To the Members of
MARKSANS PHARMA LTD
REPORT ON THE AUDIT OF THE STANDALONE FINANCIAL STATEMENTS
We have audited the accompanying standalone financial statements of Marksans PharmaLimited ("the Company") which comprises of the Balance Sheet as at 31st March2019 the Statement of Profit and Loss (including Other Comprehensive Income) theStatement of Changes in Equity the Statement of Cash Flows for the year ended on thatdate and a summary of the significant accounting policies and other explanatoryinformation (hereinafter referred to as "the standalone financial statements").
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 Indian Accounting Standards prescribed under Section133 of the Act read with the Companies (Indian Accounting Standards) Rules 2015 asamended ("Ind AS") and other accounting principles generally accepted in Indiaof the state of affairs of the Company as at 31st March 2019 its profit (including othercomprehensive income) changes in equity and its cash flows for the year ended on thatdate.
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 period. These matterswere addressed in the context of our audit of the financial statements as a whole and informing our opinion thereon and we do not provide a separate opinion on these matters. Wehave determined the matters described below to be the key audit matters to be communicatedin our report;
|Sr. No. Key Audit Matter ||Auditor's Response |
|1. Investment in Subsidiaries: ||The Management of the Company provided financial statements of all subsidiaries. We followed appropriate audit procedure to evaluate financial statements of subsidiaries. |
|Investment constitute significance portion of the standalone financial statements. The Company has investments of र2360.73 million in Subsidiaries and all subsidiaries are located outside India. ||Following are the assertions for Investment in subsidiaries: |
|The Company has following investments in the Equity Instruments in Subsidiary Companies: || Investment are properly described and classified in the standalone financial statements |
| || Investment represents investments actually owned by the Company. |
|Name of Subsidiary ||Extent of Holding (%) |
|Nova Pharmaceuticals ||60% |
|Australasia Pty Ltd. || |
|Marksans Pharma (UK) Ltd. ||100% |
|Marksans Pharma Inc. ||100% |
INFORMATION OTHER THAN THE STANDALONE FINANCIAL STATEMENTS AND AUDITOR'S REPORT THEREON
The Company's Board of Directors is responsible for the preparation of the otherinformation. The other information comprises the information included in the ManagementDiscussion and Analysis Board's Report including Annexures to Board's Report CorporateGovernance and Shareholder's Information but does not include the standalone financialstatements and our 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 the other informationis materially inconsistent with the standalone financial statements or our knowledgeobtained during the course of our audit or otherwise appears to be materially misstated.If based on the work we have performed we conclude that there is a material misstatementof this other information; we are required to report that fact. We have nothing to reportin this regard.
RESPONSIBILITY OF MANAGEMENT FOR THE STANDALONE 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 preparationand presentation of these standalone financial statements that give a true and fair viewof the financial position financial performance (including other comprehensive income)cash flows and changes in equity of the Company in accordance with the IndAS and otheraccounting principles generally accepted in India. This responsibility also includesmaintenance of adequate accounting records in accordance with the provisions of the Actfor safeguarding the assets of the Company and for preventing and detecting frauds andother irregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the standalone financial statements that give a true andfair view and are free from material misstatement whether due to fraud or error.
In preparing the standalone financial statements management is responsible forassessing the Company's 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.
The Board of Directors are also responsible for overseeing the Company's financialreporting process
AUDITOR'S 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 auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these standalone financial statements.
As part of an audit 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 standalonefinancial statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrol.
Obtain an understanding of internal financial controls relevant to the audit inorder to design audit procedures that are appropriate in the circumstances. Under Section143(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.
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 standalone financial statements or if such disclosures are inadequate to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor's report. However future events or conditions may cause the Company to cease tocontinue as a going concern.
Evaluate the overall presentation structure and content of the standalonefinancial statements including the disclosures and whether the standalone financialstatements represent the underlying transactions and events in a manner that achieves fairpresentation.
Materiality is the magnitude of misstatements in the standalone financial statementsthat individually 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 standalone financial statementsof the current period and are therefore the key audit matters. We describe these mattersin our auditor's report unless law or regulation precludes public disclosure about thematter or when 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 Section 143(3) of the Act based on our audit 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) Statement of Changes in Equity and the Statement of Cash Flow dealt with by thisReport are in agreement with the relevant books of account;
d. In our opinion the aforesaid standalone financial statements comply with the Ind ASspecified under Section 133 of the Act;
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". Our report expresses an unmodified opinion onthe adequacy and operating effectiveness of the Company's internal financial controls overfinancial reporting.
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 accordingly 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 as amended inour opinion and to the best of our information and according to the explanations given tous;
i. The Company has disclosed impact of pending litigations on its financial position inits standalone financial statements (refer note: 29)
ii. The Company has made provision as required under the applicable law or accountingstandards for material foreseeable losses if any on long-term contracts includingderivative contracts.
iii. There has been no requirement for transferring amounts required to betransferred to the Investor Education and Protection Fund by the Company.
2. 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 Companies Act 2013 we give in the "Annexure B" a statement on the mattersspecified in paragraphs 3 and 4 of the Order.
For Bhuta Shah & Co LLP
Firm Registration No. 101474W / W100100
Membership No. 048650
Place : Mumbai
Date : 29th May 2019
"Annexure A" to the Independent Auditor's Report
(Referred to in paragraph 1(f ) under Report on Other Legal and RegulatoryRequirements' Section of our report of even date)
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 MarksansPharma Limited ("the Company") as of 31st March 2019 in conjunction with ouraudit of the standalone financial statements of the Company for the year ended on thatdate.
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 (ICAI'). Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to company's policies the safeguarding ofits assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the Act.
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") issued by ICAI and Standards on Auditing prescribed underSection 143(10) of the Act to the extent applicable to an audit of internal financialcontrols. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate 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 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 proceduresselected depend on the auditor's judgment including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error.
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 systemover financial reporting.
MEANING OF INTERNAL FINANCIAL CONTROLS OVER FINANCIAL REPORTING
A Company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A Company's internal financial control over financialreporting includes those policies and procedures that (1) pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the Company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures 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
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.
In our opinion and to the best of our information and according to the explanationsgiven to us the Company has in all material respects an adequate internal financialcontrols system over financial reporting and such internal financial controls overfinancial reporting were operating effectively as at 31st March 2019 based on criteriafor the internal control over financial reporting 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 Bhuta Shah & Co LLP
Firm Registration No. 101474W / W100100
Membership No. 048650
Place : Mumbai
Date : 29th May 2019
"Annexure B" to the Independent Auditor's Report
(Referred to in paragraph 2 under Report on Other Legal and RegulatoryRequirements' Section of our report of even date.)
i. In respect of property plant and equipments (PPE): a) The Company has maintainedproper records showing full particulars including quantitative details and situation ofthe fixed assets.
b) The Company has a regular programme of physical verification of its fixed assets bywhich all fixed assets are verified in a phased manner over a period of three years. Inour opinion the periodicity of physical verification is reasonable having regard to thesize of the Company and nature of its fixed assets. Pursuant to the programme certainfixed assets have been physically verified by the management during the year. As informedno material discrepancies were noticed on such verification.
c) According to information & explanations given to us and on the basis of ourexamination of the records of the Company the title deeds of immovable properties asreflected in PPE schedule are held in the name of the Company wherever those arefreehold. In respect of immoveable properties of land that have been taken on lease anddisclosed in the Financial Statements as PPE the lease agreements are in the name of theCompany where the Company is lessee in the agreement.
ii. In respect of its inventories:
The Inventories except goods in transit and stocks lying with third parties have beenphysically verified by the Management during the year. In our opinion the frequency ofsuch verification is reasonable. For stock lying with third parties at year end writtenconfirmations have been obtained. The discrepancies noticed on physical verificationbetween physical stocks and book records were not material and have been dealt with in thebooks of account.
iii. According to the information and explanations given to us the Company has grantedunsecured interest free loan to one subsidiary covered in the register maintained underSection 189 of the Act in respect of which:
1) The terms and conditions of the loans are in our opinion prima facie notprejudicial to the Company's interest.
2) According to the information and explanations given to us there is no stipulationof schedule of repayment of principal and therefore we are unable to comment on theregularity of repayment of principal.
3) In absence of any stipulation with regard to repayment there is no overdue amountand hence clause (iii)(c) of Para 3 is not applicable to the Company.
iv. In our opinion and according to information and explanations given to us theCompany has complied with the provisions of Section 185 and 186 of the Act in respect ofgrant of loans making investments and providing guarantees and securities as applicable.
v. According to the information and explanations given to us the Company has notaccepted any deposits from the public in accordance with the provisions of Section 73 to76 of the Act and rules framed thereunder. Accordingly the provisions of Clause (v) ofPara 3 of the Order is not applicable to the Company.
vi. According to the information and explanations given to us we have broadly reviewedthe books of account maintained by the Company pursuant to the rules made by the CentralGovernment for the maintenance of cost records under Section 148 of the Act and are ofthe opinion that prima facie the prescribed accounts and records have been made andmaintained. However we have not carried out a detailed examination of the same.
vii. In respect of statutory dues:
a) According to the information and explanations given to us and based on the recordsof the Company examined by us the Company has generally been regular in depositingundisputed statutory dues including provident fund Employees' State InsuranceIncome-tax Custom duty Goods and Service tax cess and/or any other material statutorydues wherever applicable to the appropriate authorities. According to the information andexplanations given to us there were no outstanding material statutory dues as on 31stMarch 2019 for a period of more than six months from the date they became payable.
b) According to the information and explanations given to us there are no duesoutstanding in respect of provident fund Employees' State Insurance Income-tax Customduty Goods and Service tax cess and/or any other material statutory dues which have notbeen deposited on account of any dispute.
viii. In our opinion and according to the information and explanations given to us theCompany has not defaulted during the year in the repayment of dues to banks financialinstitutions or government. The Company did not have any outstanding debentures during theyear.
ix. Based on our audit procedures and on the basis of information and explanationsgiven to us the Company has not raised moneys by way of initial public offer or furtherpublic offer (including debt instruments) or term loans. Accordingly the Clause (ix) ofPara 3 of the Order is not applicable to the Company.
x. Based upon the audit procedures performed and the information and explanations givenby the management no fraud by the Company and no material fraud on the Company by itsofficers or employees has been noticed or reported during the year.
xi. Based upon the audit procedures performed and the information and explanationsgiven by the management the managerial remuneration has been paid / provided inaccordance with the requisite approvals mandated by the provisions of Section 197 readwith Schedule V to the Act.
xii. In our opinion and according to the information and explanations given to us theCompany is not a Nidhi company as specified under Section 406 of the Act. Accordingly theprovisions of Clause (xii) of Para 3 of the Order is not applicable to the Company.
xiii. According to the information and explanations given to us and based on ourexamination of the records of the Company transactions with the related parties are incompliance with
Sections 177 and 188 of the Act where applicable and details of such transactions havebeen disclosed in the financial statements as required by the applicable Indian AccountingStandards.
xiv. According to the information and explanations give to us and based on ourexamination of the records of the Company the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year and hence reporting under Clause (xiv) of the Order is not applicable to theCompany.
xv. According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not entered into non-cashtransactions with directors or persons connected with the directors and hence provisionsof Section 192 of the Companies 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 Bhuta Shah & Co LLP
Firm Registration No. 101474W / W100100
Membership No. 048650
Place : Mumbai
Date : 29th May 2019