To the Members of
SANDU PHARMACEUTICALS LIMITED
Report on the Audit of the Financial Statements
1. We have audited the accompanying financial statements of SanduPharmaceuticals Limited ("the Company") which comprise the Balance Sheet as at31st March 2021 the Statement of Profit and Loss including the statement ofOther Comprehensive Income the Statement of Cash Flow and the Statement of Changes inEquity for the year then ended and notes to the financial statements and a summary ofsignificant accounting policies and other explanatory information.
2. In our opinion and to the best of our information and according tothe explanations given to us the aforesaid financial statements give the informationrequired by the Companies Act 2013 as amended ("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 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 31st March 2021 and its profitincluding other comprehensive income its cash flows and the changes in equity and for theyear ended on that date.
Basis for Opinion
3. We conducted our audit of the financial statements in accordancewith the Standards on Auditing (SAs) as specified under section 143(10) of the Act. Ourresponsibilities under those Standards are further described in the Auditor'sResponsibilities for the Audit of the Financial Statements' section of our report. Weare independent of the Company in accordance with the Code of Ethics' issued bythe Institute of Chartered Accountants of India (ICAI) together with the ethicalrequirements that are relevant to our audit of the financial statements under theprovisions of the Companies Act 2013 and the Rules made there under and we havefulfilled our other ethical responsibilities in accordance with these requirements and theICAI's Code of Ethics.
4. We believe that the audit evidence we have obtained is sufficientand appropriate to provide a basis for our audit opinion on the financial statements.
Key Audit Matters
5. Key audit matters are those matters that in our professionaljudgment were of most significance in our audit of the financial statements for thefinancial year ended on 31st March 2021. These matters were addressed in thecontext of our audit of the financial statements as a whole and in forming our opinionthereon and we do not provide a separate opinion on these matters. For each matter belowour description of how our audit addressed the matter is provided in that context.
We have determined the matters described below to be the key auditmatters to be communicated in our report.
|Key Audit Matter ||How our audit addressed the key audit matter |
|1. Revenue Recognition || |
|Revenue of the Company consists primarily of sale of products and is recognized when control of products being sold is transferred to customer and there is no unfulfilled obligation. ||Our audit procedures included and were not limited to the following - |
|Revenue is measured at fair value of the consideration received or receivable and is accounted for net of rebates trade discounts etc. || Assessed the appropriateness of the Company's revenue recognition accounting policies including those relating to rebates and trade discounts and breakage and leakage by comparing with the applicable accounting standards |
|Considering the materiality of amounts involved significant judgements related to estimation of rebates and discounts the same has been considered as a key audit matter. || Tested the design and operating effectiveness of the general IT control environment and the manual controls for recognition of revenue calculation of discounts and rebates etc. |
|(Refer Sub-note No. M of Note 2 of Accounting Policy). || On a sample basis we performed testing to verify sales transactions to the underlying supporting documentation which includes goods dispatch notes and shipping documents. |
| || We performed revenue cut-off testing by reference to bill dates of sales recorded either side of the financial year end had legally completed; and |
| || Selected a sample of sales invoices/contracts and read analyzed and identified the distinct performance obligations in these invoices/contracts. |
| ||Based on our audit procedures we have concluded that revenue is appropriately recognized and that there was no evidence of management bias. |
Information Other than the Financial Statements and Auditor'sReport Thereon
6. The Company's Board of Directors is responsible for thepreparation of the other information. The other Information comprises the informationincluded in the Management Discussion and Analysis Director's Report includingAnnexure to Director's Report Corporate Governance and Shareholder'sInformation but does not include the financial statements and our auditor's reportthereon which we obtained prior to the date of this Auditors' Report and theremaining sections of Annual Report which are expected to be made available to us afterthat date..
7. Our opinion on the financial statements does not cover the otherinformation and we do not express any form of assurance conclusion thereon.
8. In connection with our audit of the financial statements ourresponsibility is to read the other information and in doing so consider whether theother information is materially inconsistent with the financial statements or ourknowledge obtained during the course of our audit or otherwise appears to be materiallymisstated. If based on the work we have performed we have to conclude that there is amaterial misstatement of this other Information; we are required to report that fact.
9. We have nothing to report in this regard.
10. When we read the other sections of Annual Report (other than thosementioned above) if we conclude that there is a material misstatement therein we arerequired to communicate the matter to those charged with governance and take necessaryactions as applicable under the applicable laws and regulations.
Responsibilities of Management for the Financial Statements
11. The Company's Board of Directors is responsible for thematters stated in Section 134(5) of the Companies Act 2013 (the Act') withrespect to the preparation of these financial statements that give a true and fair view ofthe financial position financial performance (including other comprehensive income) cashflows and changes in equity of the Company in accordance with the accounting principlesgenerally accepted in India including the Indian Accounting Standards specified underSection 133 of the Act read with the Companies (Indian Accounting Standards) Rules 2015as amended.
This responsibility also includes maintenance of adequate accountingrecords in accordance with the provisions of the Act for safeguarding the assets of theCompany and for preventing and detecting frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent and design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe financial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.
In preparing the financial statements management is responsible forassessing the Company's ability to continue as a going concern disclosing asapplicable matters related to going concern and using the going concern basis ofaccounting unless management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so.
The Board of Directors is responsible for overseeing the Company'sfinancial reporting process.
Auditor's Responsibility for the Audit of the Financial Statements
12. Our objectives are to obtain reasonable assurance about whether thefinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonableassurance is a high level of assurance but is not a guarantee that an audit conducted inaccordance with SAs 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.
13. As part of an audit in accordance with SAs we exerciseprofessional judgment and maintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of thefinancial statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrol.
Obtain an understanding of internal financial controls relevantto the audit in order to design audit Procedures that are appropriate in thecircumstances. Under section 143(3)(i) of the Act we are also Responsible for expressingour opinion on whether the Company has adequate internal financial controls system inplace 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 thegoing concern basis of accounting and based on the audit evidence obtained whether amaterial uncertainty exists related to events or conditions that may cast significantdoubt on the Company's ability to continue as a going concern. If we conclude that amaterial uncertainty exists we are required to draw attention in our auditor'sreport to the related disclosures in the financial statements or if such disclosures areinadequate to modify our opinion. Our conclusions are based on the audit evidenceobtained up to the date of our auditor's report. However future events or conditionsmay cause the Company to cease to continue as a going concern.
Evaluate the overall presentation structure and content of thefinancial statements including the disclosures and whether the financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.
Communication with those charged with governance
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 financialstatements of the current period and are therefore the key audit matters. We describethese 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.
Report on Other Legal and Regulatory Requirements
14. 1) As required by the Companies (Auditor's Report) Order 2016(the Order') issued by the Government of India -Ministry of Corporate Affairsin terms of sub-section (11) of section 143 of the Act we enclose in the"Annexure-A" a statement on the matters specified in paragraphs 3 and 4 of thesaid Order to the extent applicable.
2) As required by Section 143 (3) of the Act based on our audit wereport to the extent applicable 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 including othercomprehensive income the Statement Cash Flow and statement of changes in equity dealtwith by this Report are in agreement with the books of account.
(d) In our opinion the aforesaid financial statements comply with theIndian Accounting Standards specified under Section 133 of the Act read with Companies(Indian Accounting Standards) Rules 2015 as amended.
(e) On the basis of the written representations received from thedirectors as on 31st March 2021 taken on record by the Board of Directorsnone of the Directors is disqualified as on 31st March 2021 from beingappointed as a director in terms of Section 164 (2) of the Act.
(f) With respect to the adequacy of the internal financial controlsover financial reporting of the Company and the operating effectiveness of such controlsrefer to our separate report in "Annexure-B"; and
(g) With respect to the other matters to be included in theAuditor's Report in accordance with the requirements of section 197(16) of the Actas 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 theAuditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors)Rule 2014 as amended in our opinion and to the best of our information and according tothe explanation given to us:
i. The Company does not have any pending litigation which would impactits financial position.
ii. The Company did not have any long-term contracts includingderivative contracts for which there were any material foreseeable losses.
iii. The Company is not liable to make any payments towards InvestorEducation and Protection Fund.
iv. The disclosures in the Standalone Financial Statements regardingholdings as well as dealings in specified bank notes during the period from 8thNovember 2016 to 30th December 2016 have not been made in these StandaloneFinancial Statements since they do not pertain to the financial year ended 31st March2021.
Annexure -A to the 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 financialstatements for the year ended on 31st March 2021 of Sandu PharmaceuticalsLimited )
(i) (a) The Company has maintained proper records showing fullparticulars including quantitative details and situation of plant property and equipment.
(b) According to the information and explanations given to us theplant property and equipment have been physically verified by the management in a phasedmanner at regular intervals based on program designed to cover all the material items. Inour opinion the frequency of verification is reasonable having regard to the size of theCompany and the nature of its assets. No material discrepancies were noticed by themanagement on such verification.
(c) According to the information and explanations given to us and onthe basis of our examination of the records of the Company the title deeds of immovableproperties are held in the name of the Company. In case of leasehold land that has beentaken on lease and disclosed as right to use assets in the Ind AS financial statementsthe lease agreement is in the name of the company where the company is the lessee in theagreement.
(ii) According to the information and explanations given to us theinventory has been physically verified by the management at reasonable intervals and nomaterial discrepancies were noticed on such verification.
(iii) According to the information and explanations given to us theCompany has not granted any loans secured or unsecured to companies firms limitedliability partnership or other parties listed in the register maintained under Section 189of the Companies Act 2013. Accordingly the provisions of clause 3(iii)(a) to (c) of theorder are not applicable to the Company and hence not commented upon.
(iv) In our opinion and according to the information and explanationsgiven to us the Company has complied with the provision of section 185 & 186 of theCompanies Act 2013 in respect of loans investments guarantees or securities asapplicable.
(v) The Company has not accepted any deposits from the public and hencethe directives issued by the Reserve Bank of India and the provisions of section 73 to 76of the Act. Therefore the provisions of the clause (v) of paragraph 3 of the Order arenot applicable to the company.
(vi) We have broadly reviewed the accounts and records maintained bythe company pursuant to the Companies (Cost Records and Audit) Rules 2014 read withCompanies (Cost Records and Audit) Amendment under Section 148 of the Act and are of theopinion that prima facie the prescribed Cost records have been made and maintained. Wehave however not made a detailed examination of the records with a view to determinewhether they are accurate or complete.
(vii) (a) The Company is regular in depositing with appropriateauthorities undisputed statutory dues including Provident
Fund Employees' State Insurance Income-tax Service tax SalesTax Custom Duty Excide Duty Goods and Service Tax and other material statutory dues asapplicable. Based on our audit procedures and according to the information andexplanations given to us there are no arrears of undisputed statutory dues which remainedoutstanding as at 31st March 2021 for a period of more than six months fromthe date they became payable except dues of Tax Deducted at source aggregating to Rs.138516/- (PY. Rs. 193375/-) on account of defaults pertains to prior years.
(b) According to the information and explanations given to us andrecords of the Company no dues of Income-tax Sales tax Service Tax VAT are outstandingin the books of the Company on account of any dispute.
(viii) According to the information and explanations given to us thecompany has not defaulted in repayment of dues to banks and financial institution. TheCompany has not taken any loan from the Government and has not issued any debentures.
(ix) The Company has not raised any money by way of public offer orfurther 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) According to the information and explanations furnished by themanagement which has been relied upon by us there were no material frauds on or by theCompany noticed or reported during the course of our audit.
(xi) According to the information and explanations give to us and basedon our examination of the records of the Company managerial remuneration has been paid orprovided in accordance with the requisite approvals mandated by the provision of Section197 read with schedule V to the Companies Act 2013.
(xii) In our opinion the Company is not a Nidhi Company. Thereforethe provisions of clause 3(xii) of the Order are not applicable to the Company.
(xiii) According to the information and explanations give to us andbased on our examination of the records. In our opinion all transactions with relatedparties are in compliance with sections 177 and 188 of the Companies Act 2013 and thedetails have been disclosed in the financial statements as required by the Applicableaccounting standards.
(xiv) The Company has made a preferential allotment of EquityConvertible warrants during the year in compliance with the requirements of Section 42 ofthe Act. The amounts raised have been used for the purpose for which funds were raised.
(xv) According to the information and explanations give to us and basedon our examination of the records the company has not entered into any non-cashtransactions with directors or persons connected with them and hence provisions of section192 of the Act are not applicable.
(xvi) In our opinion the Company is not required to be registeredunder section 45-IA of the Reserve Bank of India Act 1934.
Annexure-B to Auditors report
Report on the Internal Financial Controls under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 ("the Act")
1. We have audited the internal financial controls of SanduPharmaceuticals Limited ("the Company") as of 31st March 2021 inconjunction with our audit of the financial statements of the Company for the year endedon that date.
Management's Responsibility for Internal financial Controls
2. The Board of Directors of the Company is responsible forestablishing and maintaining internal financial controls based on the internal controlover financial reporting criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note on Audit of Internal Financialcontrols over Financial Reporting 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 its business including adherence tocompany'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 Companies Act 2013.
3. Our responsibility is to express an opinion on the Company'sinternal financial controls & financial reporting based on our audit. We Conducted ouraudit in accordance with the Guidance Note on Audit of internal Financial Controls overFinancial Reporting (the 'Guidance. Note.'") Issued by ICAI and theStandards on Auditing and deemed to be prescribed under section 143(10) of the CompaniesAct 2013 to the extent applicable to an audit of internal financial controls bothissued by the Institute of Chartered Accountants of India. Those Standards and theGuidance note required that we comply with ethical requirements and plan and perform theaudit to obtain reasonable assurance about whether adequate internal financial controlsover financial reporting was established and maintained and if such controls operatedeffectively in all material respects.
4. Our audit involves performing procedures to obtain audit evidenceabout the adequacy of the internal financial Controls system over financial reporting andtheir operating effectiveness. Our audit of internal financial controls over financialreporting included obtaining an understanding of internal financial controls overfinancial reporting assessing the risk that a material weakness exists and testing andevaluating the design and operating effectiveness of internal control based on theassessed risk. The procedures selected depend on the auditor's judgment includingthe assessment of the risks of material misstatement of the financial statements whetherdue to fraud or error.
5. We believe that the audit evidence we have obtained is sufficientand appropriate to provide basis for our audit opinion on the Company's internalfinancial control system over financial reporting.
Meaning of internal financial controls over Financial Reporting
6. A company's internal financial control over financial reportingis a process designed to provide reasonable assurance regarding the reliability offinancial reporting and the preparation of financial statements for external purposes inaccordance with generally accepted accounting principles. A company's internalfinancial control over financial reporting includes those policies and procedures that
(1) pertain to the maintenance of records that in reasonable detailaccurately and fairly reflect the transactions and dispositions of the assets of thecompany;
(2) provide reasonable assurance that transactions are recorded asnecessary to permit preparation of financial statements in accordance with generallyaccepted accounting principles and that receipts and expenditures of the company arebeing made only in accordance with authorizations of management and directors of thecompany; and
(3) provide reasonable assurance regarding prevention or timelydetection of unauthorized acquisition use or disposition of the company's assetsthat could have a material effect on the financial statements.
Inherent Limitations of Internal Financial Control over FinancialReporting
7. Because of the inherent limitations of internal financial controlsover financial 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 conditions orthat the degree of compliance with the policies or procedures may deteriorate.
8. In our opinion the Company has in all material respects anadequate internal financial controls system over financial reporting and such internalfinancial controls over financial reporting were operating effectively as at 31stMarch 2021 based on the internal control over financial reporting criteria established.
9. by the Company considering the essential components of internalcontrol stated in the Guidance Note on Audit of Internal financial Controls Over FinancialReporting issued by The Institute of Chartered Accountants of India.
|For Dileep & Prithvi |
|Chartered Accountants |
|Firm Reg. No. 122290W |
|Himmat Mali |
|M. No. 183378 |
|Place: Mumbai |
|Date: 30th June 2021 |