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Gennex Laboratories Ltd.

BSE: 531739 Sector: Health care
NSE: N.A. ISIN Code: INE509C01026
BSE 00:00 | 26 Sep 6.55 -0.25
(-3.68%)
OPEN

6.90

HIGH

6.90

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6.50

NSE 05:30 | 01 Jan Gennex Laboratories Ltd
OPEN 6.90
PREVIOUS CLOSE 6.80
VOLUME 204911
52-Week high 12.26
52-Week low 5.75
P/E 22.59
Mkt Cap.(Rs cr) 83
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 6.90
CLOSE 6.80
VOLUME 204911
52-Week high 12.26
52-Week low 5.75
P/E 22.59
Mkt Cap.(Rs cr) 83
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Gennex Laboratories Ltd. (GENNEXLAB) - Auditors Report

Company auditors report

To the Members of

Gennex Laboratories Limited

Report on the Audit of the Standalone Financial Statements

Qualified Opinion

1. We have audited the accompanying standalone financial statements ofGennex Laboratories Limited ('the Company') which comprise the Standalone Balance Sheetas at 31st March 2021 the Standalone Statement of Profit and Loss (including OtherComprehensive Income) the Standalone Cash Flow Statement and the Standalone Statement ofChanges in Equity for the year then ended and a summary of significant accountingpolicies and other explanatory information.

2. In our opinion and to the best of our information and according tothe explanations given to us except for the information referred to in Basis for Qualifiedopinion of our report the aforesaid standalone financial statements give the informationrequired by 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 Indiaincluding Indian Accounting Standards ('Ind AS') specified under section 133 of the Actof the state of affairs (Financial position) of the Company as at 31st March2021 and itsprofit (financial performance including other comprehensive income) its cash flows andthe changes in equity for the year ended on that date.

Basis for Qualified Opinion

3. The Balances of Current Assets Other Non-Current AssetsNon-Current Liabilities Other Non-Current Liabilities Current Liabilities &OtherCurrent Liability are subject to Confirmation/reconciliations. The Impact of the same isunascertained.

4. We conducted our audit in accordance with the Standards on Auditing(SAs) specified under section 143(10) of the Act. Our responsibilities under thosestandards are further described in the Auditor's Responsibilities for the Audit of theFinancial 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 ('ICAI') together with the ethical requirements that are relevant to our audit ofthe financial statements under the provisions of the Act and the rules thereunder and wehave fulfilled our other ethical responsibilities in accordance with these requirementsand the Code of Ethics. We believe that the audit evidence we have obtained is sufficientand appropriate to provide a basis for our opinion.

Key Audit Matter

5. Key audit matters are those matters that in our professionaljudgment were of most significance in our audit of the standalone financial statements ofthe current period. These matters were addressed in the context of our audit of thefinancial statements as a whole and in forming our opinion thereon and we do not providea separate opinion on these matters.

6. We have determined the matter described below to be the key auditmatters to be communicated in our report.

Key Audit Matter How our Audit addressed the key audit matter
Carrying value of Investment in Associate entity. As informed to us The Company is still in the construction stage and yet to commence the operation Hence valued at Cost. Discussion with the management on the development in these litigations during year ended March 31st 2021 Review of the disclosures made by the company in the financial statements in this regard.
The Company has an investment of Rs 700 lakhs in its associate Deccan Remedies ltd Obtain representation letter from the management on the assessment of these matters.
Pending Land registration

Information other than the Financial Statements and Auditor's Reportthereon

7. The Company's Board of Directors is responsible for the otherinformation. The other information comprises the information included in the AnnualReport but does not include the financial statements and our auditor's report thereon.Our opinion on the financial statements does not cover the other information and we willnot express any form of assurance conclusion thereon. In connection with our audit of thefinancial statements our responsibility is to read the other information and in doingso consider whether the other information is materially inconsistent with the financialstatements or our knowledge obtained in the audit or otherwise appears to be materiallymisstated. If based on the work we have performed we conclude that there is a materialmisstatement of this other information; we are required to report that fact. We havenothing to report in this regard.

Responsibilities of Management for the Standalone Financial Statements

8. The Company's Board of Directors is responsible for the mattersstated in section 134(5) of the Act with respect to the preparation of these standalonefinancial statements that give a true and fair view of the state of affairs (financialposition) profit or loss (financial performance including other comprehensive income)cash flows and changes in equity of the Company in accordance with the accountingprinciples generally accepted in India including the Ind AS specified under section 133of the Act. This responsibility also includes maintenance of adequate accounting recordsin accordance with the provisions of the Act for safeguarding of the assets of the Companyand for preventing and detecting frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; and design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe financial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.

9. In preparing the 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.

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

Auditors Responsibilities for the Audit of the Financial Statements

11. Our objectives are to obtain reasonable assurance about whether thefinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report on Standalone Financials that includes ouropinion. Reasonable assurance is a high level of assurance but is not a guarantee that anaudit conducted in accordance with Standards on Auditing will always detect a materialmisstatement when it exists. Misstatements can arise from fraud or error and areconsidered material if individually or in the aggregate they could reasonably beexpected to influence the economic decisions of users taken on the basis of thesefinancial statements.

12. As part of an audit in accordance with Standards on Auditing weexercise professional judgment and maintain professional skepticism throughout the audit.We also:

• Identify and assess the risks of material misstatement of thefinancial 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 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 explaining 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 management.

• Conclude on the appropriateness of management's use of the goingconcern basis 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 financial statements or if such disclosures are inadequate tomodify our opinion. Our conclusions are based on the audit evidence obtained up to thedate of our auditor's report. However future events or conditions may cause the Companyto cease to continue as a going concern.

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

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

14. We also provide those charged with governance with a statement thatwe have 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.

15. From the matters communicated with those charged with governancewe determine those matters that were of most significance in the audit of the financialstatements of the current period and are therefore the key audit matters. We describethese matters in our auditor's report unless law or regulation precludes public disclosureabout the matter or when in extremely rare circumstances we determine that a mattershould not be communicated in our report because the adverse consequences of doing sowould reasonably be expected to outweigh the public interest benefits of suchcommunication.

Report on Other Legal and Regulatory Requirements

16. As required by the Companies (Auditor's Report) Order 2016 ('theOrder') issued by the Central Government of India in terms of section 143(11) of the Actwe give in the Annexure A statement on the matters specified in paragraphs 3 and 4 of theOrder.

17. Further to our comments in Annexure A as required by section143(3) of the Act we report that:

a) we have sought and obtained all the information and explanationswhich to the best of our knowledge and belief were necessary for the purpose of our audit;

b) In our opinion proper books of account as required by law have beenkept by the Company so far as it appears from our examination of those books;

c) the standalone financial statements dealt with by this report are inagreement with the books of account;

d) In our opinion the aforesaid standalone financial statements complywith Ind AS specified under section 133 of the Act;

e) on the basis of the written representations received from thedirectors and taken on record by the Board of Directors none of the directors isdisqualified as on 31 March 2021 from being appointed as a director in terms of section164(2) of the Act;

f) we have also audited the internal financial controls over financialreporting (IFCoFR) of the Company as on 31st March 2021 in conjunction with our audit ofthe standalone financial statements of the Company for the year ended on that date and ourreport as per Annexure B expressed unmodified opinion; and

g) with respect to the other matters to be included in the Auditor'sReport in accordance with rule 11 of the

Companies (Audit and Auditors) Rules 2014 (as amended) in our opinionand to the best of our information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations on itsfinancial position as at 31 March 2021;

ii. The Company did not have any long-term contracts includingderivative contracts for which there were any material foreseeable losses as at 31 March2021;

iii. There has been no delay in transferring amounts required to betransferred to the Investor Education and Protection Fund by the Company during the yearended 31 March 2021; and

iv. The disclosure requirements relating to holdings as well asdealings in specified bank notes were applicable for the period from 8 November 2016 to 30December 2016 which are not relevant to these standalone financial statements. Hencereporting under this clause is not applicable.

18. As required by section 197(16) of the Act we report that theCompany has paid remuneration to its directors during the year in accordance with theprovisions of and limits laid down under section 197 read with Schedule V to the Act.

Annexure A to the Independent Auditor's Report of even date to themembers of Gennex Laboratories Limited on the standalone financial statements for theyear ended 31st March 2021

Based on the audit procedures performed for the purpose of reporting atrue and fair view on the standalone financial statements of the Company and taking intoconsideration the information and explanations given to us and the books of account andother records examined by us in the normal course of audit and to the best of ourknowledge and belief we report that:

(a) The Company has maintained proper records showing full particularsincluding quantitative details and situation of fixed assets.

(b) The Company has a regular program of physical verification of itsfixed assets under which fixed assets are verified in a phased manner over a period ofthree years which in our opinion is reasonable having regard to the size of the Companyand the nature of its assets. In accordance with this program certain fixed assets wereverified during the year and no material discrepancies were noticed on such verification.

(c) The title deeds of all the immovable properties (which are includedunder the head 'Property plant and equipment') are held in the name of the Company exceptfor the Land case amounting to Rs. 77875000 is pending registration

(i) In our opinion the management has conducted physical verificationof inventory at reasonable intervals during the year No material discrepancies werenoticed on the aforesaid verification.

(ii) The Company has not granted any loans secured or unsecured tocompanies firms Limited Liability Partnerships or other parties covered in the registermaintained under Section 189 of the Act. Therefore the provisions of Clause 3(iii)(iii)(a) (iii)(b) and (iii)(c) of the said Order are not applicable to the Company

(iii) In our opinion the Company has complied with the provisions ofSection 186 in respect of investments and loans. Further in our opinion the Company hasnot entered into any transaction covered under Section 185 and Section 186 of the Act inrespect of guarantees and security.

(iv) In our opinion the Company has not accepted any deposits withinthe meaning of Sections 73 to 76 of The Act and the Companies (Acceptance of Deposits)Rules 2014 (as amended). Accordingly the provisions of clause 3(v) of the Order are notapplicable.

(v) We have broadly reviewed the books of account maintained by theCompany pursuant to the Rules made by the Central Government for the maintenance of costrecords under sub-section (1) of Section 148 of the Act As informed to us the provisionof sec 148(1) are now applicable and the Cost audit for the year 2020-21 is in progress.

(vi) (a) Undisputed statutory dues including provident fund employees'state insurance income-tax goods and service tax duty of customs cess and othermaterial statutory dues as applicable have generally been regularly deposited with theappropriate authorities though there has been a slight delay in a few cases. Further noundisputed amounts payable in respect thereof were outstanding at the year-end for aperiod of more than six months from the date they became payable.

(b) The dues outstanding in respect of Income tax sales-taxservice-tax duty of customs on account of disputes are as follows:

Nature of Statute Nature of Dues Amount (Rs in Lacs) (Disputed) Period to which the amount relates to Forum where the dispute is pending
1 CST Sales Tax 96.47 2001-02 High Court
2 CST Sales Tax 14.57 2007-08 Appellate DC(CT)
Total 111.04
Assmt year
3 Income Tax Income Tax 8.22 2001-02 Appellate Authority
Income Tax 37.36 2002-03 Appellate Authority
Income Tax 3.81 2015-16 Appellate Authority
Income Tax 9.75 2019-20 Appellate Authority
Total 59.14

(vii) The Company has not defaulted in repayment of loans or borrowingsto any bank during the year. The Company has loans or borrowings payable to financialinstitutions or government and does not have any outstanding debentures during the year.

(viii) In our opinion and according to the information andexplanations given to us the moneys raised by way of term loans have been applied on anoverall basis for the purposes for which they were obtained. The Company has not raisedany moneys by way of initial public offer or further public offer (including debtinstruments)

(ix) During the course of our examination of the books and records ofthe Company carried out in accordance with the generally accepted auditing practices inIndia and according to the information and explanations given to us we have neither comeacross any instance of material fraud by the Company or on the Company by its officers oremployees noticed or reported during the year nor have we been informed of any such caseby the Management

(x) Managerial remuneration has been paid / provided by the Company inaccordance with the requisite approvals mandated by the provisions of Section 197 of theAct read with Schedule V to the Act.

(xi) In our opinion the Company is not a Nidhi Company. Accordinglyprovisions of clause 3(xii) of the Order are not applicable.

(xii) In our opinion all transactions with the related parties are incompliance with Sections 177 and 188 of Act where applicable and the requisite detailshave been disclosed in the standalone financial statements etc. as required by theapplicable Ind AS.

(xiii) During the year the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures.Accordingly provisions of the clause 3(xiv) of the order are not applicable.

(xiv) In our opinion the Company has not entered into any non-cashtransactions with the directors or persons connected with them covered under Section 192of the Act. Accordingly the provisions of clause 3(xv) of the order are not applicable.

(xv) The Company is not required to be registered under Section 45-IAof the Reserve Bank of India Act 1934.

Annexure B to the Independent Auditor's Report of even date to themembers of Gennex laboratories Limited on the standalone financial statements forthe year ended 31st March 2021

Independent Auditor's Report on the Internal Financial Controls underClause (i) of Sub-section 3 of Section 143 of the

Companies Act 2013 ('the Act')

Opinion

1. In conjunction with our audit of the standalone financial statementsof Gennex Laboratories Limited ('the Company') as at and for the year ended 31stMarch2021 we have audited the internal financial controls over financial reporting ('IFCoFR')of the Company as at that date.

2. In our opinion the Company has in all material respects adequateinternal financial controls over financial

Reporting and such controls were operating effectively as at 31 March2021 based on the internal control over financial reporting criteria established by thecompany considering the essential components of internal control stated in the GuidanceNote issued by the ICAI.

Management's Responsibility for Internal Financial Controls

3. The Company's Board of Directors is responsible for establishing andmaintaining internal financial controls based on the internal control over financialreporting criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls overFinancial Reporting ('the Guidance Note') issued by the Institute of Chartered Accountantsof India ('ICAI').These responsibilities include the design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the orderly and efficient conduct of the Company's business including adherenceto the Company'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 Act.

Auditor's Responsibility

4. Our responsibility is to express an opinion on the Company's IFCoFRbased on our audit. We conducted our audit in accordance with the Standards on Auditingissued by the ICAI and deemed to be prescribed under Section 143(10) of the Act to theextent applicable to an audit of IFCoFR and the Guidance Note issued by the ICAI. ThoseStandards and the Guidance Note require that we comply with ethical requirements and planand perform the audit to obtain reasonable assurance about whether adequate IFCoFR wereestablished and maintained and if such controls operated effectively in all materialrespects.

5. Our audit involves performing procedures to obtain audit evidenceabout the adequacy of the IFCoFR and their operating effectiveness. Our audit of IFCoFRincludes obtaining an understanding of IFCoFR assessing the risk that a material weaknessexists and testing and evaluating the design and operating effectiveness of internalcontrol based on the assessed risk. The procedures selected depend on the auditor'sjudgment including the assessment of the risks of material misstatement of the financialstatements whether due to fraud or error.

6. We believe that the audit evidence we have obtained is sufficientand appropriate to provide a basis for our audit opinion on the Company's IFCoFR.

Meaning of Internal Financial Controls over Financial Reporting

7. A company's IFCoFR is a process designed to provide reasonableassurance regarding the reliability of financial reporting and the preparation offinancial statements for external purposes in accordance with generally acceptedaccounting principles. A company's IFCoFR include those policies and procedures that (1)pertain to the maintenance of records that in reasonable detail accurately and fairlyreflect the transactions and dispositions of the assets of the company;

(2) Provide reasonable assurance that transactions are recorded asnecessary to permit preparation of financial statements in accordance with generallyaccepted accounting principles and that receipts and expenditures of the company arebeing made only in accordance with authorizations of management and directors of thecompany; and

(3) Provide reasonable assurance regarding prevention or timelydetection of unauthorised acquisition use or disposition of the company's assets thatcould have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls over FinancialReporting

8. Because of the inherent limitations of IFCoFR including thepossibility of collusion or improper management override of controls materialmisstatements due to error or fraud may occur and not be detected. Also projections ofany evaluation of the IFCoFR to future periods are subject to the risk that the IFCoFR maybecome inadequate because of changes in conditions or that the degree of compliance withthe policies or procedures may deteriorate.

For PPKG& Co
Chartered Accountants
Firm's Registration No.: 009655S
Girdhari Lal Toshniwal
Partner
Membership No: 205140
UDIN: 21205140AAAAIW7065
Place: Hyderabad
Date: 30th June 2021

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