to Note 45 to the standalone financial statements which describes thelitigation and issues pertaining to regularisation of the hospital building in which theCompany operates today and the related matters. A letter was received from ChennaiMetropolitan Development Authority (CMDA) on August 25 2020 wherein certain clearancesand certificates were sought within 30 days in connection with the regularisation. TheCompany is taking steps to complete the process of submission of the sought clearances andcertificates which involves taking a number of actions and significant expenses andcapital expenditure. While the Company is co-operating to get all the clearances it hasbeen legally advised that as per the agreement between the Company and Fortis HealthManagement Limited ("FHML") it is not required to bear any expenses revenue orcapital nature incurred towards regularisation of building and obtaining the requisiteclearances and certificates (or for the expenses that may need to be incurred in theunlikely event that the regularisation is not approved) as all such expenses will be borneby FHML. The Company also continues to believe that all Orders / Notices issued by CMDAprima facie would not result in any significant adverse impact on its operations/financial statements or on the going concern status.
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.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.
Description of Key Audit Matter
Related party transactions (refer note 32 43 and 45 to the standalone financialstatements)
|The Key Audit Matter ||How the matter was addressed in our audit |
|Related party transactions are regulated under SEBI (Listing area Obligations and Disclosure Requirements) Regulations 2015 as well as Companies Act 2013. In addition the relevant accounting standards require specific compliance and disclosures of related parties and transactions with them to be made in the consolidated financial statements. ||In view of the significance of the matter we applied the following audit procedures in this among others to obtain sufficient appropriate audit evidence: |
|We have identified the related party transactions as a key audit matter due to the significance of the amounts given as loans to related parties recoverability of such loans and risk of non-compliance with various regulations. Also a substantial portion of the expenses (clinical establishment expenses etc.) are paid to related parties. ||Obtain an understanding of the Company's related party relationships and transactions. |
| ||Obtained a list of related party relationships and significant related party transactions from the management. Made inquiries of management regarding the identity of the related parties including changes from the prior year and the nature of relationships and of the transactions with them. We also maintained alertness regarding related party information when examining records or documents regarding undisclosed related party relationships or transactions. |
| ||Evaluated the design implementation and operating effectiveness of key controls over identification and authorization of significant related party transactions. |
| ||Obtained confirmation from related party with respect to transactions and balances and evaluated the management's assessment on the recoverability of the loans to related parties as and when they fall due. Performed substantive procedures to check the completeness of expenditure and interest income. |
| ||Evaluated compliance of such related party transactions with the relevant accounting standard and applicable laws and regulations. |
| ||Assessed the adequacy and appropriateness of the disclosures made in accordance withthe relevant accounting standard and applicable laws and regulations. |
The Company's management and Board of Directors are responsible for the otherinformation. The other information comprises the information included in the Company'sannual report but does not include the financial statements and our auditors' reportthereon. The Company's annual report is expected to be made available to us after the dateof this auditor's report.
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 identified above when it becomes available and in doingso consider whether the other information is materially inconsistent with the standalonefinancial statements or our knowledge obtained in the audit or otherwise appears to bematerially misstated.
When we read the Company's annual report if we conclude that there is a materialmisstatement of this other information we are required to communicate the matter to thosecharged with governance and take necessary actions as required under the applicable lawsand regulations.
MANAGEMENT'S AND BOARD OF DIRECTORS' RESPONSIBILITY FOR THE STANDALONE FINANCIALSTATEMENTS
The Company's Management and Board of Directors are responsible for the matters statedin section 134(5) of the Act with respect to the preparation of these standalone financialstatements that give a true and fair view of the state of affairs profit / loss and othercomprehensive income changes in equity and cash flows of the Company in accordance withthe accounting principles generally accepted in India including the Indian AccountingStandards (Ind AS) specified under section 133 of the Act. This responsibility alsoincludes maintenance of adequate accounting records in accordance with the provisions ofthe Act for safeguarding of the assets of the Company and for preventing and detectingfrauds and other irregularities; selection and application of appropriate accountingpolicies; making judgments and estimates that are reasonable and prudent; and designimplementation and maintenance of adequate internal financial controls that were operatingeffectively for ensuring accuracy and completeness of the accounting records relevant tothe preparation and presentation of the standalone financial statements that give a trueand fair view and are free from material misstatement whether due to fraud or error.
In preparing the standalone financialstatements the Management and Board of Directorsare responsible for assessing the Company's ability to continue as a going concerndisclosing as applicable matters related to going concern and using the going concernbasis of accounting unless the Board of Directors either intends to liquidate the Companyor to cease operations or has no realistic alternative but to do so.
The Board of Directors is also responsible for overseeing the Company's financialreporting process.
AUDITOR'S RESPONSIBILITIES 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 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 control relevant to the audit in order to designaudit procedures that are appropriate in the circumstances. Under section 143(3)(i) of theAct we are also responsible for expressing our opinion on whether the company hasadequate internal financial controls with reference to financial statements in place andthe operating effectiveness of such controls.
Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures in the standalone financial statements madeby the Management and Board of Directors.
Conclude on the appropriateness of the Management and Board of Directors use of thegoing concern basis of accounting and based on the audit evidence obtained whether amaterial uncertainty exists related to events or conditions that may cast significantdoubt on the Company's ability to continue as a going concern. If we conclude that amaterial uncertainty exists we are required to draw attention in our auditor's report tothe related disclosures in the standalone financialstatements 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 standalone financialstatements including the disclosures and whether the standalone financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.
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 auditors' 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 the Companies (Auditors' Report) Order 2016 ("the Order")issued by the Central Government in terms of section 143 (11) of the Act we give in the"Annexure A" a statement on the matters specified in paragraphs 3 and 4 of theOrder to the extent applicable.
2. (A) As required by Section 143(3) of the Act we report that:
a) We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit.
b) In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books
c) The standalone balance sheet the standalone statement of profit and loss (includingother comprehensive income) the standalone statement of changes in equity and thestandalone statement of cash flows dealt with by this Report are in agreement with thebooks 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 with reference tofinancial statements of the Company and the operating effectiveness of such controlsrefer to our separate Report in "Annexure B".
(B) With respect to the other matters to be included in the Auditors' Report inaccordance with Rule 11 of the Companies
(Audit and Auditors) Rules 2014 in our opinion and to the best of our information andaccording to the explanations given to us:
i. The Company has disclosed the impact of pending litigations as at March 31 2021 onits financial position in its standalone financial statements - Refer Note 34 and Note 45to 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 in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.
iv. The disclosures in the standalone financial statements regarding holdings as wellas dealings in specified bank notes during the period from November 8 2016 to December30 2016 have not been made in these standalone financial statements since they do notpertain to the financial year ended March 31 2021.
(C) With respect to the matter to be included in the Auditors' Report under section197(16):
In our opinion and according to the information and explanations given to us theremuneration paid by the Company to its directors during the current year is in accordancewith the provisions of Section 197 of the Act. The remuneration paid to any director isnot in excess of the limit laid down under Section 197 of the Act. The Ministry ofCorporate Affairs has not prescribed other details under Section 197(16) which arerequired to be commented upon by us.
ANNEXURE A TO THE INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF FORTIS MALAR HOSPITALSLIMITED FOR THE YEAR ENDED MARCH 31 2021
(Referred to in paragraph 1 under Report on Other Legal and RegulatoryRequirements' section of our report of even date)
(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 physical verification of its fixed assets by whichall fixed assets are verified every year. In our opinion this periodicity of physicalverification is reasonable having regard to the size of the Company and the nature of itsassets. According to the information and explanations given to us no materialdiscrepancies were noticed on such verification.
(c) According to the information and explanations given to us and based on theexamination of records produced by the Company the title/ lease deeds of the immoveableproperties/ lease property included in fixed assets is in the name of the Company.
(ii) The inventories have been physically verified by the management during the year.In our opinion the frequency of verification is reasonable and adequate to the size ofthe Company and the nature of its business. The discrepancies noticed on physicalverification during the year were not material and have been properly dealt with in thebooks of account.
(iii) According to the information and explanations given to us the Company hasgranted unsecured loans to companies covered in the register maintained under section 189of the Companies Act 2013 in respect of which:
(a) The terms and conditions of the grant of such loans as applicable are in ouropinion prima facie not prejudicial to the
(b) The schedule of repayment of principal and payment of interest has been stipulatedand repayments or receipts of principal amounts and interest have been regular as perapplicable stipulations.
(c) There is no overdue amount remaining outstanding as at the balance sheet date.
(iv) According to the information and explanations given to us the Company hascomplied with the provisions of Section 185 and
186 of the Companies Act 2013 in respect of loans investments guarantees andsecurity as applicable.
(v) According to the information and explanations given to us the Company has notaccepted deposits as mentioned in the directives issued by Reserve Bank of India and theprovisions of sections 73 to 76 or any other relevant provisions of the
Companies Act 2013 and the rules framed thereunder. Accordingly paragraph 3(v) of theOrder is not applicable.
(vi) We have broadly reviewed the books of account maintained by the Company pursuantto the rules prescribed by the Central
Government for maintenance of cost records under section 148(1) of the Companies Act2013 in respect of provision of services and are of the opinion that prima facie theprescribed accounts and records have been made and maintained. However we have not made adetailed examination of the records with a view to determine whether they are accurate orcomplete.
(vii) (a) According to the information and explanations given to us and on the basis ofour examination of the records of the Company amounts deducted / accrued in the books ofaccount in respect of undisputed statutory dues including provident fund employees' stateinsurance income tax goods and services tax and other material statutory dues have beengenerally regularly deposited during the year by the Company with the appropriateauthorities. As explained to us the Company did not have any dues on account of servicetax sales tax duty of customs duty of excise value added tax and cess.
According to the information and explanations given to us no undisputed amountspayable in respect of provident fund employees' state insurance income-tax goods andservices tax and other material statutory dues were in arrears as at
March 31 2021 for a period of more than six months from the date they became payable.
ANNEXURE A TO THE INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF FORTIS MALAR HOSPITALSLIMITED FOR THE YEAR ENDED MARCH 31 2021 (Contd.)
(b) According to the information and explanations given to us there are no dues ofincome tax sales tax value added tax duty of excise duty of customs and service taxwhich have not been deposited with the appropriate authorities on account of any disputesother than the following dues:
|Name of the statute ||Nature of dues ||Forum where dispute is pending ||Period to which amount relates to ||Amount involved (Rs.) ||Amount unpaid* (Rs.) |
|Income Tax Act 1961 ||Income Tax ||Honourable High Court of Madras ||FY 2009-10 ||2267402 ||- |
|Tamil Nadu Value Added Tax Act 2006 ||Value Added Tax ||Honourable High Court of Madras ||FY 2008-09 to FY 2011-12 ||25493296 ||25493296 |
*After considering refunds adjusted by the authorities
(viii) According to the information and explanations given to us the Company has nottaken any loan or borrowings from financial institutions banks and Government or has notissued any debentures. Accordingly paragraph 3(viii) of the Order is not applicable.
(ix) According to the information and explanations given to us the Company has notraised any money by way of initial public offer or further public offer (including debtinstruments) and term loans during the year.
(x) According to the information and explanations given to us no fraud by the Companyor on the Company by its officers or employees has been noticed or reported during thecourse of our audit.
(xi) In our opinion and according to information and explanations given to us theCompany has paid/provided managerial remuneration in accordance with the requisiteapprovals mandated by the provision of Section 197 read with Schedule V to the
Companies Act 2013.
(xii) In our opinion and 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) According to the information and explanations given to us and on the basis ofour examination of the books of account of the
Company transactions with the related parties are in compliance with Section 177 and188 of the Act where applicable and details of such transactions have been disclosed inthe standalone financial statements as required by the applicable accounting standards.
(xiv) According to the information and explanations given to us and based on ourexamination of the records of the Company 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 to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not entered into non-cashtransactions with directors or persons connected with him. Accordingly paragraph 3(xv) ofthe Order is not applicable.
(xvi) The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934.
Report on the internal financial controls with reference to the aforesaid standalonefinancial statements under Clause (i) of Sub-section 3 of Section 143 of the CompaniesAct 2013 (Referred to in paragraph 2(f) under Report on Other Legal and RegulatoryRequirements' section of our report of even date)
We have audited the internal financial controls with reference to financial statementsof Fortis Malar Hospitals Limited ("the Company") as of March 31 2021 inconjunction with our audit of the standalone financial statements of the Company for theyear ended on that date.
In our opinion the Company has in all material respects adequate internal financialcontrols with reference to financial statements and such internal financial controls wereoperating effectively as at March 31 2021 based on the internal financial controls withreference to financial statements criteria established by the Company considering theessential components of internal control stated in the Guidance Note on Audit of InternalFinancial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India (the "Guidance Note").
MANAGEMENT'S RESPONSIBILITY FOR INTERNAL FINANCIAL CONTROLS
The Company's management and the Board of Directors are responsible for establishingand maintaining internal financial controls based on the internal financial controls withreference to financial statements criteria established by the Company considering theessential components of internal control stated in the Guidance Note. Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to company's policies the safeguarding ofits assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the Companies Act 2013 (hereinafter referred to as"the Act").
Our responsibility is to express an opinion on the Company's internal financialcontrols with reference to financial statements based on our audit. We conducted our auditin accordance with the Guidance Note and the Standards on Auditing prescribed undersection 143(10) of the Act to the extent applicable to an audit of internal financialcontrols with reference to financial statements.
Those Standards and the Guidance Note require that we comply with ethical requirementsand plan and perform the audit to obtain reasonable assurance about whether adequateinternal financial controls with reference to financial statements were established andmaintained and whether such controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls with reference to financial statements and their operatingeffectiveness. Our audit of internal financial controls with reference to financialstatements included obtaining an understanding of such internal financial controlsassessing 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 standalone
financial statements whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the
Company's internal financial controls with reference to financial statements.
MEANING OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO FINANCIAL STATEMENTS
A company's internal financial controls with reference to financial statements is aprocess designed to provide 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 controls with reference tofinancial statements include those policies and procedures that (1) pertain to themaintenance 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 financialstatements in accordance with generally accepted accounting principles and that receiptsand expenditures of the company are being made only in accordance with authorisations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised acquisition use or disposition of thecompany's assets that could have a material effect on the Standalone financial statements.
INHERENT LIMITATIONS OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO FINANCIALSTATEMENTS
Because of the inherent limitations of internal financial controls with reference tofinancial statements including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected. Also projections of any evaluation of the internal financial controls withreference to standalone financial statements to future periods are subject to the riskthat the internal financial controls with reference to standalone financial statements maybecome inadequate because of changes in conditions or that the degree of compliance withthe policies or procedures may deteriorate.
for B S R & Co. LLP
Firm's Registration Number: 101248W/W-100022
Harsh Vardhan Lakhotia
Membership No. 222432
ICAI UDIN: 21222432AAAABP7551
Date: May 25 2021