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Morepen Laboratories Ltd.

BSE: 500288 Sector: Health care
NSE: MOREPENLAB ISIN Code: INE083A01026
BSE 00:00 | 20 Oct 50.60 -1.55
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NSE 00:00 | 20 Oct 50.50 -1.70
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OPEN 51.50
PREVIOUS CLOSE 52.15
VOLUME 253833
52-Week high 75.00
52-Week low 24.50
P/E 26.63
Mkt Cap.(Rs cr) 2,825
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 51.50
CLOSE 52.15
VOLUME 253833
52-Week high 75.00
52-Week low 24.50
P/E 26.63
Mkt Cap.(Rs cr) 2,825
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 Audit ofStandalone Financial Statements

Opinion

We have audited the accompanying standalone financial statements of MorepenLaboratories Limited ("the Company") which comprise the Balance sheet as at31s1 March 2020 the Statement of Profit and Loss (including OtherComprehensive Income) Statement of Changes in Equity and Statement of Cash Flows for theyear then ended and summary of 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 theexplanations given to us the aforesaid standalone financial statements give theinformation required by the Companies Act 2013 ("the Act") in the manner sorequired and give a true and fair view in conformity with the Indian Accounting Standardsprescribed under section 133 of the Act read with the Companies (Indian AccountingStandards) Rules 2015 as amended ("Ind AS") and other accounting principlesgenerally accepted in India of the state of affairs of the Company as at 31s1March 2020 the profit and total comprehensive income changes in equity and its cashflows for the year ended on that date.

Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing(SAs) specified under section 143(10) of the Act. Our responsibilities under thoseStandards are further described in the Auditor's Responsibilities for the Audit ofstandalone financial statements section of our report. We are independent of the Companyin accordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia together with the independence requirements that are relevant to our audit of thestandalone financial statements under the provisions of the Act and the rules thereunderand we have fulfilled our other ethical responsibilities in accordance with theserequirements and the Code of Ethics. We believe that the audit evidence we have obtainedis sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that in our professionaljudgement were of most significance in our audit of standalone financial statements ofthe current period. These matters were addressed in the context of our audit of thestandalone financial statements as a whole and in forming our opinion thereon and we donot provide a separate opinion on these matters. We have determined the matters describedbelow to be the key audit matters to be communicated in our report.

Key Audit Matter Auditor's Response
1 In the Scheme of Arrangement & Compromise under Section 391 of the Companies Act 1956 as approved by the Hon'ble High Court of Himachal Pradesh vide its Order dated 4th August 2009 the Company allotted 92490413 Equity Shares to the fixed deposit holders in settlement of their dues. The Hon'ble NCLT vide its judgment dated 12th March 2018 dismissed the Company's petition seeking approval of the Scheme and stated that the order will not affect the allotment of the shares to the FD holders who have traded the shares to the third parties or transferred the allotted shares and to the balance FD holders (eligible FD holders) the company shall pay the outstanding amount as per the scheme approved by the Company Law Board (CLB). The appeal preferred by the company against the said order of NCLT is dismissed during the year by Hon'ble National Company Law Appellate Tribunal (NCLAT). Principal Audit Procedures
We collected the following documents
- Scheme approved by the Company Law Board (CLB) dated19.08.2003
- Scheme of Arrangement & Compromise under Section 391 of the Companies Act 1956 approved by the Hon'ble High Court of Himachal Pradesh dated 4th August 2009
- Judgment of Hon'ble NCLT dated 12th March 2018 dismissing the Company's petition seeking approval of the Scheme of arrangement with the Fixed Deposit holders
- Copy of order of Hon'ble National Company Law Appellate Tribunal (NCLAT) dismissing the appeal of the company.
Pursuant to implementation of Hon'ble National Company Law Tribunal (NCLT) Chandigarh Order dated 12.03.2018 out of 38565810 Equity Shares of Rs 2/- each issued at a premium of Rs 9.32 per share belonging to 31109 eligible FD holders only 228 FD holders holding 266413 equity shares (0.69% of the total shares) approached the company for the cancellation of their shares and they have been paid as per terms of the order by the company till 31.03.2020. - Communication with ROC and Stock Exchanges in this regard.
We read and analysed the above orders/ judgments/ communications.
The payment to eligible FD holders may impact financials of the company in the coming year/years.
(Refer Note No. 13G to the standalone financial statements)

Materiality is the magnitude of misstatements in the standalonefinancial statements that individually or in aggregate makes it probable that theeconomic decisions of a reasonably knowledgeable user of the financial statements may beinfluenced. We consider quantitative materiality and qualitative factor in

(i) planning the scope of our audit work and in evaluating the resultsof our work; and (ii) to evaluate the effect of any identified misstatements in thefinancial statements.

We communicate with those charged with governance regarding amongother matters the planned scope and timing of the audit and significant audit findingsincluding any significant deficiencies in internal control that we identify during ouraudit.

We also provide those charged with governance with a statement that wehave complied with relevant ethical requirements regarding independence and tocommunicate with them all relationships and other matters that may reasonably be thoughtto bear on our independence and where applicable related safeguards.

From the matters communicated with those charged with governance wedetermine those matters that were of most significance in the audit of the standalonefinancial statements of the current period and are therefore the key audit matters. Wedescribe these matters in our auditor's report unless law or regulation precludes publicdisclosures about the matter or when in extremely rare circumstances we determine that amatter should not be communicated in our report because the adverse consequences of doingso would reasonably be expected to outweigh the public interest benefits of suchcommunication.

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 in terms of section 143(11) ofthe Act we give in Annexure A a statement on the matters specified in paragraphs 3 and 4of the Order to the extent applicable.

2. As required by Section 143(3) of the Act based on our audit wereport that:

a) We have sought and obtained all the information and explanationswhich to the best of our knowledge and belief were necessary for the purposes of ouraudit.

b) In our opinion proper books of accounts as required by law havebeen kept by the company so far as it appears from our examination of those books.

c) The Balance Sheet the Statement of Profit and Loss (including othercomprehensive income) Statement of Changes in Equity and the Statement of Cash Flowsdealt with by this report are in agreement with the books of accounts.

d) In our opinion the aforesaid standalone financial statements complywith the Indian Accounting Standards prescribed under section 133 of the Act read withrelevant rules issued thereunder.

e) On the basis of the written representations received from thedirectors as on 31s1 March 2020 taken on record by the Board of Directorsnone of the directors are disqualified as on 31s1 March 2020 from beingappointed as a director in terms of section 164(2) of the Act.

f) With respect to the adequacy of the internal financial controls overfinancial reporting of the company and the operating effectiveness of such controls referto our separate report in "Annexure B". Our report expresses an unmodifiedopinion on the adequacy and operating effectiveness of the Company's internal financialcontrols over financial reporting.

g) With respect to the other matters to be included in the Auditor'sReport in accordance with the requirements of section 197(16) of the Act as amended:

In our opinion and to the best of our information and according to theexplanations given to us the remuneration paid by the company to its directors during theyear is in accordance with the provisions of section 197 of the Act.

h) With respect to the other matters to be included in the Auditor'sReport in accordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 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 itsfinancial position in its standalone financial statements.

(ii) The Company did not have any long term contracts includingderivative contracts.

(iii) During the year the company was not liable to transfer anyamount to the Investor Education and Protection Fund.

For Satinder Goyal & Co.
Chartered Accountants
Firm's Regn. No: 027334N
S.K. Goyal
(Partner)
Date : 22nd June 2020 Membership No. : 084613
Place : New Delhi UDIN:20084613AAAAAI1226

ANNEXURE "A" TO THE INDEPENDENT AUDITOR'S REPORT

(Referred to in paragraph 1 under the heading "Report on OtherLegal and Regulatory Requirements" of our report of even date on the standalonefinancial statements of Morepen Laboratories Limited for the year ended 31s1March 2020.)

(i) (a) The Company has maintained proper records showing fullparticulars including quantitative details and situation of fixed assets.

(b) According to the information and explanation given to us theCompany has a regular program of physical verification of its fixed assets. In ouropinion the frequency of physical verification is reasonable having regard to the sizeand the nature of its assets. As informed to us the discrepancies noticed on suchverification are not material and have been properly dealt with in the books of accounts.

(c) According to the information and explanations given to us and onthe basis of our examination of the books of accounts the title deeds of immovableproperty are held in the name of the Company.

(ii) As explained to us the inventories were physically verifiedduring the year by the Management at reasonable intervals and no material discrepancieswere noticed on physical verification.

(iii) According to the information and explanations given to us thecompany has not granted any loans secured or unsecured to companies firms limitedliability partnerships or other parties covered in the register maintained under section189 of the Companies Act 2013 (the "Act"). Hence provision of this clause isnot applicable.

(iv) According to the information and explanations given to us andbased on audit procedures performed we are of the opinion that in respect of loansinvestments guarantees and security the company has complied with the provisions ofsection 185 and 186 of the Act.

(v) Pursuant to implementation of Hon'ble National Company Law Tribunal(NCLT) Chandigarh Order dated 12.03.2018 out of 38565810 Equity Shares of Rs 2/- eachissued at a premium of Rs 9.32 per share belonging to 31109 eligible FD holders only228 FD holders holding 266413 equity shares (0.69% of the total shares) approached thecompany for the cancellation of their shares and the company is making payments as perterms of the order. (Refer Note No. 13G to the standalone financial statements).

(vi) We have broadly reviewed the books of accounts maintained by thecompany pursuant to the rules made by the Central Government for the maintenance of costrecords under section 148(1) of the Act in respect of the company's products to which thesaid rules are made applicable and that prima facie the prescribed cost records have beenmade and maintained. However we have not carried out detailed examination of the recordswith a view to determine whether these are accurate and complete.

(vii) (a) According to the information and explanations given to us andon the basis ofour examination of the records of the company during the year the companyis regular in depositing undisputed statutory dues including provident fund employees'state insurance income tax service tax duty of custom value added tax goods andservices tax (GST) cess and any other applicable statutory dues to the appropriateauthorities.

According to the records and information and explanations given to usthe following statutory dues were in arrears as on 31s1 March 2020 for aperiod of more than six months from the date they became payable-

Nature Year Outstanding since Amount (')
Fringe benefit tax A.Y. 2009-10 31.03.2011 1028025

(b) According to the records and information and explanation given tous there are no dues in respect of Income tax Sales tax VAT Service- tax Custom dutycess outstanding as at 31s1 March 2020 due to any dispute.

(viii) According to the information and explanations given to us by themanagement the company has not made any default in the repayment of loans or interest toBanks/FIs. However the preference shares issued to Banks/FIs have not been redeemed.(Refer Note No. 18 of standalone financial statements).

(ix) According to the information and explanations given to us andbased on our examination of the records of the company the company did not raise anymoney by way of initial public offer or further public offer (including debt instruments)and/or term loan during the year.

(x) During the course of our examination of the books and records ofthe company carried out in accordance with the generally accepted auditing practices inIndia and according to the information and explanations given to us we have neither comeacross any instance of fraud by the company or on the company by its officers oremployees noticed or reported during the year nor have we been informed of any such caseby the Management.

(xi) According to the information and explanations given to us and onthe basis of our verification of books of accounts of the company the company haspaid/provided for Managerial remuneration in accordance with the requisite approvalsmandated by the provisions of section 197 of the Act read with Schedule V of the Act.

(xii) In our opinion and according to information and explanationsgiven to us the company is not a Nidhi company. Accordingly paragraph 3(xii) of theOrder is not applicable.

(xiii) According to the information and explanations given to us andbased on our examination of the records of the company transactions with the relatedparties are in compliance 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 andbased on our examination of the records of the company the company has not made anypreferential allotment or private placement of shares or 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 andbased on our examination of the records of the company the company has not entered intoany non-cash transaction with directors or person connected with them during the year.Accordingly the provision 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-IAof the Reserve Bank of India Act1934.

For Satinder Goyal & Co.
Chartered Accountants
Firm's Regn. No: 027334N
S.K. Goyal
(Partner)
Place : New Delhi Membership No. : 084613
Date : 22nd June 2020 UDIN: 20084613AAAAAI1226

ANNEXURE "B" TO THE INDEPENDENTAUDITOR'S REPORT

(Referred to in paragraph 2(f) under the heading "Report on OtherLegal and Regulatory Requirements" of our report of even date on the standalonefinancial statements of Morepen Laboratories for the year ended 31st March2020)

Report on the Internal Financial Controls overFinancial Reporting under Clause (i) of Sub-section 3 of Section 143 of the Companies Act2013 ("the Act")

We have audited the internal financial controls over financialreporting of Morepen Laboratories Limited ("the Company") as of 31stMarch 2020 in conjunction with our audit of the standalone financial statements of theCompany for the year ended on that date.

Management's Responsibility for Internal FinancialControls

The Company's management is responsible for establishing andmaintaining internal financial controls based on the internal control over financialreporting criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls overFinancial Reporting issued by the Institute of Chartered Accountants of India (the"Guidance Note"). These responsibilities include the design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the orderly and efficient conduct of its business including adherence tocompany's policies the safeguarding of its assets the prevention and detection of fraudsand errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Act.

Auditors' Responsibility

Our responsibility is to express an opinion on the Company's internalfinancial controls over financial reporting based on our audit. We conducted our audit inaccordance with the Guidance Note and the Standards on Auditing prescribed under section143(10) of the Act to the extent applicable to an audit of internal financial control.Those Standards and the Guidance Note require that we comply with ethical requirements andplan and 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 aboutthe adequacy of the internal financial controls system over financial reporting and theiroperating effectiveness. Our audit of internal financial controls over financial reportingincluded 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 andappropriate to provide a basis for our audit opinion on the Company's internal financialcontrols system over financial reporting.

Meaning of Internal Financial Controls overFinancial Reporting

A company's internal financial control over financial reporting 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 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.

Limitations of Internal Financial Controls OverFinancial Reporting

Because of the inherent limitations of internal financial controls overfinancial reporting including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected. Also projections of any evaluation of the internal financial controls overfinancial reporting to future periods are subject to the risk that the internal financialcontrol over financial reporting may become inadequate because of changes in conditionsor that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion the Company has in all material respects an adequateinternal financial controls system over financial reporting and such internal financialcontrols over financial reporting were operating effectively as at 31st March2020 based on the internal control over financial reporting criteria established by theCompany considering the essential components of internal control stated in the GuidanceNote.

For Satinder Goyal & Co.
Chartered Accountants
Firm's Regn. No: 027334N
S.K. Goyal
(Partner)
Place : New Delhi Membership No. : 084613
Date : 22nd June 2020 UDIN : 20084613AAAAAI1226

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