To the Members of Marksans Pharma Limited
REPORT ON THE AUDIT OF THE STANDALONE FINANCIAL STATEMENTS
We have audited the accompanying standalone financial statements of Marksans PharmaLimited ("the Company") which comprise the Balance Sheet as at March 31 2020the Statement of Profit and Loss (including Other Comprehensive Income) the Statement ofChanges in Equity and the Statement of Cash Flows for the year ended on that date and asummary of the significant accounting policies and other explanatory information(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 gives a true and fair view inconformity with the aforesaid Ind AS and other accounting principles generally acceptedin India prescribed under section 133 of the Act read with the Companies (IndianAccounting Standards) Rules 2015 as amended ("Ind AS") and other accountingprinciples generally accepted in India of the state of affairs of the Company as at March31 2020 the profit (other comprehensive income) changes in equity and its cash flowsfor the year ended on that date.
BASIS FOR OPINION
We conducted our audit of the standalone financial statements in accordance with theStandards on Auditing ("SA"s) specified under section 143(10) of 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 ("ICAI") together with theethical requirements that are relevant to our audit of the standalone financial statementsunder the provisions of the Act and the Rules made thereunder and we have fulfilled ourother ethical responsibilities in accordance with these requirements and the ICAI's Codeof Ethics. We believe that the audit evidence obtained by us is sufficient and appropriateto provide a basis for our audit opinion on the standalone financial statements.
EMPHASIS OF MATTER:
World Health Organisation (WHO) declared outbreak of Coronavirus Disease (COVID-19) aglobal pandemic on March 11 2020. Consequent to this Government of India declaredlockdown on March 23 2020 and the Company temporarily suspended the operations in all itsmanufacturing units in compliance with the lockdown instructions issued by the Central andState Governments. COVID-19 has impacted the normal business operations of the Company byway of interruption in production product supply unavailability of personnelclosure/lock down of production facilities etc. during the lock-down period. Themanagement believes that no adjustments are required in the financial statements as itdoes not impact the current financial year however in view of the various preventivemeasures taken (such as complete lock-down restrictions by the Government of India travelrestrictions etc.) and highly uncertain economic environment a definitive assessment ofthe impact on the subsequent periods is highly dependent upon circumstances as theyevolve.
Our opinion is not modified in respect of above matter.
KEY AUDIT MATTERS
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone financial statements of the current period.These matters were addressed in the context of our audit of the standalone financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters. We have determined the matters described below to bethe key audit matters to be communicated in our report.
|Key Audit Matter ||Auditor's Response |
|1. Investment in Subsidiaries: Investment constitute significance portion of the standalone financial statements. The Company has investments of RS 2360.74 million in subsidiaries as at March 31 2020 and all subsidiaries are located outside India. ||The Management of the Company provided financial statements of all subsidiaries. We followed appropriate audit procedure to evaluate financial statements of subsidiaries. |
|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 Australasia Pty Ltd. ||60% || |
|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 BusinessResponsibility Report Corporate Governance and Shareholder's Information but does notinclude the standalone financial statements 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 materialmisstatement of this other information; we are required to report that fact. We havenothing to report in 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 Ind AS financial statements that give a true and fairview of the financial position financial performance (including other comprehensiveincome) cash flows and changes in equity of the Company in accordance with the accountingprinciples generally accepted in India including the Indian Accounting Standards (Ind AS)specified under section 133 of the Act read with relevant rules issued thereunder. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; anddesign implementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the standalone Ind AS financialstatements that give a true and fair view and are free from material misstatement whetherdue 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.
The Board of Directors are also responsible for overseeing the Company's financialreporting process
AUDITOR'S RESPONSIBILITY FOR THE AUDIT OF THE 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 the standalone financial statements. As part of an audit inaccordance with SAs we exercise professional judgment and maintain professionalskepticism 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 read with Rule 7 of the Companies (Accounts)Rules 2014;
e. On the basis of the written representations received from the directors as on March31 2020 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2020 from being appointed as a director in terms of Section 164 (2) of theAct;
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 Rule 11 of the Companies (Audit and Auditors) Rules 2014 as amended inour opinion and to the best of our information and according to the explanations given tous:
i. The Company has disclosed the impact of pending litigations on its financialposition in its standalone financial statements.
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 is no requirement for transferring amounts during the year to the InvestorEducation 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 Act we give in the "Annexure B" a statement on the matters specified inparagraphs 3 and 4 of the Order to the extent applicable.
For Bhuta Shah & Co LLP
Firm Registration No. 101474W / W100100
Membership No. 127487
UDIN: 20127487AAAAB RS 7332
Mumbai; 02 June 2020
Annexure "A" to Independent Auditors' Report
(Referred to in paragrap Rs 1(f) under Report on Other Legal and RegulatoryRequirements' section of our report to the Members of Marksans Pharma Limited of evendate)
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 March 31 2020 in conjunction with ouraudit of the standalone Ind AS financial statements of the Company for the year ended onthat date.
We have audited the internal financial controls with reference to the financialstatements of Marksans Pharma Limited ("the Company") as on March 31 2020 inconjunction with our audit of the financial statements of the Company for the year endedon that date.
In our opinion the Company has in all material respects adequate internal financialcontrols with reference to the financial statements and such internal financial controlswere operating effectively as at March 31 2020 based on the internal control withreference to the financial statements criteria established by the Company considering theessential components of internal control stated in the Guidance Note on Audit of InternalFinancial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India ("the Guidance Note").
MANAGEMENT'S RESPONSIBILITY FOR INTERNAL FINANCIAL CONTROLS
The Company's management and the Board of Directors are responsible for establishingand maintaining internal financial controls based on the internal controls with referenceto the financial statements criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note. 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 the preventionand detection of frauds errors the accuracy and completeness of the accounting recordsand the timely preparation of reliable financial information as required under the Act.
Our responsibility is to express an opinion on the Company's internal financialcontrols with reference to the financial statements based on our audit. We conducted ouraudit in accordance with the Guidance Note and the Standards on Auditing prescribed undersection 143(10) of the Act to the extent applicable to an audit of internal financialcontrols with reference to the financial statements. Those Standards and the Guidance Noterequire that we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether adequate internal financial controls with reference tothe financial statements were established and maintained and whether such controlsoperated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system with reference to the financial statements andtheir operating effectiveness.
Our audit of internal financial controls with reference to the financial statementsincluded 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 judgment including the assessment of therisks of material 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 systemwith reference to the financial statements.
MEANING OF INTERNAL FINANCIAL CONTROLS OVER FINANCIAL REPORTING
A company's internal financial controls with reference to the financial statements is aprocess 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 control 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
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 financialcontrols over financial reporting to future periods are subject to the risk that theinternal financial control over financial reporting may become inadequate because ofchanges in conditions or that the degree of compliance with the policies or proceduresmay deteriorate.
For Bhuta Shah & Co LLP
Firm Registration No. 101474W / W100100
Membership No. 127487
UDIN: 20127487AAAAB RS 7332
Mumbai; 02 June 2020
Annexure "B" to Independent Auditors' Report
(Referred to in paragrap Rs 2 under Report on Other Legal and RegulatoryRequirements' section of our report to the Members of Marksans Pharma Limited of evendate.)
i. In respect of property plant and equipment (fixed assets):
a) The Company has maintained proper records showing full particulars includingquantitative details and situation of the property plant and equipment (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 such 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 and explanations given to us and on the basis of ourexamination of the records of the Company the title deeds of immovable properties asreflected in the schedule of property plant and equipment are held in the name of theCompany wherever those are freehold. In respect of immoveable properties of land that havebeen taken on lease and disclosed in the financial statements as property plant andequipment the lease agreements are in the name of the Company where the Company is lesseein 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. 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. However the principal has been repaid during theyear.
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 Insurance Income-tax Custom duty Goods and Service tax cess and/or any other material statutory dueswherever applicable to the appropriate authorities. According to the information andexplanations given to us there were no outstanding material statutory dues as on March31 2020 for a period of more than six months from the date they became payable.
b) Details of dues of Income Tax Sales Tax Service Tax Excise duty Goods andService Tax and Value Added Tax which have not been deposited as on March 31 2020 onaccount of disputes are given below:
|Name of Statute ||Nature of Dues ||Forum where dispute is pending ||Period to which amount relates ||Amount involved (Rs) |
|Income Tax ||IT matters under dispute (Penalty Case) ||High Court ||AY 2006-07 ||5799493 |
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 suchtransactions have been disclosed in the financial statements as required by the applicableIndian Accounting Standards.
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. 127487
UDIN: 20127487AAAAB RS 7332
Mumbai; 02 June 2020