To the Members of
HealthCare Global Enterprises Limited
Report on the Audit of the Standalone Financial Statements
We have audited the standalone financial statements of HealthCare Global EnterprisesLimited ("the Company") which comprise the balance sheet as at
31 March 2019 and the statement of profit and loss (including other comprehensiveincome) statement of changes in equity and statement of cash flows for the year thenended and notes to the standalone financial statements including a summary of thesignificant accounting policies and other explanatory information.
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone financial statements give the information requiredby the Companies Act 2013 ("Act") in the manner so required and give a true andfair view in conformity with the accounting principles generally accepted in India of thestate of affairs of the Company as at 31 March 2019 and profit and other comprehensiveincome changes in equity and its cash flows for the year ended on that date.
Basis for Opinion
We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder section 143(10) of the Act. Our responsibilities under those SAs are furtherdescribed in the Auditor's Responsibilities for the Audit of the Standalone FinancialStatements section of our report. We are independent of the Company in accordance with theCode of Ethics issued by the Institute of Chartered Accountants of India together with theethical requirements that are relevant to our audit of the standalone financial statementsunder the provisions of the Act and the Rules thereunder 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 Matters
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone financial statements of the current period.These matters were addressed in the context of our audit of the standalone financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters.
|Key audit matter ||How our audit addressed the key audit matter |
|Impairment testing of goodwill and investments in subsidiaries || |
|Goodwill and investments are significant items on the balance sheet. With respect to investment in subsidiaries Management assesses at each reporting date if there is an indication based on either internal or external sources of information that investments in subsidiaries may be impaired. Where such indicators exist management performs impairment testing. For Goodwill Management performs impairment testing annually. ||Our audit procedures on testing for impairment of goodwiil and investments in subsidiaries primarily includes the following: |
| || test of design and operating effectiveness of internal controls process relating to impairment testing; |
| || evaluated management's identification of CGU's the carrying value of each CGU and the methodology followed by management for the impairment assessment in compliance with the prevailing accounting standards; |
|In performing such impairment assessments Management compares the carrying value of each of the identifiable cash generating units ("CGUs") to which goodwill/investments have been allocated with their respective value in use' computed based on discounted cash flow method and/or market comparable method to determine if any impairment loss should be recognized. || evaluated appropriateness of key assumptions included in the future cash flow forecasts used in computing recoverable amount of each CGU such as revenue growth rates profitability discount rates etc. with reference to our understanding of their business and historical trends; and |
|We focused on this area due to the magnitude of the carrying amounts of these assets and the fact that significant judgments were required by Management (i) to identify whether any impairment indicators existed for any of these assets during the year; and (ii) to compute and determine the appropriate impairment approaches i.e. fair value less costs of disposal or value in use. || |
| || re-computation of impairment workings to verify mathematical accuracy and verify the appropriateness of the disclosure in the standalone financial statements. |
|Refer note 6 and 7 to the standalone financial statements. || |
|Property plant and equipment || |
|During the current year the Company has been involved in establishing new units and expansion of existing units at several locations. The Company has incurred significant capital expenditure and Property plant and equipment (PPE) is a significant item on the balance sheet. Judgment is required in determining timing of capitalization and the nature of costs capitalized. ||Our audit procedures on PPE in response to the identified key audit matter include: |
| || test of design and operating effectiveness of internal controls process relating to capitalization of PPE; |
| || testing on a sample basis additions to PPE to verify the existence nature of costs capitalized with |
|Refer note 5 to the standalone financial statements. ||underlying supporting documents/ management certification and classification of PPE; |
| || verify on a sample basis internal management or external expert certification on timing of capitalization; and |
| || inquired with management on variances between actual expenditure and the related budgets. |
Information Other than the Standalone Financial Statements and Auditors' Report Thereon
The Company's management and Board of Directors are responsible for the otherinformation. The other information comprises the information included in the Company'sannual report but does not include the standalone financial statements and our auditors'report thereon.
Our opinion on the standalone financial statements does not cover the other informationand we do not express any form of assurance conclusion thereon. In connection with ouraudit of the standalone financial statements our responsibility is to read the otherinformation and in doing so consider whether the otherinformationismateriallyinconsistentwiththestandalone financial statements or our knowledgeobtained in the audit or otherwise appears to be materially misstated. If based on thework we have performed we conclude that there is a material misstatement of this otherinformation we are required to report that fact. We have nothing to report in thisregard.
Management's Responsibility for the Standalone Financial Statements
The Company's management and Board of Directors are responsible for the matters statedin section 134(5) of the Act with respect to the preparation of these standalone financialstatements that give a true and fair view of the state of affairs profit/loss and othercomprehensive income changes in equity and cash flows of the Company in accordance withthe accounting principles generally accepted in India including the Indian AccountingStandards (Ind AS) specified under section 133 of the Act. This responsibility alsoincludes maintenance of adequate accounting records in accordance with the provisions ofthe Act for safeguarding of the assets of the Company and for preventing and detectingfrauds and other irregularities; selection and application of appropriate accountingpolicies; making judgments and estimates that are reasonable and prudent; and designimplementation and maintenance of adequate internal financial controls that were operatingeffectively for ensuring the accuracy and completeness of the accounting records relevantto the preparation and presentation of the standalone financial statements that give atrue and fair view and are free from material misstatement whether due to fraud or error.
In preparing the standalone financial statements management and Board of Directors areresponsible for assessing the Company's ability to continue as a going concerndisclosing as applicable matters related to going concern and using the going concernbasis of accounting unless management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so.
Board of Directors is also responsible for overseeing the Company's financial reportingprocess.
Auditor's Responsibilities for the Audit of the Standalone Financial Statements
Our objectives are to obtain reasonable assurance about whether the standalonefinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these standalone financial statements. As part of an audit inaccordance with SAs we exercise professional judgment and maintain professionalskepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the 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 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 expressing our opinion on whether the Company hasadequate internal financial controls with reference to financial statements in place andthe operating effectiveness of such controls.
Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by management.
Concludeontheappropriatenessofmanagement's use of the going concern basis ofaccounting 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 standalone financial statements or if such disclosures are inadequate to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor's report. However future events or conditions may cause the Company to cease tocontinue 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.
We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit. We alsoprovide those charged with governance with a statement that we have complied with relevantethical requirements regarding independence and to communicate with them allrelationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards. From the matters communicated withthose charged with governance we determine those matters that were of most significancein the audit of the standalone financial statements of the current period and aretherefore the key audit matters. We describe these matters in our auditors' report unlesslaw or regulation precludes public disclosure about the matter or when in extremely rarecircumstances we determine that a matter should not be communicated in our report becausethe adverse consequences of doing so would reasonably be expected to outweigh the publicinterest benefits of such communication.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditors' Report) Order 2016 ("the Order")issued by the Central Government in terms of section 143 (11) of the Act we give in the"Annexure A" a statement on the matters specified in paragraphs 3 and 4 of theOrder to the extent applicable.
(A) As required by Section 143(3) of the Act we report that: a) We have sought andobtained all the information and explanations which to the best of our knowledge andbelief were necessary for the purposes of our audit. b) In our opinion proper books ofaccount as required by law have been kept by the Company so far as it appears from ourexamination of those books. c) The balance sheet the statement of profit and loss(including other comprehensive income) the statement of changes in equity and thestatement of cash flows dealt with by this Report are in agreement with the books ofaccount. d) In our opinion the aforesaid standalone financial statements comply with theInd AS specified under section 133 of the Act. e) On the basis of the writtenrepresentations received from the directors as on 31 March 2019 taken on record by theBoard of Directors none of the directors is disqualified as on 31 March 2019 from beingappointed as a director in terms of Section 164(2) of the Act. f) With respect to theadequacy of the internal financial controls with reference to standalone financialstatements of the Company and the operating effectiveness of such controls refer to ourseparate Report in "Annexure B".
(B) With respect to the other matters to be included in the Auditors' Report inaccordance with Rule 11 of the Companies (Audit and
Auditors) Rules 2014 in our opinion and to the best of our information and accordingto the explanations given to us: i. The Company has disclosed the impact of pendinglitigations as at 31 March 2019 on its financial position in its standalone financialstatements - Refer Note 31 to the standalone financial statements; ii. The Company did nothave any long-term contracts including derivative contracts for which there were anymaterial foreseeable losses; iii. There were no amounts which were required to betransferred to the Investor Education and Protection Fund by the Company; iv. Thedisclosures in the standalone financial statements regarding holdings as well as dealingsin specified bank notes during the period from 8 November 2016 to 30 December 2016 havenot been made in these financial statements since they do not pertain to the financialyear ended 31 March 2019. (C) With respect to the matter to be included in the Auditors'Report under section 197(16): In our opinion and according to the information andexplanations given to us the remuneration paid by the Company to its directors during thecurrent year is in accordance with the provisions of Section 197 of the Act. Theremuneration paid to any director is not in excess of the limit laid down under Section197 of the Act. The Ministry of Corporate Affairs has not prescribed other details underSection 197(16) which are required to be commented upon by us.
| ||For B S R & Co. LLP |
| ||Chartered Accountants |
|Firm's Registration No. 101248W/W-100022 || |
| ||Amit Somani |
|Place: Bengaluru ||Partner |
|Date: 23 May 2019 ||Membership No: 060154 |
Annexure-A to the Independent Auditor's Report of even date on the standalone financialstatements of HealthCare Global Enterprises Limited
With reference to the Annexure A referred to in the Independent Auditor's Report to themembers of the Company on the standalone financial statements for the year ended 31 March2019 we report the following: (i) (a) The Company has maintained proper records showingfull particulars including quantitative details and situation of fixed assets.
(b) The Company has a regular programme of physical verification of its fixed assets bywhich all fixed assets are verified in a phased manner over a period of 3 years. In ouropinion this periodicity of physical verification is reasonable having regard to the sizeof the Company and the nature of its assets. Pursuant to the programme certain fixedassets were physically verified during the year. No material discrepancies were noticed onsuch verification. (c) In our opinion and according to the information and explanationsgiven to us and on the basis of our examination of the records of the Company the titledeeds of immovable properties included in property plant and equipment are held in thename of the Company except the following immovable properties:
(Rs in millions)
|Total number of cases ||Gross block ||Net Block ||Remarks if any |
|Freehold land -3 cases ||132.08 ||132.08 || |
|Building 3 cases ||455.61 ||357.42 ||The buildings referred to here are on the freehold land referred above. |
(ii) The inventory has been physically verified by the management during the year. Inour opinion the frequency of such verification is reasonable. The discrepancies noticedon verification between the physical stock and the book records were not material. (iii)The Company has granted loans to two companies and a Limited Liability Partnership(LLP') covered in the register maintained under section 189 of the Companies Act2013 ("the Act").
(a) In our opinion and according to the information and explanations given to us theterms and conditions on which the loans had been granted to a company and a LLP listed inthe Register maintained under Section 189 of the Act are not prejudicial to the Company'sinterest.
(b) According to the information and explanations given to us for the loans grantedterms and conditions with respect to repayment of principal and payment of interest arenot stipulated. We are therefore unable to make specific comment on the regularity ofrepayment of principal and payment of interest.
(c) For similar reasons as explained in (iii) (b) above in relation to these loans weare unable to make a specific comment on amounts being overdue for more than ninety days.During the earlier years due to the adverse business performance of a subsidiary companythe outstanding loan was fully provided for. (iv) In our opinion and according to theinformation and explanations given to us the Company has complied with the provisions ofSections 185 and 186 of the Act with respect to the loans given investments madeguarantees and securities given. (v) The Company has not accepted any deposits from thepublic within the meaning the directives issued by the Reserve Bank of India provisionsof Section 73 to 76 of the Act any other relevant provisions of the Act and the relevantrules framed thereunder.
(vi) We have broadly reviewed the books of account maintained by the Company pursuantto the rules prescribed by the Central Government for maintenance of cost records underSection 148 of the Act and are of the opinion that prima facie the prescribed accountsand records have been made and maintained. However we have not made a detailedexamination of such records. (vii) (a) According to the information and explanations givento us and on the basis of our examination of the records of the Company amounts deducted/accrued in the books of account in respect of undisputed statutory dues includingProvident fund Employees' State Insurance Income-tax Goods and Services tax duty ofCustoms and other material statutory dues have generally been regularly deposited duringthe year by the Company with the appropriate authorities.
According to the information and explanations given to us no undisputed amountspayable in respect of Provident fund Employees' State Insurance Income-tax Goods andServices tax duty of Customs and other material statutory dues were in arrears as at 31March 2019 for a period of more than six months from the date they became payable.
(b) According to the information and explanations given to us there are no dues ofincome Tax or sales Tax or service Tax or duty of customs or duty of excise or value addedtax or goods and service tax which have not been deposited by the Company on account ofdisputes except for the following:
|Name of the statute ||Nature of the dues ||Amount (J in million)# ||Period to which the amount relates ||Forum where dispute is pending |
|Andhra Pradesh Value Added Tax Act 2005 ||Value Added Tax ||2.5 (0.4)* ||Financial year 2011- 12 to financial year 2014-15 ||High Court of Judicature at Hyderabad for the state of Telangana and the state of Andhra Pradesh |
|The Central Excise Act 1944 ||Excise duty ||15.20 (0.6)* ||April 2009 to March 2014 ||Central Excise Customs and Service Tax Appellate Tribunal (CESTAT) |
|The Central Excise Act 1944 ||Excise duty ||13.14 ||March 2013 to June 2015 ||Commissioner( Appeals) of Central Excise |
|The Karnataka Value Added Tax Act 2003 ||Value Added Tax ||29.80 (8.9)* ||Financial year 2013-14 to financial year 2014-15 ||Joint Commissioner Department of Commercial Taxes Bangalore |
|The Karnataka Tax on Entry of Goods Act 1979 ||Entry Tax ||6.11 (1.38)* ||Financial year 2013-14 ||Deputy Commissioner of Commercial Taxes Bangalore |
|The Central Sales Tax Act 1956 ||Value Added Tax ||18.86 (1.38)* ||Financial year 2014- 15 to financial year 2016-17 ||Deputy Commissioner of Commercial Taxes Bangalore |
*represents amount paid under protest
#the amounts disclosed above includes interest and penalties demanded whereverapplicable.
(viii)In our opinion and according to the information and explanations given to us theCompany has not defaulted in repayment of loans or borrowings to financial institutionsand banks. The Company did not have any outstanding loans or borrowings from governmentand there are no dues to debenture holders during the year.
(ix) According to the information and explanations given to us and based on examinationof the records of the Company the term loans obtained during the year were applied forthe purpose for which they were obtained. The Company has not raised any money by way ofinitial public offer or further public offer (including debt instruments) during the year.
(x) According to the information and explanations given to us no material fraud on theCompany by its officers and employees or fraud by the Company has been noticed or reportedduring the course of our audit.
(xi) In our opinion and according to the information and explanations given to us andbased on examination of the records of the Company the Company has paid / providedmanagerial remuneration in accordance with the requisite approvals mandated by theprovisions of Section 197 read with Schedule V to the Act.
(xii) According to the information and explanations given to us in our opinion theCompany is not a Nidhi Company as prescribed under Section 406 of the Act.
(xiii) According to the information and explanations given to us and based on ourexamination of the records of the Company all transactions with the related parties arein compliance with Sections 177 and 188 of the Act where applicable and details of suchtransactions have been disclosed in the standalone financial statements as required by theapplicable 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 complied with the provisions ofSection 42 of the Act in respect of preferential allotment of shares during the year.Further no amounts have been raised from the preferential allotment of shares during theyear as the allotment was the consideration towards business acquisition by the Company.(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)According to the information and explanations given to us the Company is notrequired to be registered under section 45-IA of the Reserve Bank of India Act 1934.
| ||for B S R & Co. LLP |
| ||Chartered Accountants |
|Firm's Registration No: 101248W/W-100022 ||Amit Somani |
|Place: Bengaluru ||Partner |
|Date: 23 May 2019 ||Membership No: 060154 |
Annexure B to the Independent Auditors' Report
on the standalone financial statements of HealthCare Global Enterprises Limited for theyear ended 31 March 2019
Report on the internal financial controls with reference to the aforesaid standalonefinancial statements under Clause (i) of Sub-section 3 of Section 143 of the CompaniesAct 2013
(Referred to in paragraph (f) under Report on Other Legal and RegulatoryRequirements' section of our report of even date)
We have audited the internal financial controls with reference to standalone financialstatements of HealthCare Global Enterprises Limited ("the Company") as of 31March 2019 in conjunction with our audit of the standalone financial statements of theCompany for the year ended on that date.
InouropiniontheCompanyhasinallmaterialrespects adequate internal financial controlswith reference to standalone financial statements and such internal financial controlswere operating effectively as at 31 March 2019 based on the internal financial controlswith reference to standalone financial statements criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Note onAudit of Internal Financial Controls Over Financial Reporting issued by the Institute ofChartered Accountants of India (the "Guidance Note").
Management's Responsibility for Internal Financial Controls
The Company's management and the Board of Directors are responsible for establishingand maintaining internal financial controls based on the internal financial controls withreference to standalone financial statements criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Note.These responsibilities include the design implementation and maintenance of adequateinternal financial controls that were operating effectively for ensuring the orderly andefficient conduct of its business including adherence to company's policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information as required under the Companies Act 2013 (hereinafterreferred to as "the Act").
Our responsibility is to express an opinion on the Company's internal financialcontrols with reference to standalone financial statements based on our audit. Weconducted our audit in accordance with the Guidance Note and the Standards on Auditingprescribed under section 143(10) of the Act to the extent applicable to an audit ofinternal financial controls with reference to standalone financial statements. ThoseStandards and the Guidance Note require that we comply with ethical requirements and planand perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls with reference to standalone financial statements were established andmaintained and whether such controls operated effectively in all material respects. Ouraudit involves performing procedures to obtain audit evidence about the adequacy of theinternal financial controls with reference to standalone financial statements and theiroperating effectiveness. Our audit of internal financial controls with reference tostandalone financial statements included obtaining an understanding of such internalfinancial controls assessing the risk that a material weakness exists and testing andevaluating the design and operating effectiveness of internal control based on theassessed risk. The procedures selected depend on the auditor's judgement including theassessment of the risks of material misstatement of the standalone financial statementswhether due to fraud or error. We believe that the audit evidence we have obtained issufficient and appropriate to provide a basis for our audit opinion on the Company'sinternal financial controls with reference to standalone financial statements.
Meaning of Internal Financial controls with Reference to Standalone FinancialStatements
A company's internal financial controls with reference to standalone financialstatements is a process designed to provide reasonable assurance regarding the reliabilityof financial reporting and the preparation of standalone financial statements for externalpurposes in accordance with generally accepted accounting principles. A company's internalfinancial controls with reference to standalone financial statements include thosepolicies and procedures that (1) pertain to the maintenance of records that in reasonabledetail accurately and fairly reflect the transactions and dispositions of the assets ofthe company; (2) provide reasonable assurance that transactions are recorded as necessaryto permit preparation of standalone financial statements in accordance with generallyaccepted accounting principles and that receipts and expenditures of the company arebeing made only in accordance with authorisations of management and directors of thecompany; and (3) provide reasonable assurance regarding prevention or timely detection ofunauthorised acquisition use or disposition of the company's assets that could have amaterial effect on the standalone financial statements.
Inherent Limitations of Internal Financial controls with Reference to StandaloneFinancial Statements
Because of the inherent limitations of internal financial controls with reference tostandalone financial statements including the possibility of collusion or impropermanagement override of controls material misstatements due to error or fraud may occurand not be detected. Also projections of any evaluation of the internal financialcontrols with reference to standalone financial statements to future periods are subjectto the risk that the internal financial controls with reference to standalone financialstatements may become inadequate because of changes in conditions or that the degree ofcompliance with the policies or procedures may deteriorate.
| ||for B S R & Co. LLP |
| ||Chartered Accountants |
|Firm's Registration No: 101248W/W-100022 ||Amit Somani |
|Place: Bengaluru ||Partner |
|Date: 23 May 2019 ||Membership No: 060154 |