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Neuland Laboratories Ltd.

BSE: 524558 Sector: Health care
NSE: NEULANDLAB ISIN Code: INE794A01010
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NSE 00:00 | 26 May 973.40 -27.50
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OPEN 1007.45
PREVIOUS CLOSE 1001.55
VOLUME 4622
52-Week high 2309.65
52-Week low 965.85
P/E 19.72
Mkt Cap.(Rs cr) 1,253
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 1007.45
CLOSE 1001.55
VOLUME 4622
52-Week high 2309.65
52-Week low 965.85
P/E 19.72
Mkt Cap.(Rs cr) 1,253
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Neuland Laboratories Ltd. (NEULANDLAB) - Auditors Report

Company auditors report

To the Members of Neuland Laboratories Limited

Report on the Audit of the Standalone Financial

Statements

Opinion

We have audited the accompanying standalone financial statements ofNeuland Laboratories Limited ("the Company") which comprise the standaloneBalance Sheet as at March 31 2021 and the standalone Statement of Profit and Loss(including other comprehensive income) the standalone Statement of Changes in Equity andthe standalone Statement of Cash Flows for the year then ended and notes to thestandalone financial statements including a summary of significant accounting policiesand other explanatory information (hereinafter referred to as the "standalonefinancial 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 so requiredand give a true and fair view in conformity with the Indian Accounting Standardsprescribed under section 133 of the Act read with Companies (Indian Accounting Standards)Rules 2015 as amended and other accounting principles generally accepted in India of thestate of affairs of the Company as at March 31 2021 the profit including othercomprehensive income changes in equity and its cash flows for the year ended on thatdate.

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 of theStandalone 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 (ICAI) together with the ethical 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 professional judgmentwere of most significance in our audit of the standalone financial statements of thecurrent period. These matters were addressed in the context of our audit of the standalonefinancial statements as a whole and in forming our opinion thereon and we do not providea separate opinion on these matters.

Key Audit Matter How the KAM was addressed in our audit
1 Impairment of Goodwill Our audit procedures in respect of this area included:
Refer Note 36 to the standalone financial statements. 1. Obtained an understanding from the management with respect to process and controls followed by the Company to perform annual impairment test related to goodwill.
Goodwill is tested for impairment by the Management on an annual basis as required by IND AS 36 - Impairment of Asset. In determining the fair value/ value in use of business reporting units the Company has applied judgment in estimating future revenues operating profit margins long-term growth rate and discount rates.
2. Assessed the Company's internal controls over preparation of annual budgets and future forecasts for the business as a whole and the approach followed for annual impairment test and key assumptions applied.
3. Assessed the reasonableness of the assumptions used and appropriateness of the valuation methodology applied and tested the discount rate and long-term growth rates used in the forecast including comparison to economic and industry forecasts where appropriate.
As at March 31 2021 Goodwill represents 21.11% of the Company's total assets and 35.74% of the Company's total shareholder's equity. The Company has performed its annual impairment test of goodwill and determined that there is no impairment required to be done.
4. Assessed reasonableness of the future revenue and margins the historical accuracy of the Company's estimates and its ability to produce accurate long-term forecasts.
Due to significance of the above matter and involvement of the significant management judgement in estimation of fair value/ value in use we have considered this as a key audit matter.
5. Compared the future operating cash flow forecasts with the business plan and budgets approved by the Board.
6. Assessed and validated the adequacy and appropriateness of the disclosures made by the management in the standalone financial statements.
7. Verification of compliance with Ind AS 36 - Impairment of Assets.

Information Other than the Standalone Financial Statements andAuditor's Report Thereon

The Company's Board of Directors is responsible for the otherinformation. The other information comprises the information included in the Annualreport but does not include the standalone financial statements and our auditor's reportthereon.

Our opinion on the standalone financial statements does not cover theother information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the standalone financial statementsour responsibility is to read the other information and in doing so consider whether theother information is materially inconsistent with the standalone financial statements orour knowledge obtained in the audit or otherwise appears to be materially misstated. Ifbased on the work we have performed we conclude that there is a material misstatement ofthis other information we are required to report that fact. We have nothing to report inthis regard.

Responsibilities of Management and Those Charged with Governance forthe Standalone Financial Statements

The Company's Board of Directors is responsible for the matters statedin section 134(5) of the Act with respect to the preparation of these Standalone financialstatements that give a true and fair view of the financial position financial performanceincluding other comprehensive income changes in equity 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. This responsibility alsoincludes maintenance of adequate accounting records in accordance with the provisions ofthe Act for safeguarding of the assets of the Company and for preventing and detectingfrauds and other irregularities; selection and application of appropriate accountingpolicies; making judgments and estimates that are reasonable and prudent; and designimplementation 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 financialstatement that give a true and fair view and are free from material misstatement whetherdue to fraud or error.

In preparing the Standalone financial statements the Board ofDirectors is responsible for assessing the Company's ability to continue as a goingconcern disclosing as applicable matters related to going concern and using the goingconcern basis of accounting unless the Board of Directors either intends to liquidate theCompany or to cease operations or has no realistic alternative but to do so.

Those Board of Directors are also responsible for overseeing theCompany's financial reporting process.

Auditor's Responsibilities for the Audit of the Standalone FinancialStatements

Our objectives are to obtain reasonable assurance about whether thestandalone financial statements as a whole are free from material misstatement whetherdue to fraud or error and to issue an auditor's report that includes our opinion.Reasonable assurance is a high level of assurance but is not a guarantee that an auditconducted in accordance with SAs will always detect a material misstatement when itexists. Misstatements can arise from fraud or error and are considered material ifindividually or in the aggregate they could reasonably be expected to influence theeconomic decisions of users taken on the basis of these standalone financial statements.

We give in "Annexure A" a detailed description of Auditor'sresponsibilities for Audit of the Standalone Financial Statements.

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 of the Act we give in "Annexure B" a statement on thematters specified in paragraphs 3 and 4 of the 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 explanationswhich to the best of our knowledge and belief were necessary for the purposes of ouraudit.

(b) In our opinion proper books of account 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 (includingother comprehensive income) the Statement of Changes in Equity and the Statement of CashFlow dealt with by this Report are in agreement with the books of account.

(d) In our opinion the aforesaid standalone financial statementscomply with the Accounting Standards specified under Section 133 of the Act read withRule 7 of the Companies (Accounts) Rules 2014.

(e) On the basis of the written representations received from thedirectors as on March 312021 taken on record by the Board of Directors none of thedirectors are disqualified as on March 312021 from being appointed as a director in termsof Section 164 (2) of the Act.

(f) With respect to the adequacy of the internal financial controlswith reference to standalone financial statements of the Company and the operatingeffectiveness of such controls refer to our separate Report in "Annexure C".

(g) 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 - Refer Note 39 to thestandalone financial statements;

ii. The Company did not have any long-term contracts includingderivative contracts for which there were any material foreseeable losses.

iii. There has been no delay in transferring amounts required to betransferred to the Investor Education and Protection Fund by the Company.

3. As required by The Companies (Amendment) Act 2017 in our opinionaccording to information explanations given to us the remuneration paid by the Companyto its directors is within the limits laid prescribed under Section 197 of the Act and therules thereunder.

For MSKA & Associates
Chartered Accountants
ICAI Firm Registration No. 105047W
Amit Kumar Agarwal
Partner
Place: Hyderabad INDIA Membership No. 214198
Date : May 112021 UDIN: 21214198AAAABY5427

TO THE INDEPENDENT AUDITOR'S REPORT ON EVEN DATE ON THE STANDALONEFINANCIAL STATEMENTS OF NEULAND LABORATORIES LIMITED

Auditor's Responsibilities for the Audit of the Standalone FinancialStatements

As part of an audit in accordance with SAs we exercise professionaljudgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of thestandalone financial statements whether due to fraud or error design and perform auditprocedures responsive to those risks and obtain audit evidence that is sufficient andappropriate to provide a basis for our opinion. The risk of not detecting a materialmisstatement resulting from fraud is higher than for one resulting from error as fraudmay involve collusion forgery intentional omissions misrepresentations or the overrideof internal control.

• Obtain an understanding of internal control relevant to theaudit in order to design audit procedures that are appropriate in the circumstances. Undersection 143(3)(i) of the Act we are also responsible for expressing our opinion onwhether the company has internal financial controls with reference to financial statementsin place and the operating effectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management's use of the goingconcern basis of accounting and based on the audit evidence obtained whether a materialuncertainty exists related to events or conditions that may cast significant doubt on theCompany's ability to continue as a going concern. If we conclude that a materialuncertainty exists we are required to draw attention in our auditor's report to therelated disclosures in the financial statements or if such disclosures are inadequate tomodify our opinion. Our conclusions are based on the audit evidence obtained up to thedate of our auditor's report. However future events

0 or conditions may cause the Company to cease to continue

_ as a going concern.

• Evaluate the overall presentation structure and content ofthestandalone financial statements including the disclosures and whether the standalonefinancial statements represent the underlying transactions and events in a manner thatachieves fair presentation.

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 publicdisclosure 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.

For MSKA & Associates
Chartered Accountants
ICAI Firm Registration No. 105047W
Amit Kumar Agarwal
Partner
Place: Hyderabad INDIA Membership No. 214198
Date : May 112021 UDIN: 21214198AAAABY5427

ANNEXURE B

ANNEXURE B TO INDEPENDENT AUDITORS' REPORT OF EVEN DATE ON THESTANDALONE FINANCIAL STATEMENTS OF NEULAND LABORATORIES LIMITED FOR THE YEAR ENDED MARCH31 2021

[Referred to in paragraph 1 under 'Report on Other Legal and RegulatoryRequirements' in the Independent Auditors' Report]

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

(b) Fixed assets (Property Plant and Equipment) have been physicallyverified by the management during the year and no material discrepancies were identifiedon such verification.

(c) The title deeds of all the immovable properties (which areincluded under the head 'Property plant and equipment') are held in the name of thecompany except for the following property which according to the information andexplanations given to us are under dispute pending with Honorable High Court of Telanganaas to the ownership of the property as stated in Note 39(c) to the financial statements:

Nature of Property Whether Leasehold/ Freehold Gross Block as at March 31 2021 Net Block as at March 31 2021 Remarks
Land Freehold 3.30 lakhs 3.30 lakhs The title deeds of the land are in the name of Neuland Health Sciences Private Limited erstwhile Company that was merged with the company. Further the title deed of the land is under dispute in respect of which we have been informed by the management of the company that they have filed a writ petition with Honorable High Court of Telangana.

ii. The inventory has been physically verified during the year by themanagement. In our opinion the frequency of verification is reasonable. No materialdiscrepancies were noticed on verification between the physical stock and the bookrecords.

iii. The Company has not granted any loans secured or unsecured toCompanies Firms Limited Liability Partnerships (LLP) or other parties covered in theregister maintained under section 189 of the Companies Act 2013 ('the Act'). Accordinglythe provisions stated in paragraph 3 (iii) (a) to (c) of the Order are not applicable tothe Company.

iv. In our opinion and according to the information and explanationsgiven to us the Company has complied with the provisions of section 186 of the Act inrespect of investments made. Further in our opinion the Company has not entered into anytransaction covered under Section 185 and Section 186 of the Act in respect of loansguarantees and security made.

v. In our opinion and according to the information and explanationsgiven to us the Company has not accepted any deposits from the public within the meaningof Sections 73 74 75 and 76 of the Act and the rules framed there under. Accordinglythe provisions of clause 3(v) of the Order are not applicable.

vi. We have broadly reviewed the books of account relating tomaterials labour and other items of cost maintained by the Company pursuant as specifiedby the Central Government for the maintenance of cost records under sub-section (1) ofsection 148 of the Act and we are of the opinion that prima facie the prescribed accountsand records have been made and maintained. We have not however made a detailedexamination of the records with a view to determine whether they are accurate or complete.

vii. (a) According to the information and explanations given

to us and the records of the Company examined by us in our opinionthe Company is regular in depositing with appropriate authorities undisputed statutorydues including provident fund employees' state insurance income-tax goods and servicetax duty of customs cess and any other statutory dues applicable to it.

(b) According to the information and explanations given to us noundisputed amounts payable in respect of provident fund employees' state insuranceincome-tax duty of customs goods and service tax cess and other statutory dues wereoutstanding at the year end for a period of more than six months from the date theybecame payable.

(c) According to the information and explanation given to us and therecords of the company examined by us

there are no dues of income tax goods and service tax customs dutycess and any other statutory dues which have not been deposited on account of disputesexcept for the following:

Name of the statute Nature of dues Amount Rs. Period to which the amount relates Forum where dispute is pending
Income Tax Act 1961 Income Tax 693.33 lakhs FY 2003-2004 Hon'ble High court of Telangana
Income Tax Act 1961 Income Tax 19.01 lakhs FY 2011-2012 Income Tax Appellate Tribunal

viii. In our opinion and according to the information and explanationsgiven to us The Company has not defaulted in repayment of loans or borrowings to anyfinancial institution or bank during the year. Further the Company has no loans orborrowings payable to government and does not have any outstanding debentures during theyear.

ix. The Company did not raise any money by way of initial public offeror further public offer (including debt instruments) and term loans during the year.Accordingly the provisions stated in paragraph 3 (ix) of the Order are not applicable tothe Company.

x. During the course of our audit examination of the books and recordsof the Company carried out in accordance with the generally accepted auditing practicesin India and according to the information and explanations given to us we have neithercome across any instance of material fraud by the Company or on the Company by itsofficers or employees.

xi. According to the information and explanations given to us and basedon our examination of the records of the Company the Company has paid/ provided formanagerial remuneration in accordance with the requisite approvals mandated by theprovisions of section 197 read with Schedule V to the Act.

xii. In our opinion and according to the information and explanationsgiven to us the Company is not a Nidhi Company. Accordingly the provisions stated inparagraph 3(xii) of the Order are not applicable to the Company.

xiii. According to information and explanations given to us and basedon our examination of the records of the Company transactions with the related partiesare in compliance with sections 177 and 188 of the Act where applicable and details ofsuch transactions have been disclosed in the financial statements as required by theapplicable accounting 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 fully or partly convertibledebentures during the year. Accordingly the provisions stated in paragraph 3 (xiv) of theOrder are not applicable to the Company.

xv. According to the information and explanations given to us and basedon our examination of the records of the Company the Company has not entered intonon-cash transactions with directors or persons connected with him. Accordinglyprovisions stated in paragraph 3(xv) of the Order are not applicable to the Company.

xvi. In our opinion the Company is not required to be registered undersection 45 IA of the Reserve Bank of India Act 1934 and accordingly the provisionsstated in paragraph clause 3 (xvi) of the Order are not applicable to the Company.

For MSKA & Associates
Chartered Accountants
ICAI Firm Registration No. 105047W
Amit Kumar Agarwal
Partner
Place: Hyderabad INDIA Membership No. 214198
Date : May 112021 UDIN: 21214198AAAABY5427

ANNEXURE C

ANNEXURE C TO THE INDEPENDENT AUDITOR'S REPORT OF EVEN DATE ON THESTANDALONE FINANCIAL STATEMENTS OF NEULAND LABORATORIES LIMITED

[Referred to in paragraph (2)(f) under 'Report on Other Legal andRegulatory Requirements' in the Independent Auditors' Report]

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

We have audited the internal financial controls with reference tostandalone financial statements of Neuland Laboratories Limited ("the Company")as of March 31 2021 in conjunction with our audit of the standalone financial statementsof the Company for the year ended on that date.

Management's Responsibility for Internal Financial Controls

The Company's Management is responsible for establishing andmaintaining internal financial controls based on the internal control with reference tostandalone 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 (ICAI) (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 and errors the accuracy and completeness of the accountingrecords and the timely preparation of reliable financial information as required underthe Act.

Auditors' Responsibility

Our responsibility is to express an opinion on the Company's internalfinancial controls with reference to standalone financial statements based on our audit.We conducted our audit in accordance with the Guidance Note and the Standards on Auditingissued by ICAI and deemed to be prescribed under section 143(10) ofthe Act to the extentapplicable to an audit of internal financial controls. Those Standards and the GuidanceNote require that we comply with ethical requirements and plan and perform the audit toobtain reasonable assurance about whether internal financial controls with reference tostandalone financial statements was established and maintained and if such controlsoperated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence aboutthe internal financial controls with reference to standalone financial statements andtheir operating effectiveness. Our audit of internal financial controls with reference tostandalone financial statements included obtaining an understanding of internal financialcontrols with reference to standalone financial statements assessing the risk that amaterial weakness exists and testing and evaluating the design and operatingeffectiveness of internal control based on the assessed risk. The procedures selecteddepend on the auditor's judgement including the assessment of the risks of materialmisstatement of the standalone 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 with reference to standalone financial statements.

Meaning of Internal Financial Controls with Reference to standaloneFinancial Statements

A Company's internal financial control with reference to standalonefinancial statements is a process designed to provide reasonable assurance regarding thereliability of financial reporting and the preparation of standalone financial statementsfor external purposes in accordance with generally accepted accounting principles. ACompany's internal financial control with reference to standalone financial statementsincludes those policies and procedures that (1) pertain to the maintenance of recordsthat 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 standalone 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 ofthe 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 standalone financial statements.

Inherent Limitations of Internal Financial Controls with Reference toStandalone Financial Statements

Because of the inherent limitations of internal financial controls withreference to standalone financial statements including the possibility of collusion orimproper management override of controls material misstatements due to error or fraud mayoccur and not be detected. Also projections of any evaluation of the internal financialcontrols with reference to standalone financial statements to future periods are subjectto the risk that the internal financial control with reference to standalone financialstatements may become inadequate because of changes in conditions or that the degree ofcompliance with the policies or procedures may deteriorate.

Opinion

In our opinion the Company has in all material respects internalfinancial controls with reference to standalone financial statements and such internalfinancial controls with reference to standalone financial statements were operatingeffectively as at March 31 2021 based on the internal control with reference tostandalone financial statements criteria established by the Company considering theessential components of internal control stated in the Guidance Note.

For MSKA & Associates
Chartered Accountants
ICAI Firm Registration No. 105047W
Amit Kumar Agarwal
Partner
Place: Hyderabad INDIA Membership No. 214198
Date : May 112021 UDIN: 21214198AAAABY5427

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