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Morepen Laboratories Ltd.

BSE: 500288 Sector: Health care
NSE: MOREPENLAB ISIN Code: INE083A01026
BSE 13:11 | 20 Feb 15.10 -0.70
(-4.43%)
OPEN

15.60

HIGH

15.65

LOW

14.85

NSE 12:59 | 20 Feb 15.15 -0.65
(-4.11%)
OPEN

15.70

HIGH

15.85

LOW

14.70

OPEN 15.60
PREVIOUS CLOSE 15.80
VOLUME 81996
52-Week high 41.30
52-Week low 14.85
P/E 29.04
Mkt Cap.(Rs cr) 679
Buy Price 15.10
Buy Qty 580.00
Sell Price 15.20
Sell Qty 2099.00
OPEN 15.60
CLOSE 15.80
VOLUME 81996
52-Week high 41.30
52-Week low 14.85
P/E 29.04
Mkt Cap.(Rs cr) 679
Buy Price 15.10
Buy Qty 580.00
Sell Price 15.20
Sell Qty 2099.00

Morepen Laboratories Ltd. (MOREPENLAB) - Auditors Report

Company auditors report

INDEPENDENT AUDITOR'S REPORT

To

The Members of Morepen Laboratories Limited Report on the Standalone Ind AS FinancialStatements

We have audited the accompanying standalone Ind AS financial statements of MorepenLaboratories Limited (“the Company”) which comprises the Balance Sheet asat March 31 2018 the Statement of Profit and Loss (including Other ComprehensiveIncome) the Cash Flow Statement and the Statement of Changes in Equity for the year thenended and a summary of significant accounting policies and other explanatory information(hereinafter referred to as “the standalone Ind AS financial statements”).

Management's responsibility for the Standalone Ind AS 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 ofthese standalone Ind AS financial statements that give a true and fair view of thefinancial position financial performance including other comprehensive income cash flowsand changes in equity of the Company in accordance with the accounting principlesgenerally accepted in India including the Indian Accounting Standards (“IndAS”) prescribed under Section 133 of the Act read with relevant rules issuedthereunder.

This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding the assets of the Company andfor preventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgements and estimates that are reasonable andprudent; and design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the adequacy and completeness ofthe accounting records relevant to the preparation and presentation of the standalone IndAS financial statement 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 standalone Ind AS financialstatements based on our audit. In conducting our audit we have taken into account theprovisions of the Act the accounting and auditing standards and matters which arerequired to be included in the audit report under the provisions of the Act and the Rulesmade thereunder. We conducted our audit in accordance with the Standards on Auditingspecified under Section 143(10) of the Act. Those Standards require that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance aboutwhether the standalone Ind AS financial statements are free from material misstatement. Anaudit involves performing procedures to obtain audit evidence about the amounts and thedisclosures in the standalone Ind AS financial statements. The procedure selected dependon the auditor's judgement including the assessment of the risk of material misstatementof the standalone Ind AS financial statements whether due to fraud or error. In makingthose risk assessments the auditor considers internal financial control relevant to theCompany's preparation of standalone Ind AS financial statements that give a true and fairview in order to design audit procedures that are appropriate in the circumstances. Anaudit also includes evaluating the appropriateness of the accounting policies used and thereasonableness of the accounting estimates made by the Company's Directors as well asevaluating the overall presentation of the standalone Ind AS financial statements.

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

Opinion

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone Ind AS financial statements give the informationrequired by the Act in the manner so required and give a true and fair view in conformitywith the accounting principles generally accepted in India including the Ind AS of thefinancial position of the Company as at March 31 2018 and its financial performanceincluding other comprehensive income its cash flows and the changes in equity for theyear ended on that date.

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 section 143(11) of the Act and onthe basis of such checks of the books and records of the Company as we consideredappropriate and as per information and explanations given to us during the course ofaudit we give in the Annexure A a statement on the matters specified in paragraphs 3 and4 of the Order.

2. As required by Section 143(3) of the Act we report that :

(a) We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit.

(b) In our opinion proper books of accounts 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) the Statement of Cash Flows and the Statement of the Changes in Equity dealt withby this report are in agreement with the books of accounts.

(d) In our opinion the aforesaid standalone Ind AS financial statements comply withthe Indian Accounting Standards prescribed under Section 133 of the Act read with relevantrules issues thereunder.

(e) On the basis of the written representations received from the Directors as on 31March 2018 taken on record by the Board of Directors none of the directors isdisqualified as on 31 March 2018 from being appointed as director in terms of Section164(2) of the Act.

(f) Based on the checking of the books and records of the Company as we consideredappropriate and as per information and explanations given to us our separate report withrespect to the adequacy of the internal financial controls over financial reporting of thecompany and the operating effectiveness of such controls is as per Annexure B.

(g) With respect to the other matters to be included in the Auditors' 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 standalone Ind AS financial statements Refer Note No. 20 to the StandaloneInd AS financial statements;

ii. the Company has made provision as required

under the applicable law or accounting standards for material foreseeable losses ifany on long term contracts including derivate contracts; iii. there has been no delay intransferring amounts requiring to be transferred to the Investor Education and ProtectionFund by the Company.

For Satinder Goyal & Co.
Chartered Accountants
FRN: 027334N
(CA S. K. Goyal)
Place: New Delhi Partner
Date: 16 May 2018 Membership No.: 084613

Annexure -A to the Independent Auditors' Report Morepen Laboratories Limited

Annexure “A” referred to in paragraph 1 under the heading “Report onOther Legal and Regulatory Requirements” of our report of even date on the standaloneInd AS financial statements of Morepen Laboratories Limited for the year ended 31March 2018.

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

(b) According to the explanation and information given to us the Company has a regularprogramme of physical verification of its fixed assets. In our opinion the frequency ofphysical verification is reasonable having regard to the size and the nature of itsassets. As informed to us the discrepancies noticed on such verification are notmaterial and have been properly dealt with adjusted in the books of accounts.

(c) According to the information and explanations given to us and on the basis of ourexamination of the books of accounts the title deeds of immovable property are held inthe name of the Company.

(ii) As explained to us the inventories were physically verified during the year bythe Management at reasonable intervals and no material discrepancies were noticed onphysical verification. The discrepancies noticed on physical verification of inventory ascompared to books of accounts were not material.

(iii) According to the information and explanations given to us the Company has notgranted any loans secured or unsecured to Companies firms limited liabilitypartnerships or other parties covered in the register maintained under Section 189 of theCompanies Act 2013. Hence provision of this clause is not applicable. (iv) According tothe information and explanations given to us and based on audit procedures performed weare of the opinion that in respect of loans investments guarantees and security theCompany has complied with the provisions of Section 185 and 186 of the Act.

(v) With approval of scheme of Arrangement and Compromise u/s 391 of the Companies Act1956 for the fixed deposit holders by Hon'ble high Court of Himachal Pradesh in Shimla andin compliance thereof the Company issued equity shares to the fixed deposit holderstowards settlement of their dues. However pursuant to the representation by the CentralGovernment the NCLT Chandigarh rejected the scheme vide its order dated 12.03.2018. Onan appeal filed by the Company before National Company Law Appellate Tribunal (NCLAT) theNCLAT while issuing notice has stayed the operation of the NCLT order dated 12.03.2018)(Refer note 38(d) to the standalone Ind AS financial statements).

(vi) We have broadly reviewed the books of accounts maintained by the Company pursuantto the rules made by the Central Government for the maintenance of cost records underSection 148(1) of the Act in respect of the Company's products to which the said rules aremade applicable and that prima facie the prescribed cost records have been made andmaintained. However we have not carried out detailed examination of the records with aview to determine whether these are accurate and complete.

(vii) (a) According to the information and explanations given to us and on the basis ofour examination of the records of the Company the amount deducted / accrued in the booksof accounts in respect of undisputed statutory dues including sales tax service tax dutyof custom duty of excise cess have generally been regularly deposited during the year bythe Company with the appropriate authorities. However the Company is not regular indepositing the dues of Employee's State Insurance Provident fund Income Tax (TDS) &Value Added Tax (VAT) Goods and Services Tax (GST) though the delays in deposit have notbeen serious.

According to the records and information and explanations given to us no undisputedamount payable in respect of provident fund sales tax income tax value added tax dutyof custom service tax cess and other material statutory dues were in arrears as on March31 2018 for a period of more than six months from the date they became payable.

(b) According to the records and information and explanation given to us there are nodues in respect of Income-tax Sales-tax VAT Service-tax Customs duty cess outstandingas at March 31 2018 due to any dispute. According to the information provided to us thefollowing duties of excise have not been deposited by the company on account of disputes:

Name of the statute Nature of dues Amount (in Rs) Period to which the amount relates Forum where dispute is pending
Central Excise Act 1944 Excise duty Penalty Fine and Interest 3522989 April 2003 to July 2003 CESTAT - Ahmedabad
Central Excise Act 1944 Excise duty Penalty Fine and Interest 60549602 August 2001 to April 2004 CESTAT - Delhi
Central Excise Act 1944 Excise duty Penalty Fine and Interest 7014776 June 2004 to July 2008 CESTAT - Chandigarh
Central Excise Act 1944 Excise duty Penalty Fine and Interest 7244941 June 2004 to March 2009 CESTAT - Chandigarh
Central Excise Act 1944 Excise duty Penalty Fine and Interest 83456 December 2008 to March 2009 CESTAT - Chandigarh
Central Excise Act 1944 Excise duty Penalty Fine and Interest 1327597 April 2009 to March 2010 CESTAT - Chandigarh
Central Excise Act 1944 Excise duty Penalty Fine and Interest 159828 April 2009 to March 2010 CESTAT - Chandigarh
Central Excise Act 1944 Excise duty Penalty Fine and Interest 200175 April 2010 to September 2010 CESTAT - Chandigarh
Central Excise Act 1944 Excise duty Penalty Fine and Interest 707894 April 2010 to December 2010 Commissioner of Appeal - Chandigarh
Central Excise Act 1944 Excise duty Penalty Fine and Interest 2560641 January 2011 to June 2015 Commissioner of Appeal - Chandigarh
Central Excise Act 1944 Excise duty Penalty Fine and Interest 1078144 July 2015 to June 2017 Commissioner of Appeal - Chandigarh

(viii) According to the information and explanations given to us by the management thedefaults in making payments to Banks/FIs by the Company is as under:

Name of Lenders Interest Amount ( Rs. in Lakhs) Period of default
UCO Bank 27.31 Less than 3 months
Karur Vysya Bank 3.57 Less than 3 months
Exim Bank 34.23 Less than 3 months

(ix) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company did not raise any money by way ofinitial public offer or further public offer (including debt instruments) during the year.

(x) During the course of our examination of the books and records of the Companycarried out in accordance with the generally accepted auditing practices in India andaccording to the information and explanations given to us we have neither come across anyinstance of material fraud by the Company or on the Company by its officers or employeesnoticed or reported during the year nor have we been informed of any such case by theManagement

(xi) According to the information and explanations given to us and on the basis of ourverification of books of accounts of the Company the Company has paid/provided forManagerial remuneration in accordance with the requisite approvals mandated by theprovisions of Section 197 of the Act read with Schedule V of the Act.

(xii) In our opinion and according to information and explanations given to us theCompany is not a Nidhi Company. Accordingly paragraph 3(xii) of the Order is notapplicable.

(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 & 188 of the Act where applicable and details of suchtransactions have been disclosed in the financial statements as required by the applicableaccounting standards.

(xiv) According to the information and explanations given 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 convertible debentures during the year underreview. Accordingly the provision of clause 3(xiv) of the Order are 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 any non- cashtransaction with directors or person connected with them during the year. Accordingly theprovision of clause 3(xv) of the Order are not applicable to the Company.

(xvi) The Company is not required to be registered under Section 45-IA of the ReserveBank of India Act1934.

For Satinder Goyal & Co.
Chartered Accountants
Firm's Regn. No: 027334N
(CA S. K. Goyal)
Place: New Delhi Partner
Date: 16 May 2018 Membership No.: 084613

Annexure - B to the Auditors' Report

(Referred to in paragraph 2(f) under the heading “Report on Other Legal andRegulatory Requirements” of our report of even date on the standalone Ind ASfinancial statements of Morepen Laboratories Limited for the year ended March 31 2018)

Report on the Internal Financial Controls over Financial Reporting under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 (“the Act”)

We have audited the internal financial controls over financial reporting of MorepenLaboratories Limited (“the Company”) as of March 312018 in conjunction withour audit of the standalone Ind AS financial statements of the Company for the year endedon 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 ('ICAI'). These responsibilitiesinclude the design implementation and maintenance of adequate internal financial controlsthat were operating effectively for ensuring the orderly and efficient conduct of itsbusiness including 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 Act.

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 and the Standards on Auditing prescribed under section 143(10) ofthe Act to the extent applicable to an audit of internal financial control. 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 was established and maintained and if suchcontrols 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 authorizations ofmanagement and directors of the Company and (3) provide reasonable assurance regardingprevention or timely detection of unauthorized 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.

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 2018 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 Satinder Goyal & Co.
Chartered Accountants
Firm's Regn. No: 027334N
(CA S. K. Goyal)
Place: New Delhi Partner
Date: 16 May 2018 Membership No.: 084613