TO THE MEMBERS OF HESTER BIOSCIENCES LIMITED
REPORT ON THE STANDALONE FINANCIAL STATEMENTS OPINION
We have audited the accompanying standalone financial statements of HESTER BIOSCIENCESLIMITED ("the Company") which comprise the Balance Sheet as at 31 March 2019and the Statement of Profit and Loss including Other Comprehensive Income the Statementof Changes in Equity and the Cash Flow Statement for the year then ended and notes to thefinancial statements including a summary of the significant accounting policies and otherexplanatory information (hereinafter referred to as "Standalone FinancialStatements").
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 ("the Act") in the manner so required and give a trueand fair view in conformity with the accounting principles generally accepted in India ofthe state of affairs of the Company as at 31 March 2019 and its profit including othercomprehensive income the changes in equity and its cash flows for the year ended on thatdate.
BASIS FOR OPINION
We conducted our audit of the standalone financial statements in accordance with theStandards on Auditing (SAs) specified under Section 143(10) of the Act.
Our responsibilities under those Standards are further described in the Auditors'Responsibility 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 financial statements under the provisions of the Actand the Rules made thereunder and we have fulfilled our other ethical responsibilities inaccordance with these requirements and the Code of Ethics. We believe that the auditevidence obtained by us is sufficient and appropriate to provide a basis for our auditopinion on the standalone financial statements.
INFORMATION OTHER THAN THE FINANCIAL STATEMENTS AND AUDITORS' REPORT THEREON
The Companys' Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Directors report but does notinclude 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 our audit of the Standalone Financial Statements our responsibilityis to read the other information and in doing so consider whether such other informationis materially inconsistent with the financial statements or our knowledge obtained in theaudit or otherwise appears to be materially misstated. If based on the work we haveperformed we conclude that there is a material misstatement of this other information weare required to report that fact. We have nothing to report in this regard.
MANAGEMENTS' RESPONSIBILITY FOR THE STANDALONE FINANCIAL STATEMENTS
The Companys' 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 financial position financial performance includingother comprehensive income changes in equity and cash flows of the Company in accordancewith the Indian Accounting Standards (IND AS) prescribed under Section 133 of the Actread with the Companies (Indian Accounting Standards) Rules 2015 as amended and otheraccounting principles generally accepted in India.
This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding of the assets of the Companyand for preventing and detecting the 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.
In preparing the standalone financial statements management is responsible forassessing the Companys' ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessmanagement either intends to liquidate the Company or to cease operations or has norealistic alternative but to do so.
Those Board of Directors are also responsible for overseeing the Companys' financialreporting process.
AUDITORS' RESPONSIBILITY 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 auditors' 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 financial statements.
As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional scepticism throughout the audit. We also:
1) Identify and assess the risks of material misstatement of the Standalone 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 override of internal control.
2) Obtain an understanding of internal control relevant to the audit in order to designaudit 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 theCompany has adequate internal financial controls system in place and the operatingeffectiveness of such controls.
3) Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by management.
4) Conclude on the appropriateness of managements' 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 Companys'ability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditors' report to the related disclosures inthe financial statements or if such disclosures are inadequate to modify our opinion.Our conclusions are based on the audit evidence obtained up to the date of our auditors'report. However future events or conditions may cause the Company to cease to continue asa going concern.
5) Evaluate the overall presentation structure and content of the Standalone FinancialStatements including the disclosures and whether the Standalone Financial Statementsrepresent 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 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.
The Ind AS Financial Statements of the Company for the year ended 31 March 2018included in these standalone financial statements have been audited by the predecessorauditor who expressed an unmodified opinion on those financial statements on 14 May 2018.
REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS
1. As required by the Companies (Auditors' Report) Order
2016 ("the Order") issued by the Central Government of India in terms ofSection 143(11) of the Act we give in the "Annexure A" a statement on thematters specified in paragraphs 3 and 4 of the Order.
2. As required by Section143(3) of the Act 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 Balance Sheet the Statement of Profit and Loss including other comprehensiveIncome the Statement of Changes in Equity and the Cash Flow Statement dealt with by thisReport are in agreement with the books of account.
(d) In our opinion the aforesaid standalone financial statements comply with theAccounting Standards prescribed under Section 133 of the Act read with the Companies(Indian Accounting Standards) Rules 2015 as amended.
(e) On the basis of the written representations received from the Directors as on 31March 2019 taken on record by the Board of Directors none of the directors isdisqualified as on 31 March 2019 from being appointed as a director in terms of Section164 (2) of the Act.
(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) With respect to the other matters to be included in the Auditors' Report inaccordance with the requirements of section 197(16) of the Act as amended in our opinionand according to the information and explanation given to us by the management theremuneration paid/provided during the Current Year by the Company to its directors is inaccordance with the provisions of Section 197 read with Schedule V of the Act. Theremuneration paid/provided to any director is not in excess of the limit laid down underSection 197 of the Act.
(h) 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 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 in its standalone financial statements
- Refer Note 37 to the standalone financial statements;
ii. The Company did not have any long-term contracts including derivative contracts forwhich there are any material foreseeable losses; and
iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.
Annexure A to the Independent Auditors' Report
Referred to in Paragraph 1 on Report on Other Legal and Regulatory Requirements of OurReport of even date of Hester Biosciences Limited for the year ended 31 March 2019
(i) In respect of its Property Plant and Equipment:
(a) The Company has maintained proper records showing full particulars includingquantitative details and situation of property plant and equipment.
(b) All property plant and equipment have not been physically verified by themanagement during the year but there is a regular programme of verification which in ouropinion is reasonable having regard to the size of the Company and the nature of itsassets. No material discrepancies were noticed on verification carried out during the yearin accordance with the aforesaid plan.
(c) As per the information and explanations provided to us and on the basis of ourexamination of the records of the Company the title deeds of immovable properties areheld in the name of the Company.
(ii) The inventory has been physically verified by the management during the year. Inour opinion the frequency of verification is reasonable. No material discrepancies werenoticed on such physical verification. Inventories lying with third parties have beenconfirmed by them as at 31 March 2019 and no material discrepancies were noticed inrespect of such confirmations.
(iii) The Company has granted loan to a subsidiary company covered in the registermaintained under Section 189 of the Companies Act 2013.
(a) In our opinion and according to the information and explanations given to us theterms and conditions of the grant of such loan is prima facie not prejudicial to theinterest of the Company.
(b) The schedule of repayment of principal and payment of interest has not beenstipulated and is at the discretion of the Company. Hence in the absence of stipulationof repayment terms there
has been no default on the part of Party to whom the money has been lent; and
(c) There is no amount of loan granted to company listed in the register maintainedunder Section 189 of the Act which are overdue for more than ninety days.
(iv) In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of Section 185 and 186 of the Companies Act 2013in respect of loans to directors including entities in which they are interested and inrespect of grant of loans and advances making investments and providing guarantees andsecurities.
(v) According to the information and explanations given to us the Company has notaccepted any deposits within the meaning of Sections 73 to 76 of the Act. Therefore theprovision of Clause (v) of paragraph 3 of the Order is not applicable to the Company.
(vi) We have broadly reviewed the cost records maintained by the Company pursuant tothe Companies (Cost Records and Audit) Rules 2014 prescribed by the Central Governmentunder Section 148(1) of the Companies Act 2013 related to the manufacturing of vaccinesand are of the opinion that prima facie the prescribed accounts and records have beenmaintained. We have however not made a detailed examination of the cost records with aview to determine whether they are accurate or complete.
(vii) According to the information and explanation given to us in respect of statutorydues:
(a) The Company is generally regular in depositing with appropriate authoritiesundisputed statutory dues including Provident Fund Employees' State Insurance IncomeTax Sales Tax Service Tax Goods and Service Tax Value Added tax Customs Duty ExciseDuty Cess and other material statutory dues applicable to it.
(b) According to the information and explanations given to us no undisputed amountspayable in respect of the aforesaid dues were outstanding at the 31 March 2019 for aperiod of more than six months from the date of becoming payable.
(c) According to the information and explanations given to us the dues outstanding ofIncome Tax on account of disputes are as follows:
|Name of the Statute ||Nature of Dues ||Years to which matter pertains ||Forum where dispute is pending ||Amount (Rs) |
|Income Tax Act1961 ||Income Tax ||A.Y. 2015-16 ||Commissioner of Income Tax (Appeals) ||1101580 |
(viii)In our opinion based on the audit procedures performed for the purpose ofreporting the true and fair view of the financial statements and according to theinformation and explanations given by the management the Company has not defaulted inrepayment of loans or borrowings to banks. The Company did not have any loans orborrowings from financial institutions Government and debenture holders.
(ix) In our opinion and according to the information and explanations given to us bythe management the Company has utilised money raised by way of term loans for thepurposes for which they were raised.
The Company has not raised any money by way of initial public offer/further publicoffer/debt instruments during the year.
(x) Based on the audit procedures performed for the purpose of reporting the true andfair view of the financial statements and according to the information and explanationsgiven by the management we report that no fraud by the Company or no fraud on the Companyby the officers or employees of the Company has been noticed or reported during the year.
(xi) According to the information and explanations given by the management themanagerial remuneration has been paid/provided in accordance with the requisite approvalsmandated by the provisions of Section 197 read with Schedule V to the Companies Act 2013.
(xii) The Company is not a Nidhi company and hence reporting under clause (xii) ofParagraph 3 the Order is not applicable to the Company.
(xiii)According to the information and explanations given by the managementtransactions with the related parties are in compliance with Section 177 and 188 ofCompanies Act 2013 where applicable and the details have been disclosed in notes to thefinancial statements as required by the applicable accounting standards.
(xiv)According to the information and explanations given by the management and on anoverall examination of the Balance Sheet the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year under review and hence reporting requirements under clause (xiv) of Paragraph 3of the Order is not applicable to the Company.
(xv) According to the information and explanations given by the management the Companyhas not entered into any non-cash transactions with directors or persons connected withhim as referred to in Section 192 of Companies Act 2013.
(xvi)According to the information and explanations given to us the provisions ofSection 45-IA of the Reserve Bank of India Act 1934 are not applicable to the Company.
Annexure B to the Independent Auditors' Report
Referred to in Paragraph 2(f)on Report on Other Legal and Regulatory Requirements ofOur Report of even date of Hester Biosciences Limited for the year ended 31 March 2019
REPORT ON THE INTERNAL FINANCIAL CONTROLS UNDER SECTION 143(3)(I) OF THE COMPANIES ACT2013 ("THE ACT")
We have audited the internal financial controls over financial reporting of HESTERBIOSCIENCES LIMITED (the Company') as of 31 March 2019 in conjunction with our auditof the standalone financial statements of the Company for the year ended on that date.
MANAGEMENTS' RESPONSIBILITY FOR INTERNAL FINANCIAL CONTROLS
The Companys' management is responsible for establishing and maintaining internalfinancial controls 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 Reporting (the"Guidance Note") issued by the Institute of Chartered Accountants of India.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 Companys' policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation of reliablefinancial information as required under the Companies Act 2013.
Our responsibility is to express an opinion on the Companys' internal financialcontrols over financial reporting with reference to these standalone financial statementsbased on our audit. We conducted our audit in accordance with the Guidance Note and theStandards on Auditing prescribed under Section 143(10) of the Companies Act 2013 to theextent applicable to an audit of internal financial controls.
The Guidance Note and those Standards require that we comply with ethical requirementsand plan and perform the audit to obtain reasonable assurance about whether adequateinternal financial Controls over financials reporting was established and maintained andif such controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting with reference to thesestandalone financial statements and their operative effectiveness. Our audit of internalfinancial controls over financial reporting included obtaining an understanding ofinternal financial controls over financial reporting assessing the risk that materialweakness exists and testing and evaluating the design and operating effectiveness ofinternal controls based on the assessed risk. The procedures selected depend on theauditors' judgment including the assessment of the risks of material misstatement of thefinancial statements whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis of our audit opinion on the internal financial control system overfinancial reporting with reference to these standalone financial statements.
MEANING OF INTERNAL FINANCIAL CONTROLS OVER FINANCIAL REPORTING
A Companys' internal financial controls over financial reporting with reference tothese standalone financial statements is a process designed to provide reasonableassurance regarding the reliability of financial reporting and the preparation offinancial statements for external purposes in accordance with generally acceptedaccounting principles. A Companys' internal financial control over financial reportinginclude those policies and procedures that:
(1) pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the Company;
(2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accounting principlesand that receipts and expenditures of the Company are being made only in accordance withauthorisations of management and directors of the Company; and
(3) provide reasonable assurance regarding prevention or timely detection ofunauthorised acquisition use or disposition of the Companys' assets that could havematerial effect on the financial statements.
INHERENT LIMITATIONS OF INTERNAL FINANCIAL CONTROLS OVER FINANCIAL REPORTING
Because of the inherent limitations of internal financial controls over financialreporting with reference to these standalone financial statements including thepossibility of collusion or improper management override of controls materialmisstatements due to error or fraud may occur and not to be detected. Also projections ofany evaluation of the internal financial controls over financial reporting with referenceto these standalone financial statements to future periods are subject to the risk thatthe internal financial controls over financial reporting may become inadequate because ofchanges in conditions or that the degree of compliance with the policies or proceduresmay deteriorate.
In our opinion to the best of our information and according to the explanation givenby the management the Company has in all material respects an adequate internalfinancial control system over financial reporting with reference to these standalonefinancial statements and such internal financial controls over financial reporting withreference to these standalone financial statements were operating effectively as at 31March 2019 based on the internal controls over financials reporting criteria establishedby the Company considering the essential components of internal controls stated in theGuidance Note.
| ||For SHAH KARIA & ASSOCIATES |
| ||Chartered Accountants |
| ||ICAI Firm Registration No.: 131546W |
| ||Priyank Shah |
|Place: Ahmedabad ||Partner |
|Date: 7 May 2019 ||Membership No.: 118627 |