Independent Auditor's Report
To the Members of Pfizer Limited
Report on the Audit of the Financial Statements Opinion
1. We have audited the accompanying financial statements of Pfizer Limited (theCompany') which comprise the Balance Sheet as at 31 March 2021 the Statement of Profitand Loss (including Other Comprehensive Income) the Cash Flow Statement and the Statementof Changes in Equity for the year then ended and a summary of the significant accountingpolicies and other explanatory information.
2. In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid financial statements give the information required by theCompanies Act 2013 (Act') in the manner so required and give a true and fair viewin conformity with the accounting principles generally accepted in India including IndianAccounting Standards (Ind AS') specified under section 133 of the Act of the stateof affairs of the Company as at 31 March 2021 and its profit (including othercomprehensive income) its cash flows and the changes in equity for the year ended on thatdate.
Basis for Opinion
3. We conducted our audit in accordance with the Standards on Auditing specified undersection 143(10) of the Act. Our responsibilities under those standards are furtherdescribed in the Auditor's Responsibilities for the Audit of the Financial Statementssection of our report. We are independent of the Company in accordance with the Code ofEthics issued by the Institute of Chartered Accountants of India (ICAI') togetherwith the ethical requirements that are relevant to our audit of the financial statementsunder the provisions of the Act and the rules thereunder and we have fulfilled our otherethical responsibilities in accordance with these requirements and the Code of Ethics. Webelieve that the audit evidence we have obtained is sufficient and appropriate to providea basis for our opinion.
Key Audit Matters
4. Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the financial statements of the current period. These matterswere addressed in the context of our audit of the financial statements as a whole and informing our opinion thereon and we do not provide a separate opinion on these matters.
5. we have determined the matters described below to be the key audit matters to becommunicated in our report.
|Key audit matter ||How our audit addressed the key audit matter |
|(1) Contingent liability for litigations under Value Added Tax (VAT) and Central Sales Tax (CST) [Refer Note 23 and 41 in the financial statements] ||Our audit procedures included but were not limited to the following: |
|The Company has outstanding litigations pertaining to Sales tax/ Value added tax (VAT) for several assessment years which the Company has challenged at different forums. These litigations pertain to following two categories: ||We obtained an understanding of the management's process for: |
|A. Litigation on account of non-submission of documentary evidence at the time of assessment such as Form F and Form C pending to be issued by concerned authorities. Total liability in this category is Rs. 415.82 crores out of which Rs.5.56 crores have been provided for and Rs.40.87 crores have been disclosed as contingent liability in accordance with Ind AS 37 Provisions Contingent Liabilities and Contingent Assets based on management's assessment in consultation with professional advice from the external tax consultants. ||- identification of legal and tax matters initiated against the Company |
|B. Litigation involving question of law and certain disallowance made by authorities in assessment orders that the Company has appealed against before the relevant appellate authorities. Total demand for such cases is Rs.143.45 crores out of which Rs.32.24 crores have been provided for and Rs.24.61 crores have been disclosed as contingent liability in accordance with Ind AS 37 based on management's assessment in consultation with professional advice from the external tax consultants. ||- assessment of accounting treatment for each such litigation identified under Ind AS 37 accounting principles and for measurement of amounts involved. |
|The eventual outcome of these legal proceedings is dependent on the outcome of future events and unexpected adverse outcomes could significantly impact the Company's reported profits and balance sheet position. ||We evaluated the design and tested the operating effectiveness of key controls around above process. |
|The amounts involved are material and the application of accounting principles as given under Ind AS 37 in order to determine the amount to be recorded as a liability or to be disclosed as a contingent liability in each case is inherently subjective and needs careful evaluation and judgement to be applied by the management. ||We obtained an understanding of the nature of litigations pending against the Company and discussed the key developments during the year for key litigations with the management and respective legal counsels handling such cases on behalf of the Company. We also tested the independence objectivity and competence of such management experts involved. |
|Key judgments are also made by the management in estimating the amount of liabilities provisions and/or contingent liabilities related to aforementioned litigations. ||On a sample basis we obtained and reviewed the necessary evidence which includes correspondence with the external tax consultants and where necessary inspected minutes of case proceedings available in public domain to support the decisions and rationale for creation of provisions and / or disclosure of contingent liabilities in respect of each such litigation selected for testing. |
|Considering the degree of judgment significance of the amounts involved inherent high estimation uncertainty and reliance on external tax experts this matter has been identified as a key audit matter for the current year audit. ||We focused on the developments in the existing litigations and new litigations which could have materially impacted the amounts recorded as provisions or disclosed as contingent liability in the financial statements. We reviewed the demand notices assessment orders and appeal orders for all such cases where there was any update since previous year audit and obtained grounds of appeal submitted by the management at various authorities in consultation with their external tax consultants. |
| ||For litigations on account of non-submission of documentary evidence we obtained management's plan of action to obtain remaining forms/documentary evidences from VAT authorities in different states and actions taken by the management in this respect and with the assistance of our Indirect tax team validated the management's assessment and plan of action as obtained above. |
| ||We reviewed each external tax consultants' response to ensure that the conclusions reached are supported by sufficient rationale according to the relevant laws and adequate information is included for the management to determine the appropriate accounting treatment of such cases in the financial statements. |
| ||We assessed the appropriateness of methods used and the reliability of underlying data for the underlying calculations made for quantifying the amounts involved. We also tested the arithmetical accuracy of such calculations. |
| ||We have evaluated the adequacy of disclosures made by the Company in the financial statements in view of the requirements as specified in the Indian Accounting Standards. Based on the audit procedures performed the judgements made by the management appears to be reasonable and disclosures made in respect of these litigations were appropriate in the context of the financial statements taken as a whole. |
|(2) Contingent liability for DPCO Matters [Refer Note 18 and 39 in the financial statements) ||Our audit procedures included but were not limited to the following: |
|The pharmaceutical industry is heavily regulated which increases inherent litigation risk. The Company faces a number of legal and regulatory cases of which the most significant is a litigation under DPCO as disclosed in Note 18 and 39 to the financial statements. DPCO has issued various orders/notification for fixing the price of various pharma products. ||We obtained an understanding of the management's process for updating the status of the legal case assessment of accounting treatment in accordance with Ind AS 37 and for measurement of amounts involved. |
|With respect to the sales made by the Company of the pharmaceutical products covered by the aforementioned DPCO orders in earlier years as well as the current year the Company has received demand notices for alleged overcharging price (charging price over the price fixed by the DPCO for such products). ||We evaluated the design and tested the operating effectiveness of key controls around above process. |
|The Company has challenged these demands form DPCO and the cases are pending at various High Courts in India. ||We inspected correspondence with the Company's external legal counsel in order to corroborate our understanding of these matters accompanied by discussions with both internal and external legal counsels. We also tested the independence objectivity and competence of such management experts involved and lawyers representing these cases in the courts. |
|Total demand from above cases aggregates to Rs.175.96 crore out of which the Company has provided Rs. 20.45 crore while Rs.155.51 crore has been disclosed as contingent liability based on management's assessment in accordance with professional legal advice from the dealing lawyers. ||We obtained direct confirmation from the external legal counsel handling DPCO litigation with respect to the legal determination of the liability arising from such litigation and assessment of resulting provision recognised and contingent liability disclosures in the financial statements in accordance with requirements of Ind AS 37. |
|The amounts involved are material and the application of accounting principles as given under Ind AS 37 in order to determine the amount to be recognised as a liability or to be disclosed as a contingent liability is inherently subjective and needs careful evaluation and judgement to be applied by the management. ||We also evaluated the response received from the legal counsel to ensure that the conclusions reached is supported by sufficient legal rationale. |
|Key judgments are also made by the management in estimating the amount of liabilities provisions and/ or contingent liabilities related to aforementioned litigation. ||We assessed the appropriateness of methods used and the reliability of underlying data for the underlying calculations made for quantifying the amounts involved. We also tested the arithmetical accuracy of such calculations. |
|We focused on this area as the eventual outcome is uncertain and unexpected adverse outcomes could significantly impact the financial position and hence considered this matter to be a key audit matter for the current year audit. ||We evaluated the Company's disclosures for adequate disclosure regarding the significant litigations of the Company. |
| ||Based on the audit procedures performed the judgements made by the management appears to be reasonable and disclosures made in respect of these litigations were appropriate in the context of the financial statements taken as a whole. |
|(3) Discontinuation of Consumer Health products. ||Our audit procedures included but were not limited to the following: |
|[Refer Note 14 25 and Note 44 in the financial statements) Pfizer Inc. (ultimate parent company) and GlaxoSmithKline plc formed a joint venture ("GSK JVCo") for consumer health business which has taken over the consumer health product portfolio of Pfizer Group ("PCH"). ||We obtained agreements and letter correspondence between the parties to gain an understanding of the transaction pertaining wind down of the PCH products in India. |
|GSK JVCo conveyed its decision to not integrate/ transfer the PCH India Business into GSK JVCo and instead had requested Pfizer Limited to Wind down the PCH India Business. PCH business in India consists of only two brands Anacin and Anne French. ||We held discussion with the management/Board of directors and also with inhouse legal counsel. |
|As a part of the contractual agreement between the entities Pfizer Inc is required to reimburse the wind down cost to the Company provided that Pfizer Inc. receives such reimbursement from the GSK JVCo. Pfizer Inc will further pay the Company the Fair market value (FMV) of the PCH Business amounting to Rs. 27.50 as approved by the Board of Directors of Pfizer India which has been determined by two third-party valuation firms. ||We evaluated the design and tested the operating effectiveness of key controls around above process and over the determination of appropriate accounting treatment of this transaction. |
|The Company has completed the necessary procedures to wind down the PCH product and has recorded FMV in other income and wind down costs as receivable (Other current financial assets) from Pfizer Inc. after evaluating the provisions of (a) Ind As 105 "Non-Current assets held for sale & Discontinuing Operations" (b) Ind As 115 "Revenue from Contracts with Customers". ||Held discussion with auditor's tax experts and transfer pricing experts to evaluate the impact of the transaction. |
|Considering the materiality of amounts and significant judgements involved in determining of the fair market value and the underlying accounting treatment this matter has been considered as a key audit matter for the current year audit. ||Evaluated whether the accounting principles applied by the management fairly present the effects of the transactions in the financial statements in accordance with the principles of Ind AS. |
| ||Verified cost incurred with regard to wind down of the PCH business i.e legal expenses employee severance destruction of inventory compensation to contract manufacturers etc. |
| ||Obtained valuation report for FMV of PCH products. |
| ||Verified accrual for such FMV to be received from Pfizer Inc. |
| ||Assessed the valuation methodology used by the Company and tested the mathematical accuracy of the valuation model; |
| ||Involved auditor's valuation specialists to challenge the key assumptions such as discount rate and the valuation methodology; |
| ||We evaluated the adequacy of disclosures made by the Company in the financial statements in view of the requirements as specified in the Indian Accounting Standards Based on the audit procedures performed the judgements made by the management appears to be reasonable and disclosures made in respect of the transaction are appropriate in the context of the financial statements taken as a whole. |
Information other than the Financial Statements and Auditor's Report thereon
6. The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Annual Report but does not includethe financial statements and our auditor's report thereon. The Annual Report is expectedto be made available to us after the date of this auditor's report.
Our opinion on the financial statements does not cover the other information and wewill not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements our responsibility is to readthe other information identified above when it becomes available and in doing soconsider whether the other information is materially inconsistent with the financialstatements or our knowledge obtained in the audit or otherwise appears to be materiallymisstated.
When we read the Annual Report if we conclude that there is a material misstatementtherein we are required to communicate the matter to those charged with governance.
Responsibilities of Management and Those Charged with Governance for the FinancialStatements
7. The accompanying financial statements have been approved by the Company's Board ofDirectors. The Company's Board of Directors is responsible for the matters stated insection 134(5) of the Act with respect to the preparation of these financial statementsthat give a true and fair view of the financial position financial performance includingother comprehensive income changes in equity and cash flows of the Company in accordancewith the accounting principles generally accepted in India including the Ind AS specifiedunder section 133 of the Act. This responsibility also includes maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding of theassets of the Company and for preventing and detecting frauds and other irregularities;selection and application of appropriate accounting policies; making judgments andestimates that are reasonable and prudent; and design implementation and maintenance ofadequate internal financial controls that were operating effectively for ensuring theaccuracy and completeness of the accounting records relevant to the preparation andpresentation of the financial statements that give a true and fair view and are free frommaterial misstatement whether due to fraud or error.
8. In preparing the financial statements management is responsible for assessing theCompany's ability to continue as a going concern disclosing as applicable mattersrelated to going concern and using the going concern basis of accounting unless managementeither intends to liquidate the Company or to cease operations or has no realisticalternative but to do so.
9. Those Board of Directors is also responsible for overseeing the Company's financialreporting process.
Auditor's Responsibilities for the Audit of the Financial Statements
10. Our objectives are to obtain reasonable assurance about whether the financialstatements as a whole are free from material misstatement whether due to fraud or errorand to issue an auditor's report that includes our opinion. Reasonable assurance is a highlevel of assurance but is not a guarantee that an audit conducted in accordance withStandards on Auditing will always detect a material misstatement when it exists.Misstatements can arise from fraud or error and are considered material if individuallyor in the aggregate they could reasonably be expected to influence the economic decisionsof users taken on the basis of these financial statements.
11. As part of an audit in accordance with Standards on Auditing we exerciseprofessional judgment and maintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financial statementswhether due to fraud or error design and perform audit procedures responsive to thoserisks and obtain audit evidence that is sufficient and appropriate to provide a basis forour opinion. The risk of not detecting a material misstatement resulting from fraud ishigher than for one resulting from error as fraud may involve collusion forgeryintentional omissions misrepresentations or the override of internal control;
Obtain an understanding of internal control relevant to the audit in order to designaudit procedures that are appropriate in the circumstances. Under section 143(3)(i) of theAct we are also responsible for expressing our opinion on whether the Company hasadequate internal financial controls with reference to financial statements in place andthe operating effectiveness of such controls;
Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by management;
Conclude on the appropriateness of management's use of the going concern basis ofaccounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe financial statements or if such disclosures are inadequate to modify our opinion.Our conclusions are based on the audit evidence obtained up to the date of our auditor'sreport. However future events or conditions may cause the Company to cease to continue asa going concern;
Evaluate the overall presentation structure and content of the financial statementsincluding the disclosures and whether the financial statements represent the underlyingtransactions and events in a manner that achieves fair presentation;
12. We communicate with those charged with governance regarding among other mattersthe planned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.
13. We also provide those charged with governance with a statement that we havecomplied with relevant ethical requirements regarding independence and to communicatewith them all relationships and other matters that may reasonably be thought to bear onour independence and where applicable related safeguards.
14. From the matters communicated with those charged with governance we determinethose matters that were of most significance in the audit of the financial statements ofthe current period and are therefore the key audit matters. We describe these matters inour auditor's report unless law or regulation precludes public disclosure about the matteror when in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
15. As required by section 197(16) of the Act based on our audit we report that theCompany has paid remuneration to its directors during the year in accordance with theprovisions of and limits laid down under section 197 read with Schedule V to the Act.
16. 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 we givein the Annexure I a statement on the matters specified in paragraphs 3 and 4 of the Order.
17. Further to our comments in Annexure I as required by section 143(3) of the Actbased on our audit we report to the extent applicable that:
a) we have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purpose of our audit of theaccompanying financial statements;
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 financial statements dealt with by this report are in agreement with the booksof account;
d) in our opinion the aforesaid financial statements comply with Ind AS specifiedunder section 133 of the Act;
e) on the basis of the written representations received from the directors and taken onrecord by the Board of Directors none of the directors is disqualified as on 31 March2021 from being appointed as a director in terms of section 164(2) of the Act;
f) we have also audited the internal financial controls with reference to financialstatements of the Company as on 31 March 2021 in conjunction with our audit of thefinancial statements of the Company for the year ended on that date and our report dated26 May 2021 as per Annexure II expressed unmodified opinion; and
g) with respect to the other matters to be included in the Auditor's Report inaccordance with rule 11 of the Companies (Audit and Auditors) Rules 2014 (as amended) inour opinion and to the best of our information and according to the explanations given tous:
i. the Company as detailed in note 39 41 and 42 (i) (a) and (c) to the financialstatements has disclosed the impact of pending litigations on its financial position asat 31 March 2021.
ii. the Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses as at 31 March 2021.;
iii. there has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company during the year ended 31 March2021; and
iv. the disclosure requirements relating to holdings as well as dealings in specifiedbank notes were applicable for the period from 8 November 2016 to 30 December 2016 whichare not relevant to these financial statements. Hence reporting under this clause is notapplicable.
Annexure I to the Independent Auditor's Report of even date to the members of PfizerLimited on the financial statements for the year ended 31 March 2021
Based on the audit procedures performed for the purpose of reporting a true and fairview on the financial statements of the Company and taking into consideration theinformation and explanations given to us and the books of account and other recordsexamined by us in the normal course of audit and to the best of our knowledge and beliefwe report that: (i) (a) The Company has maintained proper records showing fullparticulars including quantitative details and situation of fixed assets.
(b) The Company has a regular program of physical verification of its fixed assetsunder which fixed assets are verified in a phased manner over a period of three yearswhich in our opinion is reasonable having regard to the size of the Company and thenature of its assets. In accordance with this program certain fixed assets were verifiedduring the year and no material discrepancies were noticed on such verification.
(c) The title deeds of all the immovable properties (which are included under the headProperty plant and equipment') are held in the name of the Company.
(ii) In our opinion the management has conducted physical verification ofinventory at reasonable intervals during the year except for goods-in-transit and nomaterial discrepancies between inventory and book records were noticed on physicalverification.
(iii) The Company has not granted any loan secured or unsecured to companies firmsLimited Liability Partnerships (LLPs) or other parties covered in the register maintainedunder Section 189 of the Act. Accordingly the provisions of clauses 3(iii)(a) 3(iii)(b)and 3(iii)(c) of the Order are not applicable.
(iv) In our opinion the Company has complied with the provisions of Sections 185 and186 of the Act in respect of loans investments guarantees and security.
(v) In our opinion the Company has not accepted any deposits within the meaning ofSections 73 to 76 of the Act and the Companies (Acceptance of Deposits) Rules 2014 (asamended). Accordingly the provisions of clause 3(v) of the Order are not applicable.
(vi) We have broadly reviewed the books of account maintained by the Companypursuant to the Rules made by the Central Government for the maintenance of cost recordsunder sub-section (1) of Section 148 of the Act in respect of Company's products/servicesand are of the opinion that prima facie the prescribed accounts and records have beenmade and maintained. However we have not made a detailed examination of the cost recordswith a view to determine whether they are accurate or complete.
(vii) (a) Undisputed statutory dues including provident fund employees' stateinsurance income-tax sales-tax service tax duty of customs duty of excise valueadded tax goods and service tax (GST) cess and other material statutory dues asapplicable have generally been regularly deposited to the appropriate authorities thoughthere has been a slight delay in a few cases. Further no undisputed amounts payable inrespect thereof were outstanding at the year-end for a period of more than six months fromthe date they became payable.
(b) The dues outstanding in respect of income-tax sales-tax service tax duty ofcustoms duty of excise and value added tax on account of any dispute are as follows:
Statement of Disputed Dues
|Name of Statute ||Forum where dispute is Pending ||Period to which the Amount relates ||Nature of dues ||Amount ||Amount paid under Protest |
|The Income Tax Act 1961 ||Commissioner of Income Tax Appeals ||2002-2003 to 2003-2004 2005-2006 2011-2012 to 2013-2014 2017-2018 ||Transfer pricing adjustment income from house property long-term capital gain and other disallowance of expenses ||70.14 ||69.12 |
| ||Commissioner of Income Tax Appeals ||2010-2011 to 2011-2012 2013-2014 to 2019-2020 ||Tax deducted at source ||48.19 ||4.28 |
| ||Income Tax Appellate Tribunal ||1984-1985 1991-1992 to 2010-2011 2012-2013 2014-2015 to 2016-2017 ||Disallowance of near expiry/ transit loss stock write off and other disallowance of expenses ||384.90 ||248.69 |
| ||Hon'ble High Court of Bombay ||2006-2007 to 2009-2010 2012-2013 ||Tax deducted at source ||20.11 ||4.09 |
|The Central Excise Act 1944 ||Hon'ble High Court of Bombay ||2004-2005 to 2006-2007 ||Disallowance of availment of CENVAT* credit ||6.31 ||0.78 |
|Customs Act 1962 ||Commissioner (Appeals) ||1995 ||Classification Matter ||0.01 ||- |
| ||Customs Excise Service Tax Appellate Tribunal (CESTAT) ||2012-2013 ||Demand of Special Additional duty (SAD) ||1.31 ||1.31 |
| ||Customs Excise Service Tax Appellate Tribunal (CESTAT) ||2015-2016 ||Anti -dumping duty ||1.00 ||0.08 |
| ||Hon'ble Supreme Court of India ||1996-1997 ||Classification Matter ||0.47 ||0.05 |
|Value Added Tax Act and State and Central Sales Tax ||Assessing officer ||2011-12 to 2016-17 ||Pending statutory declaration forms and others ||0.51 ||0.05 |
|Value Added Tax Act and State and Central Sales Tax ||Additional commissioner ||1997-1998 1998-99 2002- 20032008-2009 to 2017-2018 ||Pending statutory declaration forms disallowance of credit notes and others ||57.89 ||7.82 |
| ||Assistant Commissioner ||1986-1987 2004-2005 2010-2011 to 2017-2018 ||Pending statutory declaration forms disallowance of credit note and input tax credit and others ||4.38 ||0.55 |
| ||Deputy Commissioner ||1993-1994 to 1996-1997 1999-2000 to 2003-2004 2005-2006 to 2017-2018 ||Pending statutory declaration forms disallowance of credit note and input tax credit and others ||63.23 ||12.88 |
| ||Joint Commissioner ||1983-1984 1985-1986 to 1986-1987 1994-1995 1995-1996 1998-1999 2000-2001 to 2016-2017 ||Pending statutory declaration forms disallowance of credit note and input tax credit and others ||363.92 ||98.19 |
| ||Revision Board ||2006-2007 to 2009-2010 ||Pending statutory declaration forms disallowance of credit notes and others ||0.37 ||0.31 |
|Commissioner (Appeals) ||2005-2006 2012-2013 ||Pending statutory declaration forms and others ||0.18 ||0.04 || |
|Various Tribunals ||1991-1992 1992-1993 1994-1995 to 1996-1997 1999-2000 to 2001-2002 2003-2004 to 2013-2014 ||Pending statutory declaration forms disallowance of credit note and input tax credit and others ||66.75 ||18.74 || |
|Hon'ble High court ||1995-1996 2012-2013 to 2013-2014 ||Levy of tax and interest ||1.94 ||1.14 || |
|Hon'ble Supreme court ||1992-93 ||Levy of tax and interest ||0.10 ||- || |
* Central Value Added Tax (CENVAT)
(viii) The Company has no loans or borrowings payable to a financial institution or abank or government and no dues payable to debenture-holders during the year. Accordinglythe provisions of clause 3(viii) of the Order are not applicable.
(ix) The Company did not raise moneys by way of initial public offer or furtherpublic offer (including debt instruments) and did not have any term loans outstandingduring the year. Accordingly the provisions of clause 3(ix) of the Order are notapplicable.
(x) No fraud by the Company or on the Company by its officers or employees has beennoticed or reported during the period covered by our audit.
(xi) Managerial remuneration has been paid and provided by the Company during the yearin accordance with the requisite approvals mandated by the provisions of Section 197 ofthe Act read with Schedule V to the Act.
(xii) In our opinion the Company is not a Nidhi Company. Accordingly provisions ofclause 3(xii) of the Order are not applicable.
(xiii) In our opinion all transactions with the related parties are in compliance withSections 177 and 188 of the Act where applicable and the requisite details have beendisclosed in the financial statements as required by the applicable Ind AS.
(xiv) During the year the Company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures.
(xv) In our opinion the Company has not entered into any non-cash transactions withthe directors or persons connected with them covered under Section 192 of the Act.
(xvi) The Company is not required to be registered under Section 45-IA of the ReserveBank of India Act 1934.
Independent Auditor's Report on the internal financial controls with reference to thefinancial (i) of Sub-section 3 of Section 143 of the Companies Act 2013 (the Act')
1. In conjunction with our audit of the financial statements of Pfizer Limited(the Company') as at and for the year ended 31 March 2021 we have audited theinternal financial controls with reference to financial statements of the Company as atthat date.
Responsibilities of Management and Those Charged with Governance for Internal FinancialControls
2. The Company's Board of Directors is responsible for establishing and maintaininginternal financial controls based on the IFCoFR criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Note onAudit of IFCoFR issued by the Institute of Chartered Accountants of India ("theICAI"). These responsibilities include the design implementation and maintenance ofadequate internal financial controls that were operating effectively for ensuring theorderly and efficient conduct of the Company's business including adherence to theCompany'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.
Auditor's Responsibility for the Audit of the Internal Financial Controls withReference to Financial Statements
3. Our responsibility is to express an opinion on the Company's internal financialcontrols with reference to financial statements based on our audit. We conducted our auditin accordance with the Standards on Auditing issued by the Institute of CharteredAccountants of India (ICAI') prescribed under Section 143(10) of the Act to theextent applicable to an audit of internal financial controls with reference to financialstatements and the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting (the Guidance Note') issued by the ICAI. Those Standards and the GuidanceNote require that we comply with ethical requirements and plan and perform the audit toobtain reasonable assurance about whether adequate internal financial controls withreference to financial statements were established and maintained and if such controlsoperated effectively in all material respects.
4. Our audit involves performing procedures to obtain audit evidence about the adequacyof the internal financial controls with reference to financial statements and theiroperating effectiveness. Our audit of internal financial controls with reference tofinancial statements includes obtaining an understanding of such internal financialcontrols 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 judgement including the assessment of therisks of material misstatement of the financial statements whether due to fraud or error.
5. 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 withreference to financial statements .
Meaning of Internal Financial Controls with Reference to Financial Statements
6. A company's internal financial controls with reference to financial statements is aprocess designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles. A company's internal financial controlswith reference to financial statements include those policies and procedures that (1)pertain to the maintenance of records that in reasonable detail accurately and fairlyreflect the transactions and dispositions of the assets of the company; (2) providereasonable assurance that transactions are recorded as necessary to permit preparation offinancial statements in accordance with generally accepted accounting principles and thatreceipts and expenditures of the company are being made only in accordance withauthorisations of management and directors of the company; and (3) provide reasonableassurance regarding prevention or timely detection of unauthorised acquisition use ordisposition of the company's assets that could have a material effect on the financialstatements.
Inherent Limitations of Internal Financial Controls with Reference to FinancialStatements
7. Because of the inherent limitations of internal financial controls with reference tofinancial statements 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 withreference to financial statements to future periods are subject to the risk that theinternal financial controls with reference to financial statements may become inadequatebecause of changes in conditions or that the degree of compliance with the policies orprocedures may deteriorate.
8. In our opinion the Company has in all material respects adequate internalfinancial controls with reference to financial statements and such controls were operatingeffectively as at 31 March 2021 based on the IFCoFR criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Noteissued by the ICAI. statements under Clause
For Walker Chandiok & Co LLP
Firm's Registration No.: 001076N/N500013
Membership No.: 504662
Place: New Delhi
Date: 26 May 2021