To the Members of Indraprastha Medical Corporation Limited
REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS
We have audited the financial statements of Indraprastha Medical Corporation Limited("the Company") which comprise the balance sheet as at 31 March 2019 and thestatement of Profit and Loss statement of changes in equity and statement of cash flowsfor the year then ended and notes to the financial statements including a summary ofsignificant 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 financial statements give the information required by theCompanies Act 2013 ("the Act") in the manner so required and give a true andfair view in conformity with the Indian Accounting Standards prescribed under Section 133of the Act read with the Companies (Indian Accounting Standards) Rules 2015 as amendedand other accounting principles generally accepted in India of the state of affairs ofthe Company as at 31 March 2019 and it's profit changes in equity and its cash flowsfor 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 Companies Act 2013 ("the Act"). Ourresponsibilities under those Standards are further described in the Auditor'sResponsibilities for the Audit of the Standalone Financial Statements section of ourreport. We are independent of the Company in accordance with the Code of Ethics issued bythe Institute of Chartered Accountants of India together with the ethical requirementsthat are relevant to our audit of the financial statements under the provisions of the Actand the Rules thereunder and we have fulfilled our other ethical responsibilities inaccordance with these requirements and the ICAI's Code of Ethics. We believe that theaudit evidence we have obtained is sufficient and appropriate to provide a basis for ouropinion.
KEY AUDIT MATTERS
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the financial statements of the current year. These matterswere addressed in the context of our audit of the financial statements as a whole andinforming our opinion thereon and we do not provide a separate opinion on these matters.We have determined the matters described below to be the key audit matters to becommunicated in our report.
Description of Key Audit Matter
As discussed in Note 30.B (i) and (iii) Note 30.C 30.D to the financial statementsthe Company have contingent liabilities arising from many litigative matters including thefollowing significant matters which are the key matters and may have significant impact onthe operations of the Company:
Free treatment of underprivileged patients as per the terms of lease deed withDelhi Government: On a Public Interest Litigation (PIL) regarding free treatment in thehospital the Hon'ble Delhi High Court vide its order dated 22 September 2009 has heldthat free treatment provided by the hospital as per the terms of lease deed withGovernment of National Capital Territory of Delhi shall be inclusive of medicines andconsumables. In response to the said order the company filed a Special Leave Petition inthe Hon'ble Supreme Court for appropriate directions. The Hon'ble Supreme Court of Indiahas admitted the Special Leave Petition and passed an interim order on 30 November 2009.In pursuance of the interim order the Hospital has been providing free treatment to thepatients referred by the Govt. of NCT of Delhi. The hospital is charging for medicines& medical consumables from patients referred by the Govt. of NCT of Delhi for freetreatment in the Hospital in accordance with the directions of the Hon'ble Supreme Courtof India. As the matter is sub-judice the financial impact in the matter can bequantified only upon a decision by the Hon'ble Supreme Court of India.
Fixation of salary of nurses working in Private Hospitals: In response to a writpetition filed before the Hon'ble High Court of Delhi by Indian Professional NursesAssociation seeking directions regarding compliance of Hon'ble Supreme Court Judgementthe Directorate General of Health Services (DGHS) Govt. of NCT of Delhi has issued anorder on 25 June 2018. which inter-alia provides that in case of more than 200 beddedhospitals salary given to private nurses should be at par with the salary of the StateGovernment nurses given in the concerned State / Union territory for the similar grade.
The Association of Healthcare Providers of India (AHPI) of which the Company is also amember has filed a writ petition in the Hon'ble High Court of Delhi challenging the orderissued by DGHS. The Notice on the petition has been issued and the matter is sub-judices.If the order issued by DGHS Govt. of NCT of Delhi is to be implemented the consequentrise in costs shall have major adverse impact on the financials of the Company. Afterseries of hearings the matter is now reserved for judgement.
The management needs to exercise significant judgement and take into account relatedlaws and regulations in assessing the effects of the litigation in order to determine thecorresponding liabilities. However the actual outcomes of the litigation may differ fromthe estimates. There are therefore risks with respect to the recognition of provision ordisclosure of contingent liabilities with respect to the litigation. Therefore we gavesignificant attention to the audit of this litigation.
HOW OUR AUDIT ADDRESSED THE KEY AUDIT MATTER
We inquired with the Company's management and legal department regarding theprocedures followed to collate and monitor lawsuits filed and pending as at the date ofthe financial statements.
Reviewed legal consultation fees to check the completeness of the litigationnotified by the Company.
Inquired about the details and progress of cases and the methods/judgementsapplied by the management in estimating liabilities from litigation.
Reviewed relevant conditions and provisions of agreements with counterparties(if any);
Reviewed correspondences between the Company and the legal consultants involvedin the litigation including the Appeal's verdicts appeals petition and relevantsupporting documentation used by management and prepared by external experts.
Obtained independent status confirmation form the legal consultants whoseservices were used by the Company and their opinion on matter considering the currentstatus.
Reviewed the disclosures done by the Company in financial statements.
RESPONSIBILITIES OF MANAGEMENT AND THOSE CHARGED WITH GOVERNANCE FOR THE STANDALONEFINANCIAL STATEMENTS
The Company's Board of Directors is responsible for the matters stated in section134(5) of the Act with respect to the preparation of these financial statements that givea true and fair view of the financial position financial performance changes in equityand cash flows of the Company in accordance with the accounting principles generallyaccepted in India including the accounting Standards specified under section 133 of theAct. 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 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 financial statement that give a true and fair view and are free from materialmisstatement whether due to fraud or error.
In preparing the financial statements management is responsible for assessing theCompany's ability to continue as a going concern disclosing as applicable mattersrelated to going concern and using the going concern basis of accounting unless managementeither intends to liquidate the Company or to cease operations or has no realisticalternative but to do so.
Those Board of Directors are also responsible for overseeing the company's financialreporting process.
AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS
Our objectives are to obtain reasonable assurance about whether the financialstatements as a whole are free from material misstatement whether due to fraud or errorand to issue an auditor's report that includes our opinion. Reasonable assurance is a highlevel of assurance but is not a guarantee that an audit conducted in accordance with SAswill always detect a material misstatement when it exists. Misstatements can arise fromfraud or error and are considered material if individually or in the aggregate theycould reasonably be expected to influence the economic decisions of users taken on thebasis of these financial statements.
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 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.
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 system in place and the operating effectiveness ofsuch controls.
Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basisof accounting 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 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 auditor'sreport. However future events or conditions may cause the Company to cease to continue asa going concern.
Evaluate the overall presentation structure and content of the financialstatements including the disclosures and whether the financial statements represent theunderlying transactions and events in a manner that achieves fair presentation.
Materiality is the magnitude of misstatements in the annual financial statements thatindividually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the financial statements may be influenced. We considerquantitative materiality and qualitative factors in (i) planning the scope of our auditwork and in evaluating the results of our work; and (ii) to evaluate the effect of anyidentified misstatements in the financial statements.
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.
From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the financial statements of thecurrent period and are therefore the key audit matters. We describe these matters in ourauditor's report unless law or regulation precludes public disclosure about the matter orwhen 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
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 ofthe Act we give in the "Annexure-A" a statement on the matters specified inparagraphs 3 and 4 of the Order to the extent applicable.
2. As required by Section 143(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 financial statements dealt with by this Report are in agreement with the booksof accounts.
d) In our opinion the aforesaid financial statements comply with the AccountingStandards specified under Section 133 of the Act read with Rule 7 of the Companies(Accounts) Rules 2014.
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 Auditor's Report inaccordance with the requirements of section 197(16) of the Act as amended: In our opinionand to the best of our information and according to the explanations given to us theremuneration paid by the Company to its directors during the year is in accordance withthe provisions of section 197 of the Act.
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 in our opinionand 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 its financialposition in its financial statements - Refer Note 30.B(i) and (iii) to the financialstatements;
ii) The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses.
iii) There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.
For S.N. Dhawan & Co LLP
Firm Registration No.: 000050N/N500045
Rajeev K Saxena Partner
Membership No.: 077974
Place: New Delhi
Date: 8th May 2019
Annexure A to the Independent Auditor's Report of even date to the members ofIndraprastha Medical Corporation Limited on the financial statements for the year ended31 March 2019
(Referred to in paragraph 1 under Report on other Legal and RegulatoryRequirements' section of the Independent Auditor's Report of even date to the members ofIndraprastha Medical Corporation Limited on the financial statements as of and for theyear ended 31 March 2019
(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
(b) The fixed assets have been physically verified by the management during the yearand according to the information and explanation given to us no material discrepancieswere noticed on such verification between book records and the physical inventories. Inour opinion the frequency of verification of the fixed assets is reasonable having regardto the size of the Company and the nature of its assets.
(c) According to the information and explanations given to us and the records examinedby us and based on the examination of the audit evidences provided to us we report thatthe title deeds of all the immovable properties (which are included under the headProperty Plant and Equipment) are held in the name of the Company.
(ii) The management has conducted physical verification of inventory at reasonableintervals during the year and according to the information and explanations given to usno material discrepancies between physical inventory and book records were noticed onphysical verification.
(iii) According to the information and explanations given to us the Company has notgranted any loan secured or unsecured to companies firms Limited Liability Partnerships(LLPs) or other parties covered in the register maintained under Section 189 of the Act.Accordingly the provisions of clauses 3(iii)(a) 3(iii)(b) and 3(iii)(c) of the Order arenot applicable.
(iv) In our opinion and according to the information and explanations given to us theCompany has not entered into any transaction covered under Sections 185 and 186 of theAct. Accordingly the provisions of clause 3(iv) of the Order are not applicable.
(v) In our opinion and according to the information and explanations given to us theCompany has not accepted any deposits during the year and had no unclaimed deposits at thebeginning of the year within the meaning of Sections 73 to 76 of the Act and the Companies(Acceptance of Deposits) Rules 2014 (as amended). Accordingly the provisions of clause3(v) of the Order are not applicable.
(vi) We have broadly reviewed the books of account maintained by the Company pursuantto the Rules made by the Central Government for the maintenance of cost records undersub-section (1) of Section 148 of the Act in respect of Company's services and are of theopinion that prima facie the prescribed accounts and records have been made andmaintained. However we have not made a detailed examination of the cost records with aview to determine whether they are accurate or complete.
(vii) (a) According to the information and explanations given to us the Company isregular in depositing undisputed statutory dues including provident fund employees' stateinsurance income-tax service tax goods and services tax duty of customs value addedtax cess and other material statutory dues to the appropriate authorities. Further noundisputed amounts payable in respect thereof were outstanding at the year-end for aperiod of more than six months from the date they become payable.
(b) According to the information and explanations given to us there are no duesoutstanding in respect of income-tax sales-tax service tax duty of customs duty ofexcise and value added tax that have not been deposited with the appropriate authoritieson account of any dispute except as mentioned below:
|Name of the statute ||Nature of dues ||Amount in INR million ||Amount paid under Protest in INR million ||Period to which the amount relates ||Forum where dispute is pending |
|Service tax under Finance Act 1994 ||Service tax dues ||27.61 ||7.71 ||2006-07 to 2010-11 ||CESTAT (Delhi) |
(viii) In our opinion and according to the information and explanations given to usthe Company has not defaulted in repayment of loans or borrowings to any bank or financialinstitution or government during the year. The Company did not have any outstandingdebentures during the year.
(ix) In our opinion and according to the information and explanations given to us theCompany did not raise moneys by way of initial public offer or further public offer(including debt instruments) and did not have any term loans outstanding during the year.Accordingly the provisions of clause 3(ix) of the Order are not applicable.
(x) To the best of our knowledge and according to the information and explanationsgiven to us no fraud by the Company or on the Company by its officers or employees hasbeen noticed or reported during the period covered by our audit.
(xi) In our opinion and according to the information and explanations given to usmanagerial remuneration has been paid by the Company in accordance with the requisiteapprovals mandated by the provisions of Section 197 of the Act read with Schedule V of theAct.
(xii) The Company is not a Nidhi Company. Accordingly provisions of clause 3(xii) ofthe Order are not applicable.
(xiii) In our opinion and according to the information and explanations given to usall transactions with the related parties are in compliance with Sections 177 and 188 ofAct and the requisite details have been disclosed in the financial statements etc. asrequired by the applicable accounting standards.
(xiv) During the year the Company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures. Accordingly provisions ofclause 3 (xiv) of the order are not applicable.
(xv) In our opinion and according to the information and explanations given to us thecompany has not entered into any non-cash transactions with the directors or personsconnected with them covered under Section 192 of the Act. Accordingly provisions ofclause 3 (xv) of the order are not applicable.
(xvi) The Company is not required to be registered under Section 45-IA of the ReserveBank of India Act 1934. Accordingly provisions of clause 3 (xvi) of the order are notapplicable.
For S.N. Dhawan & Co LLP
Firm Registration No.: 000050N/N500045
Rajeev K Saxena
Membership No.: 077974
New Delhi: 8th May 2019
Annexure B to the Independent Auditor's Report of even date to the members ofIndraprastha Medical Corporation Limited on the financial statements for the year ended31 March 2019
Independent Auditor's report on the Internal Financial Controls under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 ("the Act")
1) We have audited the internal financial controls over financial reporting ofIndraprastha Medical Corporation Limited ("the Company") as of 31 March 2019 inconjunction with our audit of the financial statements of the Company for the year endedon that date.
Management's Responsibility for internal financial controls
2) The Board of Directors of the Company 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. Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of the company's 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 Act.
3) Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting(the "Guidance Note") and the Standards on Auditing issued by the Institute ofChartered Accountants of India (ICAI) and deemed to be prescribed under section 143(10) ofthe Act to the extent applicable to an audit of internal financial controls bothapplicable to an audit of Internal Financial Controls and both issued by the ICAI. 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 over financial reporting were established and maintained and if suchcontrols operated effectively in all material respects.
4) Our audit involves performing procedures to obtain audit evidence about the adequacyof the 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 over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgement including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error.
5) We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls overfinancial reporting.
MEANING OF INTERNAL FINANCIAL CONTROLS OVER FINANCIAL REPORTING
6) A company's internal financial controls over financial reporting is a processdesigned to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance withgenerally accepted accounting principles. A company's internal financial controls overfinancial reporting includes those policies and procedures that (1) pertain to themaintenance of records that in reasonable detail accurately and fairly reflect thetransactions and dispositions of the assets of the company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of financialstatements in accordance with generally accepted accounting principles and that receiptsand expenditures of the company are being made only in accordance with authorisations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised acquisition use or disposition of thecompany's assets that could have a material effect on the financial statements.
INHERENT LIMITATIONS OF INTERNAL FINANCIAL CONTROLS OvER FINANCIAL REPORTING
7) Because of the inherent limitations of 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 internal financial controls overfinancial reporting may become inadequate because of changes in conditions or that thedegree of compliance with the policies or procedures may deteriorate.
8) In our opinion the Company has in all material respects adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at 31 March 2019 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls over Financial Reporting issued by the Institute of CharteredAccountants of India.
For S.N. Dhawan & Co LLP
Firm Registration No.: 000050N/N500045
Rajeev K Saxena
Membership No.: 077974
New Delhi: 8th May 2019