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Glenmark Pharmaceuticals Ltd.

BSE: 532296 Sector: Health care
NSE: GLENMARK ISIN Code: INE935A01035
BSE 00:00 | 15 Nov 301.20 18.90
(6.70%)
OPEN

298.00

HIGH

305.40

LOW

290.20

NSE 00:00 | 15 Nov 301.00 18.95
(6.72%)
OPEN

297.80

HIGH

306.00

LOW

290.10

OPEN 298.00
PREVIOUS CLOSE 282.30
VOLUME 676118
52-Week high 706.90
52-Week low 267.30
P/E 7.19
Mkt Cap.(Rs cr) 8,500
Buy Price 298.50
Buy Qty 30.00
Sell Price 299.45
Sell Qty 635.00
OPEN 298.00
CLOSE 282.30
VOLUME 676118
52-Week high 706.90
52-Week low 267.30
P/E 7.19
Mkt Cap.(Rs cr) 8,500
Buy Price 298.50
Buy Qty 30.00
Sell Price 299.45
Sell Qty 635.00

Glenmark Pharmaceuticals Ltd. (GLENMARK) - Auditors Report

Company auditors report

To the Members of Glenmark Pharmaceuticals Limited

Report on the standalone financial statements

1. We have audited the accompanying standalone financial statements of GlenmarkPharmaceuticals Limited ('the Company') which comprise the Balance Sheet as at 31 March2018 the Statement of Profit and Loss (including Other Comprehensive Income/(loss)) theCash Flow Statement and the Statement of Changes in Equity for the year then ended and asummary of the significant accounting policies and other explanatory information.

Management's responsibility for the standalone financial statements

2. The Company's Board of Directors is responsible for the matters stated in Section134(5) of the Companies Act 2013 ('the Act') with respect

to the preparation of these standalone financial statements that give a true and fairview of the state of affairs (financial position) profit or loss (financial performanceincluding other comprehensive income/(loss)) cash hows and changes in equity of theCompany in accordance with the accounting principles generally accepted in Indiaincluding the Indian Accounting Standards (‘Ind AS') specified under Section 133 ofthe Act. This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding the assets of the Company andfor preventing 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 the accuracy and completeness ofthe accounting 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.

Auditor's responsibility

3. Our responsibility is to express an opinion on these standalone financial statementsbased on our audit.

4. We have taken into account the provisions of the Act the accounting and auditingstandards and matters which are required to be included in the audit report under theprovisions of the Act and the Rules made thereunder.

5. We conducted our audit in accordance with the Standards on Auditing specified underSection 143(10) of the Act. Those Standards require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetherthese standalone financial statements are free from material misstatement.

6. An audit involves performing procedures to obtain audit evidence about the amountsand the disclosures in the financial statements. The procedures selected depend on theauditor's judgment including the assessment of the risks of material misstatement of thefinancial statements whether due to fraud or error. In making those risk assessments theauditor considers internal financial controls relevant to the Company's preparation of thefinancial statements that give a true and fair view in order to design audit proceduresthat are appropriate in the circumstances. An audit also includes evaluating theappropriateness of the accounting policies used and the reasonableness of the accountingestimates made by the Company's Directors as well as evaluating the overall presentationof the financial statements.

7. We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on these standalone financial statements.

Opinion

8. In our opinion and to the best of our information and according to the explanationsgiven to

us the aforesaid financial statements give the information required by the Act in themanner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India including Ind AS specified under Section 133 of theAct of the state of affairs (financial position) of the Company as at 31 March 2018 andits profit (financial performance including other comprehensive (loss)) its cash hows andthe changes in equity for the year ended on that date.

Report on Other Legal and Regulatory Requirements

9. 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 a statement on the matters specified in paragraphs 3 and 4 of theOrder.

10. 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 31 March2018 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 31 March 2018 in conjunction with our audit of the financialstatements of the Company for the year ended on that date and our report dated 29 May 2018as per Annexure B expressed an unmodified opinion;

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. as detailed in Note 30 to the standalone financial statements has disclosed theimpact of pending litigations on its financial position;

ii. the Company did not have any longterm 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 disclosure requirements relating to holdings as well as dealings in specifiedbank notes were applicable for the period from 8 November 2016 to 30 December 2016 whichare not relevant to these standalone financial statements. Hence reporting under thisclause is not applicable.

For Walker Chandiok & Co LLP
Chartered Accountants
Firm's Registration No.: 001076N/N500013
Ashish Gupta
Partner
Membership No.: 504662
Place: New Delhi
Date: 29 May 2018

Annexure A

Based on the audit procedures performed for the purpose of reporting a true and fairview on the financial statements of the Company and taking into consideration theinformation 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 including quantitative details and situation of fixed assets.

(b) The Company has a regular program of physical verification of its fixed assetsunder which fixed assets are verified in a phased manner over a period of three yearswhich in our opinion is reasonable having regard to the size of the Company and thenature of its assets. In accordance with this program certain fixed assets were verifiedduring the year 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.

(ii) In our opinion the management has conducted physical verification of inventory atreasonable intervals during the year and no material discrepancies between physicalinventory and book records were noticed upon such physical verification.

(iii) The Company has granted loans to wholly owned subsidiaries being companiescovered in the register maintained under Section 189 of the Act; and with respect to thesame:

(a) in our opinion the terms and conditions of grant of such loans are not primafacie prejudicial to the Company's interest;

(b) the schedule of repayment of principal and interest has been stipulated wherein theprincipal amounts are repayable on demand and since the repayment of such loans has notbeen demanded in our opinion repayment of the principal amount and interest is regular;

(c) there is no overdue amount in respect of loans granted to such companies.

(iv) I n our opinion the Company has complied with the provisions of Sections 185 and186 of the Act in respect of loans given investments made guarantees and securitiesgiven.

(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 pursuantto the Rules made by the Central Government for the maintenance of cost records undersubsection (1) of Section 148 of the Act in respect of Company's products and services andare of the opinion that prima facie the prescribed accounts and records have been madeand maintained. However we have not made a detailed examination of the cost records witha view to determine whether they are accurate or complete.

(vii) (a) The Company is regular in depositing undisputed statutory dues includingprovident fund employees' state insurance income-tax sales-tax service tax duty ofcustoms duty of excise value added tax goods and service tax cess and other materialstatutory dues as applicable to the appropriate authorities. 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 duty of excise and value added tax on account of any dispute are as follows:

Statement of Disputed Dues

Name of the statute Nature of dues Amount (' in million) Amount paid under Protest (' in million) Period to which the amount relates Forum where dispute is pending
Income tax Act 1961 Disallowed development of new product expenditure u/s 35(2AB)* 49.23 AY 2005-06 Hon'able High Court Mumbai
Income tax Act 1961 Disallowance under reassessment order u/s 143(3) r.w.s 147. 1.26 A.Y. 2006-07 Commissioner of Income Tax (Appeal)
Income tax Act 1961 Disallowance of R&D expenses 15.76 - AY 2009-10 Commissioner of Income Tax (Appeal)
Income tax Act 1961 Transfer Pricing adjustment & allocation of R&D expenses to tax holiday units 39.82 AY 2009-10 Hon'able High Court Mumbai
Income tax Act 1961 Disallowance made under scrutiny assessment order u/s 143(3) 43.21 AY 2014-15 Commissioner of Income Tax (Appeal)
Central Sales tax Act 1956 Rejection of C forms 1.24 FY 2011-12 Additional Commissioner of Commercial Taxes (Appeal) Goa
The Goa VAT Act 2005 Disallowance of input tax credit 5.36 FY 2011-12 Additional Commissioner of Commercial Taxes (Appeal) Goa
The Gujarat VAT Act 2003 Disallowance of input tax credit 1.11 FY 2011-12 Joint Commissioner of Commercial Taxes (Appeal) Gujarat
The Goa VAT Act 2005 Disallowance of input tax credit on capital goods 3.88 FY 2012-13 Additional Commissioner of Commercial Taxes (Appeal) Goa
The Central Excise Act 1944 Levy of penalty for nonsubmission of proof of exports 10.00 Apr 2003 to Sept 2007 Customs Excise and Service Tax Appellate Tribunal ; Mumbai
The Central Excise Act 1944 Levy of penalty for nonsubmission of proof of exports* 16.31 Apr 2003 to Sept 2007 Customs Excise and Service Tax Appellate Tribunal ; Mumbai
The Central Excise Act 1944 Disallowances of rebate claims* 17.19 17.19 FY 2010-11 Jt. Secretary Dept. of Revenue Ministry of Finance
The Central Excise Act 1944 Excise Duty on domestic clearance 14.18 14.18 Apr 2005 to Apr 2009 Customs Excise and Service Tax Appellate Tribunal ; Mumbai
The Central Excise Act 1944 Excise Duty on domestic clearance* 7.99 7.99 Jan 2010 to Mar 2011 Customs Excise and Service Tax Appellate Tribunal ; Mumbai
The Central Excise Act 1944 Disallowances of Rebate claims 5.48 5.48 Apr 2008 to Mar 2011 Jt. Secretary Dept. of Revenue Ministry of Finance
The Central Excise Act 1944 Rebate claim in export of product manufactured at LL location. 0.10 FY 2016-17 Commissioner of Central Excise (Appeal) Mumbai
The Finance Act 1944 Demand for service tax under reverse mechanism 29.68 Apr 2004 to Apr 2006 Customs Excise and Service Tax Appellate Tribunal ; Mumbai

* These cases have been decided in favour of the Company by the appellate authorities.The concerned revenue department has gone further appeal against the decision. **

** A.Y./F.Y. - Assessment year/Financial year.

(viii) The Company has not defaulted in repayment of loans or borrowings to any bank orfinancial institution or government during the year.

The Company did not have any outstanding debentures during the year.

(ix) The Company did not raise moneys by way of initial public offer or further publicoffer (including debt instruments). In our opinion the term loans were applied for thepurposes for which the loans were obtained.

(x) No fraud by the Company or on the Company by its officers or employees has beennoticed or reported during the period covered by our audit.

(xi) Managerial remuneration has been paid and provided by the Company in accordancewith the requisite approvals mandated by the provisions of Section 197 of the Act readSchedule 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 been disclosed in the financial statements etc. as required by theapplicable Ind AS.

(xiv) During the year the Company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures.

(xv) In our opinion the Company has not entered into any non-cash transactions withthe directors or persons connected with them covered under Section 192 of the Act.

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

For Walker Chandiok & Co LLP
Chartered Accountants
Firm's Registration No.: 001076N/N500013
Ashish Gupta
Partner
Membership No.: 504662
Place: New Delhi
Date: 29 May 2018

Annexure B

Independent Auditor's report on the Internal Financial Controls under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 (‘the Act')

1. In conjunction with our audit of the standalone financial statements of GlenmarkPharmaceuticals Limited ("the Company") as of and for the year ended 31 March2018 we have audited the internal financial controls over financial reporting (IFCoFR) ofthe Company of as of 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 (‘the 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 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.

Auditors' 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 ICAI anddeemed to be prescribed under Section 143(10) of the Act to the extent applicable to anaudit of IFCoFR and the Guidance Note issued by the ICAI. Those Standards and theGuidance Note require that we comply with ethical requirements and plan and perform theaudit to obtain reasonable assurance about whether adequate IFCoFR were established andmaintained and if such controls operated effectively in all material respects.

4. Our audit involves performing procedures to obtain audit evidence about the adequacyof the IFCoFR and their operating effectiveness.

Our audit of IFCoFR included obtaining an understanding of IFCoFR assessing the riskthat a material weakness exists and testing and evaluating the design and operatingeffectiveness of internal control based on the assessed risk.

The procedures selected depend on the auditor's judgement including the assessment ofthe risks of material misstatement of the financial statements whether due to fraud orerror.

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 includes 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 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 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 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 31 March 2018 based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls over Financial Reportingissued by the ICAI.

For Walker Chandiok & Co LLP
Chartered Accountants
Firm's Registration No.: 001076N/N500013
Ashish Gupta
Partner
Membership No.: 504662
Place: New Delhi
Date: 29 May 2018