You are here » Home » Companies » Company Overview » Kwality Pharmaceuticals Ltd

Kwality Pharmaceuticals Ltd.

BSE: 539997 Sector: Health care
NSE: N.A. ISIN Code: INE552U01010
BSE 00:00 | 20 Oct 835.00 0
(0.00%)
OPEN

900.55

HIGH

900.55

LOW

821.15

NSE 05:30 | 01 Jan Kwality Pharmaceuticals Ltd
OPEN 900.55
PREVIOUS CLOSE 835.00
VOLUME 24000
52-Week high 922.80
52-Week low 48.00
P/E 56.15
Mkt Cap.(Rs cr) 867
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 900.55
CLOSE 835.00
VOLUME 24000
52-Week high 922.80
52-Week low 48.00
P/E 56.15
Mkt Cap.(Rs cr) 867
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Kwality Pharmaceuticals Ltd. (KWALITYPHARMA) - Auditors Report

Company auditors report

Independent Auditor’s Report for the Standalone Financial Statements of KwalityPharmaceuticals Limited (erstwhile M/s Kwality Pharmaceuticals Private Limited)

To

The Members

M/s Kwality Pharmaceuticals Limited.

Report on the Financial Statements

We have audited the accompanying financial statements of M/s Kwality PharmaceuticalsLimited (erstwhile Kwality Pharmaceuticals Private Limited) which comprise theStandalone Balance Sheet as at 31st March 2019 the StandaloneStatement of Profit and Loss and the Standalone Cash Flow Statement (collectively referredas "Standalone Financial Statements") for the year then ended and a summary ofthe significant accounting policies and other explanatory information.

Management’s Responsibility for the Financial Statements

The Company’s Board of Directors is responsible for the matters stated in Section134(5) of the Companies Act 2013 ("the Act") with respect to the preparation& presentation of these financial statements that give a true and fair view of thefinancial position financial performance and cash flows of the Company in accordance withthe accounting principles generally accepted in India including the Accounting Standardsspecified under Section 133 of the Act read with Rule 7 of the Companies (Accounts)Rules 2014. This responsibility also includes maintenance of adequate accounting recordsin accordance 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 statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these financial statements based on ouraudit.

We have taken into account the provisions of the Act the accounting and auditingstandards and matters which are required to be included in the audit report under theprovisions of the Act and the Rules made there under.

We conducted our audit in accordance with the Standards on Auditing specified underSection 143(10) of the Act. Those Standards require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetherthe financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the financial statements. The procedures selected depend on theauditor’s judgment including the assessment of the risks of material misstatement ofthe financial statements whether due to fraud or error. In making those risk assessmentsthe auditor considers internal financial control relevant to the

Company’s preparation of the financial statements that give a true and fair viewin order to design audit procedures that are appropriate in the circumstances. An auditalso includes evaluating the appropriateness of the accounting policies used and thereasonableness of the accounting estimates made by the Company’s Directors as wellas evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the financial statements.

Opinion

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 the Actin the manner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India of the state of affairs of the Company as at 31stMarch 2019 and its profit/loss and its cash flows for the year ended on that date.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor’s Report) Order 2016 (the Order) issuedby the Central

Government in terms of Section 143(11) of the Act we enclose in the Annexure Astatement on matters specified in paragraph 3 & 4 of the said order.

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 Balance Sheet & the Statement of Profit and Loss dealt with by this Reportare in agreement with the books of account.

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 31stMarch 2019 taken on record by the Board of Directors none of the directors isdisqualified as on 31st 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 A".

g. Report under the Companies (Auditor’s Report) Order 2016 (CARO 2016) has beenattached in "Annexure B".

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 Financial statements disclose the impact of pending litigations on the financialposition of the company. Refer note 40 of notes and disclosures forming part of standalonefinancial statements annexed with the standalone financial statements.

ii) The Company did not have any long-term contracts including derivative contracts assuch the question of commenting on any material foreseeable losses thereon doesn’tarise.

iii) There has not been an occasion in case of the company during the year under reportto transfer any sums to the Investor Education and Protection Fund.

For Vijay Mehra & Co.
Chartered Accountants
FRN- 001051N
Sd/-
CA Amit Handa
Place: Amritsar Partner
Dated: 30.05.2019 M.No. 502400

ANNEXURE A: To The Independent Auditor’s Report of even date on the StandaloneFinancial Statements of Kwality Pharmaceuticals Limited (erstwhile M/s KwalityPharmaceuticals Private Limited)

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act")

We have audited the internal financial controls over financial reporting of M/sKwality Pharmaceuticals Limited (erstwhile Kwality Pharmaceuticals Private Limited) asof March 31 2019 in conjunction with our audit of the financial statements of theCompany for the year ended on that date.

Management’s Responsibility for Internal Financial Controls

The Company’s 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 Reportingissued by the Institute of Chartered Accountants of India. These responsibilities includethe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to company’s policies the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the Companies Act 2013.

Auditors’ Responsibility

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 ICAI and deemed to be prescribed under section 143(10) of theCompanies Act 2013 to the extent applicable to an audit of internal financial controlsboth applicable to an audit of Internal Financial Controls and both issued by theInstitute of Chartered Accountants of India. Those Standards and the Guidance note requirethat we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether adequate internal financial controls over financialreporting was established and maintained and if such controls operated effectively in allmaterial respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system 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 procedures selected depend on the auditor’s judgment including the assessmentof the risks of material misstatement of the financial statements whether due to fraud orerror.

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 controlssystem over financial reporting.

Meaning of Internal Financial Controls Over Financial Reporting

A company’s internal financial control 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 control overfinancial reporting includes 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 accepted accountingprinciples and that receipts and expenditures of the company are being made only inaccordance with authorizations of management and directors of the company; and

(3) provide reasonable assurance regarding prevention or timely detection ofunauthorized acquisition use or disposition of the company’s assets that could havea material 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 including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at March 31 2019 based onthe 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.

For Vijay Mehra & Co.
Chartered Accountants
FRN- 001051N
Sd/-
CA Amit Handa
Place: Amritsar Partner
Dated: 30.05.2019 M.No. 502400

ANNEXURE B Report under the Companies (Auditor’s Report) Order 2016 of theStandalone Financial Statements of Kwality Pharmaceuticals Limited (erstwhile M/s KwalityPharmaceuticals Private Limited)

Referred to in of our report of even date

In terms of the information and explanations sought by us and given by the company andthe books and records examined by us in the normal course of audit and to the best of ourknowledge and belief we state that:

(i) (a) The company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.

(b) As explained to us all the assets 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 such verification.

(c) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the title deeds of the Company’sRegistered Office and Manufacturing unit is situated at Village Nagkalan Majitha RoadAmritsar Punjab is on leased premises. The same premises is owned by Mr. Ramesh Aroraand Mr. Ajay Arora Promoters of the Company and the lease is for initial period of 49years. Similarly another manufacturing unit is situated at Plot No. 1-A industrial AreaRaja Ka Bagh Tehsil Nurpur District Kangra Jassur Himachal Pradesh is on also onleased premises. The same premises is owned by Government of Himachal Pradesh and thelease is for long term.

(ii) (a) As explained to us the inventory has been physically verified at reasonableintervals during the year by the management. In our opinion the frequency of verificationis reasonable. (b) In our opinion and on the basis of our examination of the records thecompany is generally maintaining proper records of its inventories. No materialdiscrepancy was noticed on physical verification of stocks by the management as comparedto book records.

(iii) As explained to us the company has granted loan to its subsidiary listed inregister maintained under section 189 of The Companies Act 2013 (Act). The subsidiaryCompany named Kwality Pharmaceuticals Africa Limitada incorporated on 20.09.2013 under thelaws of Africa having identification number as 100428873. The registered office of theCompany is located at Mozambique Maputo Cidade Distrito Urbano 1 Bairro de CentralAfrica.

a) The subsidiary is incorporated with the intention of import export and marketing ofpharmaceutical products of the company. The terms of the aforementioned loan are notprejudicial to the interest of the company.

b) The terms of the loan do not prescribe any schedule of repayment of principal andpayment of interest.

c) As stated above the terms do not provide for schedule of repayment and thus commentson status of over dues can’t be made.

(iv) The company has not given any loans investments guarantees and securityaccording to the provisions of the section 185 and 186 of the Companies Act 2013 duringthe year.

(v) The Company has not accepted any deposits from the public as per the provisions ofsection 73 to 76 of the Companies Act 2013.

(vi) The maintenance of cost records has been specified by the central government undersub section (1) of section 148 of the Companies Act 2013 and such accounts and recordshave been so made and maintained by the company.

(vii) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company

(a)The company is regular in depositing with appropriate authorities undisputedstatutory dues including provident fund employees’ state insurance income taxsales tax wealth tax service tax custom duty excise duty Goods & Service TaxCess and other material statutory dues applicable to it. However in few cases company hasdeposited TDS and GST after due dates and paid interest on late payments.

(b) The details of dues of Income Tax that have not been deposited on account ofdispute is as under:

ACIT Circle IV Amritsar vide an order U/s 143(3) of the Income Tax Act 1961 dated28-09-2016 made certain additions and computed the total income of the Assessee company atRs 40400070/- against the total income declared by the company at Rs 8899070/- forthe Assessment year 2012-2013. The assessee company went in appeal against this order ofthe assessing officer with CIT (Appeals) Amritsar. CIT( Appeals) vide its order u/s 250(6)dated 26/10/2016 partly deleted additions amounting to Rs 20000000/- and confirmed thepart additions amounting to Rs 11501000/-. The assessee Company has filed furtherappeal to Income Tax Appellate Tribunal on 25/11/2016 vide ITA 587/Asr/2016 for deletingthe additions confirmed by the CIT(Appeals). Similarly the Income Tax Department has alsofiled a parallel appeal against CIT (Appeals) order deleting the additions of Rs20000000/- on 05/12/2016 vide ITA 623/Asr/2016. The order of the ITAT is pending tilldate. And as per the information received the final hearings for both the appeals are on05.09.2019.

The total additional tax demand of Rs 13353680/- created vide order of assessingofficer stands reduced proportionately by deletion of additions amounting to Rs20000000/- against total additions of Rs 31501000/-. The assessee company thoughfiled appeal against that CIT (Appeals) order as stated above but however has alreadydeposited in protest demand proportionately to the total assessment made.

(viii) Based on our audit procedures and according to the information and explanationsgiven to us we are of the opinion the company has not defaulted in repayment of dues toa financial institution bank Government or dues to debenture holders.

(ix) In our opinion and according to the information and explanations given to us themoneys raised by way of term loans were applied for the purposes for which those wereraised. The company has not raised money by way of Initial Public Offer/Further PublicOffer during the year.

(x) Based upon the audit procedures performed and according to the information andexplanations given to us no fraud by the company or any fraud on the company by itsofficers or employees has been noticed or reported during the course of our audit thatcauses the financial statements to be materially misstated.

(xi) According to the information and explanations given to us managerial remunerationhas been paid or provided in accordance with the requisite approvals mandated by theprovision of Section 197 read with schedule 5 to the Companies Act 2013.

(xii) The company is not a Nidhi Company hence this clause is not applicable.

(xiii) Based upon the audit procedures performed and according to the information andexplanations given to us all transactions with related parties are in compliance withsections 177 and 188 of Companies Act 2013 where applicable and the details of suchtransactions have been disclosed in the Financial statements etc. as required by theapplicable accounting standards.

(xiv) The company has not made any preferential allotment or private placement ofshares or fully or partly convertible debentures during the year under review.

(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 any non-cashtransactions with directors or persons connected with him and provisions of section 192 ofthe Act are not applicable.

(xvi) The company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934.

For Vijay Mehra & Co.
Chartered Accountants
FRN- 001051N
Sd/-
CA Amit Handa
Place: Amritsar Partner
Dated: 30.05.2019 M.No. 502400

.