To the Members of
Pharmaids Pharmaceuticals Limited Hyderabad
Report on the Audit of the Financial Statements Qualified Opinion
1. We have audited the accompanying Financial Statements of Pharmaids PharmaceuticalsLimited (the Company') which comprise the Balance Sheet as at 31st March 2020 theStatement of Profit and Loss (including Other Comprehensive Income) the Cash FlowStatement and the Statement of Changes in Equity for the year then ended and a summary ofsignificant accounting policies and other explanatory information.
2. In our opinion and to the best of our information and according to the explanationsgiven to us except for the information referred to in Basis for Qualified opinion of ourreport the aforesaid Financial Statements give the information required by the CompaniesAct 2013(Act') in the manner so required and give a true and fair view inconformity with the accounting principles generally accepted in India including IndianAccounting Standards (Ind AS') specified under section 133 of the Act of the stateof affairs (Financial position) of the Company as at 31st March2020 and its profit(financial performance including other comprehensive income) its cash flows and thechanges in equity for the year ended on that date.
Basis for Qualified Opinion
3. The Balances of Current Financial Assets Other Non-Current Assets Non CurrentLiabilities and Current Liabilities other current liability are subject toConfirmation/reconciliations. The Impact of the same is unascertained.
4. 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 there under 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 Matter
5. 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.
6. We have determined the matter described below to be the key audit matters to becommunicated in our report.
|Key Audit Matter ||How our Audit addressed the key audit matter |
|Carrying value of Investment in Associate entity. Significant change in Management of the entity ||As per NCLT Order dated 27/09/2019 Pharmaids Pharmaceuticals Limited Amalgamated with Emergent Bio Naturals Limited with effect from 01/04/2018.However Pharmaids Pharmaceuticals limited will continue its operations in its own name under new management. |
|Going Concern of the Company ||As informed to us as during the year the management was busy in setting up the future plan and merger process hence could not concentrate on business. During the ensuing year the management is hopeful of continuing the operations. Post Covid-19 pandemic the company would resume its operations. |
Information other than the Financial Statements and Auditor's Report thereon
7. 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. Our opinion on the FinancialStatements does not cover the other information and we will not express any form ofassurance conclusion thereon. In connection with our audit of the Financial Statementsour responsibility is to read the other information and in doing so consider whether theother information is materially inconsistent with the Financial Statements or ourknowledge obtained in the audit or otherwise appears to be materially misstated. If basedon the work we have performed we conclude that there is no material misstatement of thisother information. We have nothing to report in this regard.
Responsibilities of Management for the Financial Statements
8. The Company's Board of Directors is responsible for the matters stated in section134(5) of the Act with respect to the preparation of these Financial Statements that givea true and fair view of the state of affairs (financial position) profit or loss(financial performance including other comprehensive income) cash flows and changes inequity of the Company in accordance with the accounting principles generally accepted inIndia including the Ind AS specified under section 133 of the Act. This responsibilityalso includes maintenance of adequate accounting records in accordance with the provisionsof the 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 Financial Statements thatgive a true and fair view and are free from material misstatement whether due to fraud orerror.
9. 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.
10. The Board of Directors are also responsible for overseeing the Company's financialreporting process.
Auditors Responsibilities for the Audit of the Financial Statements
11. 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 Financials that includes our opinion. Reasonableassurance is a high level of assurance but is not a guarantee that an audit conducted inaccordance with Standards on Auditing 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 Financial Statements.
12. 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 FinancialStatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentional omissions misrepresentations or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under section143(3)(i)of the Act we are also responsible for explaining our opinion on whether the company hasadequate internal financial controls system in place and the operating effectiveness ofsuch controls.
Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basisof accounting 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 FinancialStatements including the disclosures and whether the Financial Statements represent theunderlying transactions and events in a manner that achieves fair presentation.
13. 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.
14. 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.
15. 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
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 A statement on the matters specified in paragraphs 3 and 4 of the Order.
17. Further to our comments in Annexure A as required by section 143(3) of the Act wereport 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;
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 March2020 from being appointed as a director in terms of section164(2) of the Act;
f) We have also audited the internal financial controls over financial reporting(IFCoFR) of the Company as on 31st March 2020 in conjunction with our audit ofthe Financial Statements of the Company for the year ended on that date and our report asper Annexure B expressed unmodified opinion; and
g) With respect to the other matters to be included in the Auditor's Report inaccordance with rule11 of the Companies (Audit and Auditors) Rules2014 (as amended) 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 its financialposition as at 31 March 2020;
ii. the Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses as at 31 March 2020;
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 March2020;
iv. the disclosure requirements relating to holdings as well as dealings in specifiedbanknotes 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 A to the Independent Auditor's Report of even date to the members of PharmaidsPharmaceuticals Limited on the Financial Statements for the year ended 31stMarch2020
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 full particulars includingquantitative 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 Company has nil amount of inventory during the year.Accordingly the provisions of clause 3(ii) of the Order are not applicable.
(iii) The Company has not granted any loans secured or unsecured to companies firmsLimited Liability Partnerships or other parties covered in the register maintained underSection 189 of the Act. Therefore the provisions of Clause 3(iii) (iii)(a) (iii)(b) and(iii)(c) of the said Order are not applicable to the Company
(iv) In our opinion the Company has complied with the provisions of Section 186 inrespect of investments and loans. Further in our opinion the Company has not enteredinto any transaction covered under Section185 and Section 186 of the Act in respect ofguarantees 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 accounts maintained by the Company pursuantto the Rules made by the Central Government for the maintenance of cost records undersub-section (1) of Section 148 of the Act. As informed to us the provision of sec 148(1)are not applicable.
(vii) (a) Undisputed statutory dues including provident fund employees' stateinsurance income-tax goods and service tax duty of customs cess and other materialstatutory dues as applicable have generally been regularly deposited with theappropriate authorities though there has been a slight delay in a few cases. Further noundisputed amounts payable in respect thereof were outstanding at the year-end for aperiod of more than six months from the date they became payable.
(viii)The Company has not defaulted in repayment of loans or borrowings to any bankduring the year. The Company has no loans or borrowings payable to financial institutionsor government and does not have any outstanding debentures during the year.
(ix) In our opinion and according to the information and explanations given to us themoneys raised by way of term loans have been applied on an overall basis for thepurposes for which they were obtained.
The Company has not raised any moneys by way of initial public offer or further publicoffer (including debt instruments)
(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) Managerial remuneration has been paid / provided by the Company in accordance withthe requisite approvals mandated by the provisions of Section 197of the Act read withSchedule 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 Act where applicable and the requisite details have beendisclosed in the Financial Statements etc. 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. Accordingly provisions ofthe clause 3(xiv) of the order are not applicable.
(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.Accordingly the provisions of clause 3(xv) of the order are not applicable.
(xvi) The Company is not required to be registered under Section 45-IA of the ReserveBank of India Act 1934.
Annexure B to the Independent Auditor's Report of even date to the members of PharmaidsPharmaceuticals Limited on the Financial Statements for the year ended 31stMarch 2020
Independent Auditor's Report on the Internal Financial Controls under Clause (i) ofSubsection 3 of Section 143 ofthe Companies Act 2013 (the Act')
1. In conjunction with our audit of the Financial Statements of PharmaidsPharmaceuticals Limited (the Company') as at and for the year ended 31stMarch2020 we have Audited The Internal Financial Controls Over Financial Reporting(IFCoFR') of the Company as at that date.
Management's Responsibility for Internal Financial Controls
2. The Company's Board of Directors is responsible for establishing and maintaininginternal financial controls based on the internal control over financial reportingcriteria established by the Company considering the essential components of internalcontrol stated in the Guidance Note on Audit of Internal Financial Controls over FinancialReporting (the Guidance Note') issued by the Institute of Chartered Accountants ofIndia(ICAI').These responsibilities include the design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the orderly and efficient conduct of the Company's business including adherenceto the Company's policies the safeguarding of its assets the prevention and detection offrauds and errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Act.
3. Our responsibility is to express an opinion on the Company's IFCoFR based on ouraudit. We conducted our audit in accordance with the Standards on Auditing issued by theICAI and deemed to be prescribed under Section 143(10) of the Act to the extentapplicable to an audit of IFCoFR and the Guidance Note issued by the ICAI. ThoseStandards and the Guidance Note require that we comply with ethical requirements andplanand perform the audit to obtain reasonable assurance about whether adequate IFCoFRwere established and maintained and if such controls operated effectively in all materialrespects.
4. Our audit involves performing procedures to obtain audit evidence about the adequacyof the IFCoFR and their operating effectiveness. Our audit of IFCoFR includes obtaining anunderstanding of IFCoFR assessing the risk that a material weakness exists and testingand evaluating the design and operating effectiveness of internal control based on theassessed risk. The procedures selected depend on the auditor's judgment including theassessment of the risks of material misstatement of the financial statements whether dueto 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 IFCoFR.
Meaning of Internal Financial Controls over Financial Reporting
6. A company's IFCoFR is a process designed to provide reasonable assurance regardingthe reliability of financial reporting and the preparation of Financial Statements forexternal purposes in accordance with generally accepted accounting principles. A company'sIFCoFR include those policies and procedures that
(1)pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company;
(2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of Financial Statements in accordance with generally accepted accountingprinciples and that receipts and expenditures of the company are being made only inaccordance with authorizations of management and directors of the company; and
(3) provide reasonable assurance regarding prevention or timely detection ofunauthorised acquisition use or disposition of the company's assets that could have amaterial effect on the Financial Statements.
Inherent Limitations of Internal Financial Controls over Financial Reporting
7. Because of the inherent limitations of IFCoFR including the possibility ofcollusion or improper management override of controls material misstatements due to erroror fraud may occur and not be detected. Also projections of any evaluation of the IFCoFRto future periods are subject to the risk that the IFCoFR may become inadequate because ofchanges in conditions or that the degree of compliance with the policies or proceduresmay deteriorate.
8. In our opinion the Company has in all material respects adequate internalfinancial controls over financialreporting and such controls were operating effectively asat 31 March 2020 based on the internal control over financial reporting criteriaestablished by the company considering the essential components of internal control statedin the Guidance Note issued by the ICAI.