To the Members of Indoco Remedies Limited
Report on the Standalone Ind AS Financial Statements
We have audited the accompanying standalone Ind AS financial statementsof Indoco Remedies Limited ("the Company") which comprise the BalanceSheet as at March 31 2021 and the Statement of Profit and Loss including OtherComprehensive Income Cash Flow Statement and the Statement of Changes in Equity for theyear then ended and a summary of significant accounting policies and other explanatoryinformation (the standalone Ind AS financial statements').
In our opinion and to the best of our information and according to theexplanations given to us the aforesaid standalone Ind AS 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 Indian Accounting Standardsprescribed under section 133 of the Act read with the Companies (Indian AccountingStandards) Rules 2015 as amended ("Ind AS") and the other accountingprinciples generally accepted in India of the state of affairs of the Company as at March31 2021 and its profit and other comprehensive loss changes in equity and its cashflows for the year ended on that date.
Basis for Opinion
We conducted our audit in accordance with the Standards on Auditing(SAs) specified under section 143(10) of the Act. Our responsibilities under thoseStandards are further described in the Auditor's Responsibilities for the Audit ofthe standalone Ind AS financial statements section of our report. We are independent ofthe Company in accordance with the Code of Ethics issued by the Institute of CharteredAccountants of India together with the ethical requirements that are relevant to our auditof the financial statements under the provisions of the Act and the Rules thereunder andwe have fulfilled our other ethical responsibilities in accordance with these requirementsand the Code of Ethics. We believe that the audit evidence we have obtained is sufficientand appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that in our professionaljudgement were of most significance in our audit of the standalone Ind AS financialstatements of the current period. These matters were addressed in the context of our auditof standalone Ind AS financial statements as a whole and in forming our opinion thereonand we do not provide a separate opinion on these matters. We have determined the mattersdescribed below to be the key audit matters to be communicated in our audit report.
|Key Audit Matters ||Auditor's Response |
|1 Provisions for Sales Returns. || |
|The Company provides for sales returns on an estimated basis as a percentage of sales. ||We have carried out the validation of the information provided by the management by performing the following procedures: |
|Such an estimate is arrived at on the basis of average of actual sales return over the last 3 financial years. Such estimation is based on managements best judgement of the probability of sales returns. Provision for sales return amounted to Rs. 2487.75 lakhs as on March 31 2021 (Rs. 2872.52 lakhs as on March 31 2020). Refer note no. 27: Current Provisions to the Standalone Financial Statements. ||a) Validating the process consistently implemented by the management in arriving at the estimates. |
| ||b) Correlating the amounts of actual sales returns with the provisions made. |
| ||c) Evaluated management assessment for change in estimates for provision for sales return during this year. |
| ||d) Getting representations from the management wherever necessary. |
|2 Intangible assets under development. || |
|The Company undertakes several projects for new product development. Once the development is complete as per management assessment such items are reclassified as Intangible Assets in the books of accounts. ||We have carried out the validation of the information provided by the management by performing the following procedures: |
|The management makes an assessment as to whether all such projects are capable of being completed and capable of getting the requisite regulatory approvals. On the basis of such assessment the costs incurred on such projects till the time development is complete as per management assessment are reflected in the financial statements as "Intangible assets under development". ||a) Obtaining detailed listing of all projects under development. |
|The quantum of Intangible Assets Under Development as on March 31 2021 was Rs. 4297.96 lakhs (Rs. 4337.90 lakhs as on March 31 2020). ||b) Evaluating management's judgement of technical and commercial feasibility of such projects and comparing the same with past record of such regulatory approvals. |
|Refer Note no. 5: Intangible Assets to the Standalone Financial Statements. ||c) Relying on management assessment about completion of development of project. |
| ||d) Getting representations from the management wherever necessary. |
|3 Direct and Indirect Tax receivables and contingent liabilities pertaining to tax matters under dispute. || |
|The Company has reflected Rs. 14053.59 lakhs as receivables of Sales Tax Entry Tax GST Input credit Income Tax MAT credit etc. as on March 31 2021 (Rs. 14698.49 lakhs as on March 31 2020). Further the Company is a party to litigations in respect of various statutory dues where the amounts demanded are to the tune of Rs. 3616.12 lakhs as on March 31 2021 (Rs. 1766.24 lakhs as on March 31 2020). Out of this an amount of Rs. 534.24 lakhs has been deposited under protest as on March 31 2021 (Rs. 528.22 lakhs as on March 31 2020). ||We have carried out the validation of the information provided by the management by performing the following procedures: |
|Contingent liabilities as defined in Ind AS 37 require assessment of probable outcomes and cash flows. The identification and quantification of contingent liabilities require estimation and judgement by the management. The ultimate recoverability of receivables is based on outcome of those proceedings and require inputs from subject specialists management judgement and therefore required significant audit attention. ||a) Evaluating the reasonableness of the underlying assumptions. |
| ||b) Examining the relevant documents on record. |
| ||c) Relying on relevant external evidence available including applicable judicial pronouncements and industry practices. |
| ||d) Getting representations from the management wherever necessary. |
Information Other than the Standalone Ind AS Financial Statements andAuditor's Report Thereon
The Company's Board of Directors is responsible for thepreparation of the other information. The other information comprises the informationincluded in the Management Discussion and Analysis Board's Report includingAnnexures to Board's Report Business Responsibility Report Corporate Governance andShareholder's Information but does not include the standalone Ind AS financialstatements and our auditor's report thereon.
Our opinion on the standalone Ind AS financial statements does notcover the other information and we do not express any form of assurance conclusionthereon.
In connection with our audit of the standalone Ind AS financialstatements our responsibility is to read the other information and in doing so considerwhether the other information is materially inconsistent with the standalone Ind ASfinancial statements or our knowledge obtained during the course of our audit or otherwiseappears to be materially misstated. When we read the other information if we concludethat there is a material misstatement of this other information we are required to reportthat fact. We have nothing to report in this regard.
Responsibilities of the Management and those charged with governancefor the Standalone Financial Statements
The Company's Board of Directors is responsible for the mattersstated in section 134(5) of the Act with respect to the preparation of these standaloneInd AS financial statements that give a true and fair view of the financial positionfinancial performance 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 implementationand maintenance of accounting policies; making judgements 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 Ind AS financial statements that give a true and fair view and are freefrom material misstatement whether due to fraud or error.
In preparing the standalone Ind AS financial statements management isresponsible 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. The Board of Directors are alsoresponsible for overseeing the Company's financial reporting process.
Auditor's Responsibilities for the Audit of the Standalone Ind ASFinancial Statements
Our objectives are to obtain reasonable assurance about whether thestandalone Ind AS financial statements as a whole are free from material misstatementwhether due to fraud or error and to issue an auditor's report that includes ouropinion. Reasonable assurance is a high level of assurance but is not a guarantee that anaudit conducted in accordance with SAs will always detect a material misstatement when itexists. Misstatements can arise from fraud or error and are considered material ifindividually or in the aggregate they could reasonably be expected to influence theeconomic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with Standards on Auditing weexercise professional judgement and maintain professional skepticism throughout the audit.
a) Identify and assess the risks of material misstatement of thestandalone Ind AS financial statements whether due to fraud or error design and performaudit procedures responsive to those risks and obtain audit evidence that is sufficientand appropriate to provide a basis for our opinion. The risk of not detecting a materialmisstatement resulting from fraud is higher than for one resulting from error as fraudmay involve collusion forgery intentional omissions misrepresentations or the overrideof internal control.
b) Obtain an understanding of internal controls relevant to the auditin order to design audit procedures that are appropriate in the circumstances. Under thesection 143(3)(i) of the Act we are also responsible for expressing our opinion onwhether the Company has adequate internal financial controls system in place and theoperating effectiveness of such controls.
c) Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures made by management.
d) Conclude on the appropriateness of management's use of thegoing 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 ability of the Company to continue as a going concern. If we conclude that amaterial uncertainty exists we are required to draw attention in our auditor'sreport to the related disclosures in the standalone Ind AS financial statements or ifsuch disclosures are inadequate to modify our opinion. Our conclusions are based on theaudit evidence obtained up to the date of our auditor's report. However futureevents or conditions may cause the Company to cease to continue as a going concern.
e) Evaluate the overall presentation structure and content of thestandalone Ind AS financial statements including the disclosures and whether thestandalone Ind AS financial statements represent the underlying transactions and events ina manner that achieves fair presentation.
Materiality is the magnitude of misstatements in the financialstatements that individually or in aggregate makes it probable that the economicdecisions of a reasonably knowledgeable user of the financial statements may beinfluenced. We consider quantitative materiality and qualitative factors in
(i) planning the scope of our audit work and in evaluating the resultsof our work; and
(ii) to evaluate the effect of any identified misstatements in thefinancial statements.
We communicate with those charged with governance regarding amongother matters the planned scope and timing of the audit and significant audit findingsincluding any significant deficiencies in internal control that we identify during ouraudit.
We also provide those charged with governance with a statement that wehave complied with relevant ethical requirements regarding independence and tocommunicate with them all relationships and other matters that may reasonably be thoughtto bear on our independence and where applicable related safeguards.
From the matters communicated with those charged with governance wedetermine those matters that were of most significance in the audit of the standalone IndAS financial statements of the current period and are therefore the key audit matters. Wedescribe these matters in our auditor's report unless law or regulation precludespublic disclosure about the matter or when in extremely rare circumstances we determinethat a matter should not be communicated in our report because the adverse consequences ofdoing so would reasonably be expected to outweigh the public interest benefits of suchcommunication.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor's Report) Order 2016("the Order") issued by the Central Government of India in terms of sub-section(11) of Section 143 of the Act we give in the Annexure A a statement on the mattersspecified in paragraphs 3 and 4 of the Order.
2. As required by Section 143(3) of the Act we report that:
a) we have sought and obtained all the information and explanationswhich to the best of our knowledge and belief were necessary for the purposes of ouraudit.
b) in our opinion proper books of account as required by law have beenkept by the Company so far as appears from our examination of those books.
c) the Balance Sheet the Statement of Profit and Loss the Cash FlowStatement and Statement of Changes in Equity dealt with by this Report are in agreementwith the books of account.
d) in our opinion the aforesaid standalone Ind AS financial statementscomply with the Indian Accounting Standards specified under Section 133 of the Act readwith relevant rules issued there under.
e) on the basis of written representations received from the directorsas on March 31 2021 taken on record by the Board of Directors none of the directors isdisqualified as on March 31 2021 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 overfinancial reporting of the Company and the operating effectiveness of such controls referto our separate report in "Annexure B"; and
g) with respect to the other matters to be included in theAuditor's Report in accordance with
Rule 11 of the Companies (Audit and Auditors) Rules 2014 in ouropinion and to the best of our information and according to the explanations given to us :
i. The Company has disclosed the impact of pending litigations on itsfinancial position in its standalone Ind AS financial statements Refer note 46 to thestandalone Ind AS financial statements.
ii. The Company did not have any long-term contracts includingderivative contracts for which there were any material foreseeable losses.
iii. There has been no delay in transferring amounts required to betransferred to the Investor Education and Protection Fund by the Company.
3. As required by Section 197(16) of the Act in our opinion and to thebest of our information and according to the explanations given to us the remunerationpaid by the Company to its directors during the year is in accordance with the provisionsof section 197 of the Act.
ANNEXURE A to the Independent Auditors' Report as required by theCompanies (Auditor's Report) order 2016
(Referred to in our Report of even date on financial statements ofIndoco Remedies Limited as at March 31 2021)
As required by the Companies (Auditor's Report) Order 2016 issuedby the Central Government in terms of Section 143(11) of the Companies Act 2013 onthe basis of the checks as we considered appropriate we report on the matters specifiedin paragraph 3 and 4 of the said order to the extent applicable to the company:
1. (a) The Company has maintained proper records showing fullparticulars including quantitative details and situation of the fixed assets.
(b) As explained to us the company has a regular programme of physicalverification of fixed assets by the management so as to cover all the fixed assets over aperiod of five years which in our opinion is reasonable having regard to the size of theCompany and the nature of its assets. Pursuant to the programme certain fixed assets werephysically verified during the year and no material discrepancies were noticed on suchverification.
(c) According to the information and explanations provided to us and onthe basis of our examination of the records of the Company the title deeds of immovableproperties are held in the name of the Company. In respect of immovable properties whichhave been taken on lease and disclosed as property plant and equipment in the standaloneInd AS financial statements the lease agreements are in the name of the Company.
2. In our opinion and according to the information and explanationsprovided to us the inventories have been physically verified by the management during theyear. In our opinion the frequency of such verification is reasonable. In our opinion andas explained to us there were no material discrepancies noticed on physical verificationof inventories as compared with the books of account.
3. According to the information and explanations given to us theCompany has not granted any loans secured or unsecured to companies firms limitedliability partnerships or other parties covered in the register maintained under Section189 of the Act. Accordingly the provisions of clause 3(iii) (a) (b) and (c) of the Orderare not applicable to the Company.
4. In our opinion and according to the information and explanationsgiven to us the Company has complied with the provisions of Section 185 and 186 of theAct with respect to the loans and investments made wherever applicable.
5. In our opinion and according to the information and explanationgiven to us the Company has not accepted any deposits from the public within the meaningof the directives issued by the Reserve Bank of India provisions of Section 73 to 76 ofthe Act any other relevant provisions of the Act and the relevant rules framedthereunder.
6. We have broadly reviewed the cost records maintained by the Companypursuant to the Companies (Cost Records and Audit) Rules 2014 prescribed by the CentralGovernment under Section 148(1) (d) of the Companies Act 2013 and are of the opinionthat prima facie the prescribed accounts and cost records have been maintained. We havehowever not made a detailed examination of the cost records with a view to determinewhether they are accurate or complete.
7. (a) According to the information and explanation given to us and onthe basis of our examination of the records of the Company amounts deducted / accrued inthe books of account in respect of undisputed statutory dues including Provident FundEmployees State Insurance Income tax Sales tax GST Custom duty and any other materialstatutory dues have been regularly deposited during the year with the appropriateauthorities. According to the information and explanations given to us no undisputedamounts payable in respect of the aforesaid dues were in arrears as at March 31 2021 fora period of more than six months from the date they became payable.
(b) According to the information and explanation given to us there areno dues of customs duty and service tax that have not been deposited on account of anydispute. However according to the information and explanation given to us the followingdues of income tax central excise and sales tax have not been deposited by the Company onaccount of disputes:
|Nature of Statue ||Nature of Dues || |
Amount (Rs. in Lakhs)
|Period to which amount relates ||Forum where dispute is pending |
|Telangana VAT Act 2005 ||T Vat ||309.59 ||2009-14 ||Telangana VAT & Sales Tax Appellate Tribunal Hyderabad |
|Telangana VAT Act 2005 ||T Vat ||114.69 ||2008-18 ||Appellate Deputy Commissioner (CT) Hyderabad Rural Division |
|Telangana VAT Act 2005 and Central Sales Tax Act 1956 ||T Vat ||5.99 ||201318 ||Deputy Commissioner (CT) Saroornagar Division Hyderabad |
|Andhra Pradesh VAT Act 2005 ||A Vat ||94.90 ||2005-09 ||High Court Hyderabad |
|Andhra Pradesh VAT Act 2005 ||A Vat ||8.02 ||2014-16 ||Andhra Pradesh VAT Appellate Tribunal Visakhapatnam |
|Goa VAT Act 2005 ||G Vat ||20.21 ||2007-08 & 2009-10 ||Asst. Commissioner Tax Officer Margao |
|Central Excise Act 1944 ||Excise Duty ||14.12 ||1997-98 various years ||Honourable Supreme Court |
|Central Excise Act 1944 ||Excise Duty ||85.88 ||1995-96 1997-98 & 2010-14 ||CESTAT Mumbai |
|Central Excise Act 1944 ||Excise Duty ||5.83 ||1997-99 ||Divisional Dy. Commissioner |
|Finance Act 1994 ||Service Tax ||586.39 ||2006-08 ||CESTAT Mumbai |
|Income Tax Act 1961 ||Income Tax ||1855.19 ||2017-18 ||CIT (A) |
8. In our opinion and according to the information and explanationsgiven to us the Company has not defaulted in repayment of dues to banks and financialinstitutions. The Company has not taken any loans or borrowings from Government and hasnot issued debentures during the year.
9. In our opinion and according to the information and explanationsgiven to us the Company has raised term loans and the term loans so raised have beenapplied for the purpose for which these were obtained. The Company did not raise any moneyby way of initial public offer or further public offer (including debt instruments) duringthe year under audit.
10. According to the information and explanations given to us nomaterial fraud by the Company or on the Company by its officers or employees hasbeen noticed or reported during the course of our audit.
11. According to the information and explanations give to us and basedon our examination of the records of the Company the Company has paid / provided formanagerial remuneration in accordance with the requisite approvals mandated by theprovisions of Section 197 read with Schedule V to the Act.
12. In our opinion and according to the information and explanationsgiven to us the Company is not a nidhi company. Accordingly paragraph 3(xii) of theOrder is not applicable.
13. According to the information and explanations given to us and basedon our examination of the records of the Company transactions with the related partiesare in compliance with Sections 177 and 188 of the Act where applicable and details ofsuch transactions have been disclosed in the standalone Ind AS financial statements asrequired by the applicable accounting standards.
14. According to the information and explanations give to us and basedon our examination of the records of the Company the Company has not made anypreferential allotment or private placement of shares or fully or partly convertibledebentures during the year.
15. According to the information and explanations given to us and basedon our examination of the records of the Company the Company has not entered intonon-cash transactions with directors or persons connected with him. Accordingly paragraph3(xv) of the Order is not applicable.
16. According to the information and explanations given to us theCompany is not required to be registered under Section 45-IA of the Reserve Bank of IndiaAct 1934.
ANNEXURE - B to the Independent Auditors' Report as required bySec. 143(3) Of Companies Act 2013
(Referred to in our Report of even date on standalone Ind AS financialstatements of Indoco Remedies Limited as at March 31 2021)
Report on the Internal Financial Controls under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 ("the Act") Opinion
We have audited the internal financial controls over financialreporting of Indoco Remedies Limited ("the Company") as of March 31 2021 inconjunction with our audit of the Standalone Ind AS financial statements of the Companyfor the year ended on that date.
In our opinion the Company has in all material respects an adequateinternal financial controls system over financial reporting and such internal financialcontrols over financial reporting were operating effectively as at March 31 2021 basedon the internal control over financial reporting 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.
Management's Responsibility for Internal Financial Controls
The Company's management is 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 offrauds and errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Companies Act 2013.
Our responsibility is to express an opinion on the Company'sinternal financial controls over financial reporting based on our audit. We conducted ouraudit in accordance with the Guidance Note on Audit of Internal Financial Controls overFinancial Reporting (the "Guidance Note") and the Standards on Auditing issuedby ICAI and deemed to be prescribed under Section 143(10) of the Companies Act 2013 tothe extent applicable to an audit of internal financial controls both applicable to anaudit of Internal Financial Controls and both issued by the Institute of CharteredAccountants of India. Those Standards and the Guidance Note require that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance aboutwhether adequate internal financial controls over financial reporting was established andmaintained and if such controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence aboutthe adequacy of the internal financial controls system over financial reporting and theiroperating effectiveness. Our audit of internal financial controls over financial reportingincluded obtaining an understanding of internal financial controls over financialreporting assessing the risk that a material weakness exists and testing and evaluatingthe design and operating effectiveness of internal control based on the assessed risk. Theprocedures selected depend on the auditor's judgement including the assessment ofthe risks of material misstatement of the standalone Ind AS financial statements whetherdue to fraud or error.
We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the Company's internalfinancial controls system over financial reporting.
Meaning of Internal Financial Controls over Financial Reporting
A Company's internal financial control over financial reporting isa process designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles. A Company's internal financial controlover financial reporting includes those policies and procedures that:
1. pertain to the maintenance of records that in reasonable detailaccurately and fairly reflect the transactions and dispositions of the assets of theCompany;
2. provide reasonable assurance that transactions are recorded asnecessary to permit preparation of 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 timelydetection of unauthorised acquisition use or disposition of the Company's assetsthat could have a material effect on the financial statements.
Inherent Limitations of Internal Financial Controls over FinancialReporting
Because of the inherent limitations of internal financial controls overfinancial reporting including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected. Also projections of any evaluation of the internal financial controls overfinancial reporting to future periods are subject to the risk that the internal financialcontrol over financial reporting may become inadequate because of changes in conditionsor that the degree of compliance with the policies or procedures may deteriorate.
| ||For Gokhale & Sathe |
| || |
| ||Firm Regn. No. 103264W |
| ||Tejas Parikh |
| || |
|Date : May 25 2021 ||Membership No. 123215 |
|Place : Mumbai ||UDIN:- 21123215AAAADD1628 |