The Members of Gufic Biosciences Limited
Report on the Audit of the Standalone Financial Statements
1. We have audited the accompanying standalone financial statements of GuficBiosciences Limited (the Company) which comprise the Balance Sheet as atMarch 31 2020 the Statement of Profit and Loss (including Other Comprehensive Income)the Statement of Cash Flows and the Statement of Changes in Equity for the year thenended and notes to the standalone financial statements including a summary of significantaccounting policies and other explanatory information.
2. In our opinion and to the best of our information and according to theexplanations given to us the aforesaid standalone financial statements give theinformation required by the Companies Act 2013 (the Act) in the manner sorequired and give a true and fair view in conformity with accounting principles generallyaccepted in India including Indian Accounting Standards (Ind AS) specifiedunder section 133 of the Act of the state of affairs of the Company as at March 31 2020its profit including its other comprehensive income its cashflows and the changes inequity for the year ended on that date
3. We conducted our audit of the standalone financial statements in accordance with theStandards on Auditing (SAs) specified under section 143(10) of the Act. Ourresponsibilities under those Standards are further described in the Auditor'sResponsibility for the Audit of the Standalone Financial Statements section of our report.We are independent of the Company in accordance with the Code of Ethics issued by theInstitute of Chartered Accountants of India (ICAI) together with the ethical requirementsthat are relevant to our audit of the standalone financial statements under the provisionsof the Act and the Rules made thereunder and we have fulfilled our other ethicalresponsibilities in accordance with these requirements and the ICAI's Code of Ethics. Webelieve that the audit evidence obtained by us is sufficient and appropriate to provide abasis for our audit opinion on the standalone financial statements.
Emphasis of Matter:
4. Attention is invited to note no. 50 of the standalone financial statements onthe assessment of the management in respect of impact of Covid - 19 pandemic on thefinancial statements and operation of the company. Our opinion is not modified in respectof the above matters.
Our opinion is not modified in respect of the above matters.
Key Audit Matters
5. Key audit matters are those matters that in our professional judgment were ofmost significance in our audit of the standalone financial statements of the currentperiod.These matters were addressed in the context of our audit of the standalonefinancial statements as a whole and in forming our opinion thereon and we do not providea separate opinion on these matters.
|Sr. No. ||Key Audit Matter ||How the matter was addressed in our audit |
|(i) ||Revenue Recognition (Refer to Note No. 2.11 of the Significant Accounting Policies & Note 27) || |
| || ||Our audit procedures amongst others included the following: |
| || Revenue from sale of goods is recognised when a promise in a customer contract (performance obligation) has been satisfied by transferring control over the promised goods to the customer. Revenue from the sale of goods is measured at the fair value of the consideration received or receivable after adjusting variable components like sales returns. || assessed the appropriateness of the Company's revenue recognition accounting policies by comparing with applicable accounting standards. |
| || The actual point in time when revenue is recognised varies depending on the specific terms and conditions with the customers. || assessed and tested the design implementation and operating effectiveness of management's key controls over revenue recognition including those relating to sales return. |
| || There is a risk of revenue being overstated by recognizing the revenue earlier than the transfer of control. || Performed substantive testing of selected samples of revenue transactions recorded during the year end. |
| || The Company provides a right of return to its customers as a common business practice. The initial revenue recognition is reduced taking into consideration the anticipated sales returns. There are key estimates and significant judgements which are involved in assessing the anticipated sales return. ||Verified contractual terms of sales invoices / contracts shipping documents and confirmation / communication with the customers to ascertain a point of time when control was transferred to the customers; |
| || || Relied on the management estimates of the deductions made to the gross sales for anticipated sales returns. |
| || Hence the revenue recognition has been considered as a key audit matter. ||Tested the sales return data and key consideration used to determine the provisions made considering the past and future anticipated returns. |
| || || considered the adequacy of the disclosures in respect of revenue in terms of relevant accounting standard. |
|(ii) Inventory its valuation and provisions thereof (Refer Note 2.7 of the Significant Accounting Policies) || |
| The Company holds inventory at various locations including factory various depots and third-party locations. Hence existence of inventory is of significant importance. ||Our audit procedures amongst other sincluded the following: |
| Inventory valuation involves significant assumptions and estimations made by the Management. || assessed the appropriateness of the inventories accounting policies and its compliances with applicable accounting standards. |
|Management also makes an estimate for near expiry and slow-moving inventory based on the age of the inventory. || evaluated the design of key internal financial controls and operating effectiveness of the relevant key controls with respect to physical verification of inventory valuation of inventory and provision for inventory. |
| We have identified inventory as a key audit matter because of the number of locations that inventory is held and the judgment applied in the valuation of inventory and provision for inventory. || year-end inventory count could not be performed on account of Covid- 19 situation by the management. The physical count of inventory was carried out by an Independent Chartered Accountants subsequently at selected locations as per our instructions. Alternative procedures have been performed and the inventory balances have been rolled back to year-end. |
| || tested on a sample basis the valuation of inventories as at the year end and the Management's assessment of provision required for near expiry and slow-moving inventories held as at the balance sheet date. |
|iii) Trade Receivable Provisioning || |
| ||Our audit procedures include the following substantive procedures: |
|Balance of trade receivables is material and considering company's business there is inherent risk that the company's receivable may not be realized. There are key estimates and significant judgements which are involved in assessing provisioning based on the Expected Credit Loss Method and hence considered as Key Audit Matters. || assessed the classification of the balances in the receivables ageing by performing an independent recomputation of the aged receivables |
| || for a sample of customer balances verified the subsequent receipts against the outstanding year end balances. |
| || understood the methodology used to calculate the provision towards the trade receivable and determined it was consistent with that applied in the prior year. |
| || tested the calculations of the provision made by the company which takes into account historical credit loss experience for the previous three year and adjusted for forward-looking information. The expected credit loss allowance is based on the ageing of the days the receivables are due. |
Information Other than the Financial Statements and Auditor's Report Thereon
6 The Company's Board of Directors are responsible for the preparation of the otherinformation. The other information comprises the information included in the Annual Report(the report) but does not include the standalone financial statements and our auditor'sreport thereon. The report is expected to be made available to us after the date of thisauditor's report.
7 In Our opinion on the standalone financial statements does not cover the otherinformation and we do not express any form of assurance conclusion thereon.
8 In connection with our audit of the standalone financial statements ourresponsibility is to read the other information identified above when it becomesavailable and in doing so consider whether the other information is materiallyinconsistent with the standalone financial statements or our knowledge obtained during thecourse of our audit or otherwise appears to be materially misstated.
Responsibilities of Management for the Standalone Financial Statements
9 The Company's Board of Directors are 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 financial position financial performance includingother comprehensive income cash flows and changes in equity of the Company in accordancewith accounting principles generally accepted in India including the Ind AS specifiedunder Section 133 of the Act read with the Companies (Indian Accounting Standards) Rules2015 as amended. This responsibility also includes maintenance of adequate accountingrecords in accordance with the provisions of the Act for safeguarding of the assets of theCompany and 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 standalone financial statements that give a true and fair view and are free frommaterial misstatement whether due to fraud or error.
10 In preparing the standalone financial statements Board of Directors are responsiblefor assessing the Company's ability to continue as a going concern disclosing asapplicable matters related to going concern and using the going concern basis ofaccounting unless management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so.
11 Those Board of Directors are also responsible for overseeing the Company's financialreporting process.
Auditor's Responsibility for the Audit of the Standalone Financial Statements
12 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 Standards on Auditing will always detect a material misstatement when it exists.Misstatements can arise from fraud or error and are considered material if individuallyor in the aggregate they could reasonably be expected to influence the economic decisionsof users taken on the basis of these standalone financial statements.
13 As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the standalonefinancial 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 financial control relevant to the audit inorder to design audit procedures that are appropriate in the circumstances. Under section143(3)(i) of the Act we are also responsible for expressing our opinion on whether theCompany has adequate internal financial controls system in place and the operatingeffectiveness of such controls.
Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures in the standalone financial statementsmade by the Board of Directors.
Conclude on the appropriateness of management's and Board of Directors use ofthe going 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 financial statements 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 standalonefinancial statements including the disclosures and whether the standalone financialstatements represent the underlying transactions and events in a manner that achieves fairpresentation.
14 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
15 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.
16 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 auditor's 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
17 As required by the Companies (Auditor's Report) Order 2016 (the Order)issued by the Central Government in terms of Section 143(11) of the Act we give in AnnexureA a statement on the matters specified in paragraphs 3 and 4 of the Order tothe extent applicable.
18 As required by Section 143(3) of the Act based on our audit 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 cash flows and the standalonestatement of changes in equity dealt with by this report are in agreement with therelevant books of account.
d) In our opinion the aforesaid standalone financial statements comply with the Ind ASspecified under Section 133 of the Act read with Companies (Indian Accounting Standards)Rules 2015 as amended.
e) On the basis of the written representations received from the directors as on March31 2020 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2020 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 over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate Report in Annexure B.
g) In our opinion and to the best of our information and according to the explanationsgiven to us the remuneration paid by the Company to its directors during the current yearis in accordance with the provisions of section 197 of the Act read with Schedule V of theAct.
h) 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)in our opinion and to the best of our information and according to the explanations givento us:
i. The Company has disclosed the impact of pending litigations as on March 31 2020 onits financial position in its standalone financial statements refer Note 43 & 44 tothe standalone financial statements;
ii. The Company has made provision as required under the applicable law or accountingstandards for material foreseeable losses if any on long-term contracts includingderivative contracts;
iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.
For S H R & Co.
FRN : 120491W
Deep N Shroff Partner
Membership No. 122592
Mumbai dated July 31 2020
ANNEXURE A TO THE AUDITOR'S REPORT
Annexure A referred to in Paragraph 1 Of Our Report of Even Date on The StandaloneFinancial Statements For The Year Ended March 31 2020 Of Gufic Biosciences Limited:
i. In respect of Fixed Assets:
(a) According to the information and explanations given to us the company hasmaintained its fixed assets register showing full particulars in respect of itsdescription original cost year of purchase useful life residual value and is in aprocess of updating its records showing quantitative details and situation of the fixedassets.
(b) The company has a phased wise programme designed to cover all items of fixed assetsover a period of five years which in our opinion is reasonable having regard to the sizeof the Company and the nature of its assets. However none of the fixed assets werephysically verified by management during the year due to Covid 19 situation. Hence nocomment is required on material discrepancies noticed at the time of verification as thephysical verification was not conducted during the year.
(c) According to information and explanations provided to us the company has acquiredduring the year immovable properties under construction disclosed as Capital Work inProgress in the Note 7 to the standalone financial statements in respect of which titledeeds are in the name of the company. There are no other immovable properties in the nameof the company. As regards the building shown in the Note 5 Property Plant andEquipment to the standalone financial statements represents capital expenditure onconstruction/extension of a building on a leasehold land which will revert to the lessoron completion of lease period. Hence question of title deeds in respect of buildingrepresented by such capital expenditure does not arise. In respect of immovable propertiesthat have been taken on lease and disclosed as right of use assets in Note 8 to thestandalone financial statements the lease agreements are in the name of the Company.
ii. As explained to us inventory have been physically verified by themanagement during the year. The discrepancies if any between physical verification ofinventory as compared to book records have been be adjusted in the books of account.
iii. According to the information and explanations given to us the Company hasnot granted any loans to parties covered in the register-maintained u/s. 189 of theCompanies Act 2013 (The Act). (other than interest free security deposits oradvances given for its business purpose. (Refer Note No. 49)
Thus the clause relating to terms and conditions of grant of loan schedule repaymentof principal and interest and amount overdue are not applicable to the company.
iv. In our opinion and according to information and explanations provided to us thecompany has not granted any loan made any investment or provided any securities coveredunder section 185 and 186 of the Act during the year under review except loans toemployees as part of condition of services.
v. In our opinion and according to the information and explanations given to us theCompany has not accepted any deposits from the public within the meaning of section 73 to76 or any other relevant provision of the Companies Act and the rule framed there underduring the year. No order has been passed by National Company Law Tribunal or Reserve Bankof India or any Court or any Tribunal.
vi. We have broadly reviewed the cost records pursuant to the Rules made by the CentralGovernment for the maintenance of cost records under Section 148 (1) of the Companies Act2013 and we are of the opinion that prima facie the prescribed accounts and records havebeen made and maintained. We have however not made detailed examination of records witha view to determine whether they are accurate.
vii. In respect of Statutory dues:
(a) According to the information and explanations given to us and according to therecords of the company examined by us the company is generally regular in depositingundisputed statutory dues in respect of custom duty with appropriate authorities. Howeverwe have observed certain delays in depositing undisputed statutory dues includingProvident Fund Employees' State Insurance Income Tax Goods and Services Tax andProfession tax applicable to it with the appropriate authorities. According to theinformation and explanations given to us there are no statutory dues outstanding as atthe last day of the financial year for a period of more than six months from the date theybecame payable except certain outstanding demand of Rs. 50.33 lakhs in respect of IncomeTax including Tax Deducted at Source as appearing on the website of the Income TaxDepartment.
(b) According to the information and explanations given to us there are no dues ofWealth Tax Service Tax Customs Duty or Cess Goods & Service Tax outstanding onaccount of any dispute except the following dues which have not been deposited withappropriate authorities on
|Name of the Statute ||Nature of Dues ||Amount ||Period to which it relates ||Forum where matter is pending |
| || ||(Rs in Lakhs) || || |
|Income Tax Act 1961 ||Income Tax ||215.99 ||2011 - 2012 ||Appeal preferred by the company before the Commissioner of Income Tax(Appeal) |
| || ||12.52 ||2012 - 2013 ||Appeal preferred by the company before the Commissioner of Income Tax (Appeal) |
| || ||6.59 ||2013 - 2014 ||Appeal preferred by the company before the Commissioner of Income Tax (Appeal) |
| ||Demand raised ||451.65 ||2018 - 2019 ||Appeal preferred by the company before the Commissioner of Income Tax (Appeal) |
| ||less: Credit not Given ||(202.96) || || |
| ||Net demand ||248.69 || || |
|Central Excise Act1944 ||Central ||14.04 ||01/02/2008 to 31/07/2008 ||Appeal preferred by the company before the Commissioner Appeal |
| ||Excise Duty || || || |
|Gujarat Value Added Tax Act 2003 ||Sales Tax ||29.15 ||2010 - 2011 ||Appeal preferred by the company to the Commissioner Appeal |
|Madhya Pradesh Vat Act 2002 ||Sales Tax ||2.51 ||2015 - 2016 ||Appeal preferred by the company to the Commissioner Appeal |
viii. According to the information and explanations given to us and based on thedocuments and records produced to us the Company has not defaulted in repayment of duesto banks.
ix. According to the information and explanations given to us the company has obtainedterm loans during the year under review which has been utilized for the purpose of whichit was raised. The company has not raised any moneys by way of further public offer(including debt instruments).
x. Based on the audit procedures performed and information and explanations given bythe management we report that no fraud on the company by its officers or employees or bythe Company have been noticed or reported during the year.
xi. According to the information and explanations given to us and based on ourexamination of the records of the company the company has paid / provided for managerialremuneration in accordance with the requisite approvals mandated by the provisions ofsection 197 read with schedule V to the Act.
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 by the Companytransactions with the related parties are in compliance with sections 177 and 188 of theAct where applicable and details of such transactions have been disclosed in the notes tothe 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.
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.
xvi. In our opinion and according to the information and explanations given to us theCompany is not required to registered under section 45-IA of the Reserve Bank of India Act1934.
For S H R & Co.
FRN : 120491W
Deep N Shroff Partner
Membership No. 122592
Mumbai dated July 31 2020
ANNEXURE: B TO THE INDEPENDENT AUDITOR'S REPORT
Referred in paragraph 2(f) under Report on Legal and Regulatory Requirementsection of our report of even date on the Standalone Ind AS Financial Statement of GuficBiosciences Limited
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013
1. We have audited the internal financial controls over financial reporting of GuficBiosciences Limited (the Company) as of March 31 2020 in conjunction withour audit of the standalone Ind AS financial statements for company for the year ended onthat date.
2. Management's Responsibility for Internal Financial Controls
The Company's management and Board of Directors are 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 issued by the Institute of Chartered Accountants of 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 its business including adherence tocompany's policies the safeguarding of its assets the prevention and detection of fraudsand errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Companies Act 2013.
3. Auditors' Responsibility
Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We have conducted our audit inaccordance with the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting (the Guidance Note) issued by the ICAI and the Standards on Auditingprescribed under section 143(10) of the Companies Act 2013 to the extent applicable toan audit of internal financial controls. Those Standards and the Guidance Note requirethat we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether adequate internal financial controls over FinancialReporting was established and maintained and if such controls operated effectively in allmaterial respects to the extent applicable.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls assessing the risk that amaterial weakness exists and testing and evaluating the design and operatingeffectiveness of internal control based on the assessed risk. The procedures selecteddepend on the auditor's judgement including the assessment of the risks of materialmisstatement of the 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 overfinancial reporting.
4. Meaning of Internal Financial Controls over Financial Reporting
A company's internal financial control over financial reporting is a process designedto provide reasonable assurance 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 control over financialreporting 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.
5. Inherent Limitations of Internal Financial Controls over Financial Reporting
Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.
In our opinion to the best of our information and according to the explanations givento us the Company has maintained in all material respects adequate internal financialcontrols over financial reporting and such internal financial controls over financialreporting were operating effectively as of March 31 2020 based on the internal controlover financial reporting criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note on Audit of Internal FinancialControls Over Financial Reporting issued by the Institute of Chartered Accountants ofIndia.
For S H R & Co.
FRN : 120491W
Deep N Shroff
Membership No. 122592
Mumbai dated July 31 2020