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Morepen Laboratories Ltd.

BSE: 500288 Sector: Health care
NSE: MOREPENLAB ISIN Code: INE083A01026
BSE 00:00 | 21 Aug 29.20 0.20
(0.69%)
OPEN

29.25

HIGH

29.75

LOW

28.85

NSE 00:00 | 21 Aug 29.25 0.20
(0.69%)
OPEN

29.90

HIGH

29.90

LOW

28.80

OPEN 29.25
PREVIOUS CLOSE 29.00
VOLUME 111055
52-Week high 44.35
52-Week low 15.55
P/E 49.49
Mkt Cap.(Rs cr) 1,314
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 29.25
CLOSE 29.00
VOLUME 111055
52-Week high 44.35
52-Week low 15.55
P/E 49.49
Mkt Cap.(Rs cr) 1,314
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Morepen Laboratories Ltd. (MOREPENLAB) - Auditors Report

Company auditors report

To

The Members of Morepen Laboratories Limited

Report on the Standalone Financial Statements

We have audited the accompanying standalone financial statements of MorepenLaboratories Limited (“the Company”) which comprise the Balance Sheet as atMarch 31 2017 the statement of Profit and Loss and the Cash Flow Statement for the yearthen ended and a summary of significant accounting policies and other explanatoryinformation.

Management's Responsibility 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 and cash flows of the Company inaccordance with the accounting principles generally accepted in India including theAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014. This responsibility also includes maintenance ofadequate accounting records in accordance with the provisions of the Act for safeguardingthe assets of the Company and for preventing and detecting frauds and otherirregularities; 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 financial statements that give a true and fair viewand are free from material misstatement whether due to fraud or error.

Auditors' Responsibility

Our responsibility is to express an opinion on these standalone financial statementsbased on our audit.

We have taken into account the provisions of the Act and the rules the accounting andauditing standards and matters which are required to be included in the audit report underthe provisions 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 and other applicable authoritative pronouncements issued by theInstitute of Chartered Accountants of India. Those Standards and pronouncements requirethat we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether the financial statements are free from materialmisstatement.

An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the financial statements. The procedures selected depend on theauditors' judgement including the assessment of the risks of material misstatement of thefinancial statements whether due to fraud or error. In making those risk assessments theauditor considers internal financial control relevant to the Company's preparation of thefinancial statements that give a true and fair view in order to design audit proceduresthat are appropriate in the circumstances. An audit also includes evaluating theappropriateness of the accounting policies used and the reasonableness of the accountingestimates made by the Company's Directors as well as evaluating the overall presentationof 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 standalone financial statements.

Opinion

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 Act in the manner so required and give a true and fair view in conformity with theaccounting principles generally accepted in India of the state of affairs of the Companyas at March 312017 and its profit 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”)issued by the Central Government of India in terms of sub-section (11) of section 143 ofthe Act and on the basis of such checks of the books and records of the company as weconsider appropriate and according to the information and explanations given to us wegive in the Annexure A a statement on the matters specified in the paragraph 3 and 4 ofthe Order to the extent applicable.

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

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

(b) In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books;

(c) The Balance Sheet the statement of Profit and Loss and the Cash Flow Statementdealt with by this Report are in agreement with the books of account;

(d) In our opinion the aforesaid standalone financial statements comply with theAccounting Standards specified under Section 133 of the Act read with Rule 7 of Companies(Accounts) Rules 2014 .

(e) On the basis of the written representations received from the directors as on March312017 taken on record by the Board of Directors none of the directors is disqualifiedas on March 312017 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 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 as at March 31 2017 onits financial position in its financial statements Refer Note 17 to the financialstatements;

ii. The Company did not have any long term contracts including derivative contracts forwhich there were any material foreseeable losses as at March 312017.

iii. No amount was required to be transferred to the Investor Education and ProtectionFund by the Company during the year ended March 31 2017.

iv The Company has provided requisite disclosure in its financial statements as toholdings as well as dealing in Specified Bank Notes during the period from November 82016to December 302016 and these are in accordance with the books of accounts maintained bythe Company.

Refer Note 18 to the financial statements.

For M Kamal Mahajan & Co. LLP
Chartered Accountants
FRN: 006855N/ N500061
(CA M K Mahajan)
New Delhi Partner
April 29 2017 Membership number: 017418

Annexure -A to the Independent Auditors' Report

Morepen Laboratories Limited

The Annexure referred to in our Independent Auditors' Report to the members of theCompany on the standalone financial statements for the year ended March 31 2017 wereport that:

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

(b) As explained to us most of the fixed assets have been physically verified by themanagement during the year and no material discrepancies were noticed on suchverification. In our opinion the frequency of physical verification is reasonable havingregard to the size of the Company and the nature of its assets.

(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 immovable properties areheld in the name of the company.

(ii) As explained to us the inventory has been physically verified at reasonableintervals by the management & no material discrepancies were noticed by themanagement. The discrepancies noticed on physical verification of inventory as compared tobook records were not material.

(iii) According to the information and explanations furnished to us the company hasnot granted any loan secured or unsecured to companies firms Limited LiabilityPartnerships or other parties covered in the register maintained under Section 189 of theCompanies Act 2013 hence provisions of this clause are not applicable.

(iv) In our opinion and according to the information and explanations given to us thecompany has complied with the provisions of section 185 and 186 of the Act with respectto the loans and investment made and guarantees and security provided by it.

(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 at Shimla andin compliance thereof issued equity shares to the fixed deposit holders towardssettlement of their dues. However the Central Government has filed an appeal against theorder approving the scheme the Hon'ble Division Bench allowed the appeal and remanded thematter back to the single judge for considering the representation of Central Government& deciding the petition. The matter was pending adjudication before single judge ofHon'ble Himachal Pradesh High Court has since been transferred to National Company LawTribunal regional Bench at Chandigarh. Subject to the pending decision of the NationalCompany Law Tribunal Chandigarh in our opinion there is no default by the company of therelevant provisions of the Act.

(vi) We have reviewed the cost records maintained by the company pursuant to theCompanies (Cost Records and Audit) Rules 2014 as amended and prescribed by the CentralGovernment under sub-section (1) of section 148 of the Act and are of the opinion thatprima facie the prescribed cost records have been made and maintained. We have nothowever made a detailed examination of the records with a view to determine whether theyare accurate or 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) though the delays in deposit have not been serious.

According to the information and explanations given to us no undisputed amount payablein respect of provident fund sales tax income tax value added tax duty of customservice tax cess and other material statutory dues were in arrears as on March 312017for a period of more than six months from the date they became payable.

(b) According to the information and explanation given to us there are no dues inrespect of Income-tax Sales-tax VAT Service-tax Customs duty cess outstanding as atMarch 31 2017 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:

Sl. No. Name of the statute Nature of dues Amount (in Rs) Period to which the amount relates Forum where dispute is pending
1. Central Excise Act 1944 Excise duty Penalty Fine and Interest 3344991 April 2003 to July 2003 CESTAT - Ahmedabad
2. Central Excise Act 1944 Excise duty Penalty Fine and Interest 57960281 August 2001 to April 2004 CESTAT - Delhi
3. Central Excise Act 1944 Excise duty Penalty Fine and Interest 6662907 June 2004 to July 2008 CESTAT - Chandigarh
4. Central Excise Act 1944 Excise duty Penalty Fine and Interest 6877129 June 2004 to March 2009 CESTAT - Chandigarh
5. Central Excise Act 1944 Excise duty Penalty Fine and Interest 79175 December 2008 to March 2009 CESTAT - Chandigarh
6. Central Excise Act 1944 Excise duty Penalty Fine and Interest 1257930 April 2009 to March 2010 CESTAT - Chandigarh
7. Central Excise Act 1944 Excise duty Penalty Fine and Interest 151331 April 2009 to March 2010 CESTAT - Chandigarh
8. Central Excise Act 1944 Excise duty Penalty Fine and Interest 189401 April 2010 to September 2010 CESTAT - Chandigarh
9. Central Excise Act 1944 Excise duty Penalty Fine and Interest 5620232 February 2006 CESTAT - Delhi
10. Central Excise Act 1944 Excise duty Penalty Fine and Interest 651538 April 2010 to December 2010 Commissioner of Appeal - Chandigarh
11. Central Excise Act 1944 Excise duty Penalty Fine and Interest 2303399 January 2011 to June 2015 Commissioner of Appeal - Chandigarh

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

(Figures in Lacs)
Name of Lenders Interest Amount Period of default
UCO Bank 68.86 Less than 3 months
Karur Vysya Bank 16.91 Less than 3 months
Exim Bank 36.06 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.

However loan for purchase of car have been raised 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 fully paid convertible debentures during theyear under review. Accordingly the provision of clause 3(xiv) of the Order are notapplicable to the company.

(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. Accordingly the provision of clause 3(xvi) of the Order are notapplicable to the company.

For M Kamal Mahajan & Co. LLP
Chartered Accountants
FRN: 006855N/ N500061
(CA M K Mahajan)
New Delhi Partner
April 29 2017 Membership number: 017418

Annexure - B to the Auditors' Report

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 MorepenLaboratories Limited (“the Company”) as of March 312017 in conjunction withour audit 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'). 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 on Audit of Internal Financial Controls over Financial Reporting(the “Guidance Note”) and the Standards on Auditing issued by ICAI and deemedto be prescribed under section 143(10) of the Act to the extent applicable to an audit ofinternal financial controls both applicable to an audit of Internal Financial Controlsand both issued by the Institute of Chartered Accountants of India. Those Standards andthe Guidance Note require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance about whether adequate internal financialcontrols over financial reporting was established and maintained and if such controlsoperated 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.

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 2017 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 M Kamal Mahajan & Co. LLP
Chartered Accountants
FRN: 006855N/ N500061
(CA M K Mahajan)
New Delhi Partner
April 29 2017 Membership number: 017418