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Gennex Laboratories Ltd.

BSE: 531739 Sector: Health care
NSE: N.A. ISIN Code: INE509C01026
BSE 00:00 | 09 Apr 3.02 0.50
(19.84%)
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3.00

HIGH

3.02

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2.65

NSE 05:30 | 01 Jan Gennex Laboratories Ltd
OPEN 3.00
PREVIOUS CLOSE 2.52
VOLUME 427504
52-Week high 4.39
52-Week low 1.32
P/E 20.13
Mkt Cap.(Rs cr) 38
Buy Price 3.02
Buy Qty 30265.00
Sell Price 3.02
Sell Qty 7850.00
OPEN 3.00
CLOSE 2.52
VOLUME 427504
52-Week high 4.39
52-Week low 1.32
P/E 20.13
Mkt Cap.(Rs cr) 38
Buy Price 3.02
Buy Qty 30265.00
Sell Price 3.02
Sell Qty 7850.00

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 of GennexLaboratories Limited (‘the Company') which comprise the Standalone Balance Sheet asat March 31 2019 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 to the explanationsgiven to us except for the information referred to in Basis for Qualified opinion of ourreport the aforesaid standalone financial statements give the information required by theCompanies Act 2013 (‘Act') in the manner so required and give a true and fair viewin conformity with the accounting principles generally accepted in India including IndianAccounting Standards (‘Ind AS') specified under section 133 of the Act of the stateof affairs (Financial position) of the Company as at March 31 2019 and its profit(financial performance including other comprehensive income) its cash flows and thechanges in equity for the year ended on that date.

Basis for Qualified Opinion

3. The Balances of Current Financial Assets Other Non-Current Assets Non CurrentLiabilities and Current Liabilities other current liability are subject to Confirmation/reconciliations. The Impact of the same is unascertained.

4. We conducted our audit in accordance with the Standards on Auditing specified undersection 143(10) of the Act. Our responsibilities under those standards are furtherdescribed in the Auditor's Responsibilities for the Audit of the Financial Statementssection of our report. We are independent of the Company in accordance with the Code ofEthics issued by the Institute of Chartered Accountants of India (‘ICAI') togetherwith the ethical requirements that are relevant to our audit of the financial statementsunder the provisions of the Act and the rules there under and we have fulfilled our otherethical responsibilities in accordance with these requirements and the Code of Ethics. Webelieve that the audit evidence we have obtained is sufficient and appropriate to providea basis for our opinion.

Key Audit Matter

5. 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 financial statements as awhole and in forming our opinion thereon and we do not provide a separate opinion onthese matters.

6. We have determined the matter described below to be the key audit matters to becommunicated 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.
The Company has an investment of '700 lakhs in its associate Deccan Remedies ltd
Pending Land registration Discussion with the management on the development in these litigations during year ended March 31 2019
Review of the disclosures made by the company in the financial statements in this regard.
Obtain representation letter from the management on the assessment of these matters.

Information other than the Financial Statements and Auditor's Report thereon

7. The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Annual Report but does not includethe financial statements and our auditor's report thereon. Our opinion on the financialstatements does not cover the other information and we will not express any form ofassurance conclusion thereon. In connection with our audit of the financial statementsour responsibility is to read the other information and in doing so consider whethertheother information is materially inconsistent with the financial statements or ourknowledge obtained in the audit or otherwise appears to be materially misstated. If basedon the work we have performed we conclude that there is a material misstatement of thisother information; we are required to report that fact. We have nothing to report in thisregard.

Responsibilities of Management for the Standalone Financial Statements

8. The Company's Board of Directors is responsible for the matters stated in section134(5) of the Act with respect to the preparation of these standalone financial statementsthat give a true and fair view of the state of affairs (financial position) profit orloss (financial performance including other comprehensive income) cash flows and changesin equity of the Company in accordance with the accounting principles generally acceptedin India including the Ind AS specified under section 133 of the Act. This responsibilityalso includes maintenance of adequate accounting records in accordance with the provisionsof the 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 wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the financial statements thatgive a true and fair view and are free from material misstatement whether due to fraud orerror.

9. In preparing the financial statements management is responsible for assessing theCompany's ability to continue as a going concern disclosing as applicable mattersrelated to going concern and using the going concern basis of accounting unless managementeither intends to liquidate the Company or to cease operations or has no realisticalternative but to do so.

10. The Board of Directors are also responsible for overseeing the Company's financialreporting process.

Auditors Responsibilities for the Audit of the Financial Statements

11. Our objectives are to obtain reasonable assurance about whether the financialstatements as a whole are free from material misstatement whether due to fraud or errorand to issue an auditor's report Standalone Financials that includes our opinion.Reasonable assurance is a high level of assurance but is not a guarantee that an auditconducted 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 we exerciseprofessional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the 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 over ride of internal control.

• Obtain an understanding of internal control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under section 143(3)(i)of the Act we are also responsible for explaining our opinion on whether the company hasadequate internal financial controls system in place and the operating effectiveness ofsuch controls.

• Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management's use of the going concern basisof accounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe financial statements or if such disclosures are inadequateto modify our opinion. Ourconclusions are based on the audit evidence obtained up to the date of our auditor'sreport. However future events or conditions may cause the Company to cease to continue asa going concern.

• Evaluate the overall presentation structure and content of the financialstatements including the disclosures and whether the financial statements represent theunderlying transactions and events in a manner that achieves fair presentation.

13. We communicate with those charged with governance regarding among other mattersthe planned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.

14. We also provide those charged with governance with a statement that we havecomplied with relevant ethical requirements regarding independence and to communicatewith them all relationships and other matters that may reasonably be thought to bear onour independence and where applicable related safeguards.

15. From the matters communicated with those charged with governance we determinethose matters that were of most significance in the audit of the financial statements ofthe current period and are therefore the key audit matters. We describe these matters inour auditor's report unless law or regulation precludes public disclosure about the matteror 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

16. As required by section 197(16) of the Act we report that the Company has paidremuneration to its directors during the year in accordance with the provisions of andlimits laid down under section 197 read with Schedule V to the Act.

17. As required by the Companies (Auditor's Report) Order 2016 (‘the Order')issued by the Central Government of India in terms of section 143(11) of the Act we givein the Annexure A statement on the matters specified in paragraphs 3 and 4 of the Order.

18. Further to our comments in Annexure A as required by section 143(3) of the Act wereport that:

a. we have sought and obtained all the information and explanations which to the bestof 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 been kept by theCompany so far as it appears from our examination of those books;

c. the standalone financial statements dealt with by this report are in agreement withthe books of account;

d. In our opinion the aforesaid standalone financial statements comply with Ind ASspecified under section 133 of the Act;

e. on the basis of the written representations received from the directors and taken onrecord by the Board of Directors none of the directors is disqualified as on March 312019 from being appointed as a director in terms of section 164 (2) of the Act;

f. we have also audited the internal financial controls over financial reporting(IFCoFR) of the Company as on March 31 2019 in conjunction with our audit of thestandalone 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's Report inaccordance with rule 11 of the Companies (Audit and Auditors) Rules 2014 (as amended) inour opinion and to the best of our information and according to the explanations given tous:

i. the Company has disclosed the impact of pending litigations on its financialposition as at March 31 2019;

ii. the Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses as at March 31 2019;

iii. there has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company during the year ended March 312019; and the disclosure requirements relating to holdings as well as dealings inspecified bank notes were applicable for the period from November 8 2016 to December 302016 which are not relevant to these standalone financial statements. Hence reportingunder this clause is not applicable.

h. The above financial statements include Statement of Branch of the Company which hasbeen audited by the auditors whose report have been furnished to us by the management andour opinion on the branch financial statements is so far as it relates to the amounts anddisclosures included in respect of the branch solely based on the reports of the otherauditors.

For PPKG & Co.
Chartered Accountants
Firm Regn. No. 009655S
Giridhari Lal Toshniwal
Place: Hyderabad Partner
Date: 30.05.2019 Membership No. 205140

Annexure A to the Independent Auditor's Report of even date to the members of GennexLaboratories Limited on the standalone financial statements for the year ended March 312019

Based on the audit procedures performed for the purpose of reporting a true and fairview on the standalone financial statements of the Company and taking into considerationthe information and explanations given to us and the books of account and other recordsexamined by us in the normal course of audit and to the best of our knowledge and beliefwe report that:

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

b. The Company has a regular program of physical verification of its fixed assets underwhich fixed assets are verified in a phased manner over a period of three years which inour opinion is reasonable having regard to the size of the Company and the nature of itsassets. In accordance with this program certain fixed assets were verified during theyear and no material discrepancies were noticed on such verification.

c. The title deeds of all the immovable properties (which are included under the head‘Property plant and equipment') are held in the name of the Company except for theLand case amounting to '77875000 is pending registration

ii. In our opinion the management has conducted physical verification of inventory atreasonable intervals during the year No material discrepancies were noticed on theaforesaid verification.

iii. The Company has not granted any loans secured or unsecured to companies firmsLimited Liability Partnerships or other parties covered in the register maintained underSection 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

iv. In our opinion the Company has complied with the provisions of Section 186 inrespect of investments and loans. Further in our opinion the Company has not enteredinto any transaction covered under Section 185 and Section 186 of the Act in respect ofguarantees and security.

v. In our opinion the Company has not accepted any deposits within the meaning ofSections 73 to 76 of The Act and the Companies (Acceptance of Deposits) Rules 2014 (asamended). Accordingly the provisions of clause 3(v) of the Order are not applicable.

vi. We have broadly reviewed the books of account maintained by the Company pursuant tothe Rules made by the Central Government for the maintenance of cost records under theprovisions of Section 148 of the Act. As informed to us the provisions of Sec. 148(1) arenow applicable and the Cost Audit for the year 2018-19 is in progress.

vii a. Undisputed statutory dues including provident fund employees' state insuranceincome-tax goods and service tax duty of customs cess and other material statutorydues as applicable have generally been regularly deposited with the appropriateauthorities though there has been a slight delay in a few cases. Further no undisputedamounts payable in respect thereof were outstanding at the year-end for a period of morethan six months from the date they became payable.

b. The dues outstanding in respect of Income tax sales-tax service-tax duty ofcustoms on account of disputes are as follows:

Nature of Statute Nature of Dues Amount (' in Lacs) (Disputed) Period to which the amount relates to From 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
Total 45.58

viii. The Company has not defaulted in repayment of loans or borrowings to any bankduring the year. The Company has no loans or borrowings payableto financial institutionsor government and does not have any outstanding debentures during the year.

ix. In our opinion and according to the information and explanations given to us themoneys raised by way of term loans have been applied on an overall basis for thepurposes for which they were obtained. The Company has not raised any moneys by way ofinitial public offer or further public offer (including debt instruments)

x. During the course of our examination of the books and records of the Companycarried out in accordance with the generally accepted auditing practices in India andaccording to the information and explanations given to us we have neither come across anyinstance of material fraud by the Company or on the Company by its officers or employeesnoticed or reported during the year nor have we been informed of any such case by theManagement

xi. Managerial remuneration has been paid / provided by the Company in accordance withthe requisite approvals mandated by the provisions of Section 197 of the Act read withSchedule V to the Act.

xii. In our opinion the Company is not a Nidhi Company. Accordingly provisions ofclause 3(xii) of the Order are not applicable.

xiii. In our opinion all transactions with the related parties are in compliance withSections 177 and 188 of Act where applicable and the requisite details have beendisclosed in the standalone financial statements etc. as required by the applicable IndAS.

xiv. During the year the Company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures. Accordingly provisions ofthe clause 3(xiv) of the order are not applicable.

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

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

For PPKG & Co.
Chartered Accountants
Firm Regn. No. 009655S
Giridhari Lal Toshniwal
Place: Hyderabad Partner
Date: 30.05.2019 Membership No. 205140

Annexure B to the Independent Auditor's Report of even date to the members of Gennex

Laboratories Limited on the standalone financial statements for the year ended March31 2019

Independent Auditor's Report on the Internal Financial Controls under Clause (i) ofSubsection 3 of Section 143 of the Companies Act 2013 (‘the Act')

1. In conjunction with our audit of the standalone financial statements of GennexLaboratories Limited (‘the Company') as at and for the year ended March 31 2019 wehave audited the internal financial controls over financial reporting (‘IFCoFR') ofthe Company as at that date.

Management's Responsibility for Internal Financial Controls

2. The Company's Board of Directors is responsible for establishing and maintaininginternal financial controls based on the internal control over financial reportingcriteria established by the Company considering the essential components of internalcontrol stated in the Guidance Note on Audit of Internal Financial Controls over FinancialReporting (‘the Guidance Note') issued by the Institute of Chartered Accountants ofIndia (‘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

3. Our responsibility is to express an opinion on the Company's IFCoFR based on ouraudit. We conducted our audit in accordance with the Standards on Auditing issued by theICAI and deemed to be prescribed under Section 143(10) of the Act to the extentapplicable 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.

4. Our audit involves performing procedures to obtain audit evidence about the adequacyof the IFCoFR and their operating effectiveness. Our audit of IFCoFR includes obtaining anunderstanding of IFCoFR assessing the risk that a material weakness exists and testingand evaluating the design and operating effectiveness of internal control based on theassessed risk. The procedures selected depend on the auditor's judgment including theassessment of the risks of material misstatement of the financial statements whether dueto fraud or error.

5. We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's IFCoFR.

Meaning of Internal Financial Controls over Financial Reporting

6. A company's IFCoFR is a process designed to provide reasonable assurance regardingthe reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles. A company'sIFCoFR include those policies and procedures that (1) pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures of the company are being made only in accordance with authorizations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of un authorised acquisition use or disposition of thecompany's assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls over Financial Reporting

7. Because of the inherent limitations of IFCoFR including the possibility ofcollusion or improper management override of controls material misstatements due to erroror fraud may occur and not be detected. Also projections of any evaluation of the IFCoFRto future periods are subject to the risk that the IFCoFR may become inadequate because ofchanges in conditions or that the degree of compliance with the policies or proceduresmay deteriorate.

Opinion

8. In our opinion the Company has in all material respects adequate internalfinancial controls over financial reporting and such controls were operating effectivelyas at March 31 2019 based on the internal control over financial reporting criteriaestablished by the company considering the essential components of internal control statedin the Guidance Note issued by the ICAI.

For PPKG & Co.
Chartered Accountants
Firm Regn. No. 009655S
Giridhari Lal Toshniwal
Place: Hyderabad Partner
Date: 30.05.2019 Membership No. 205140