To the Members of
SANDU PHARMACEUTICALS LIMITED
Report on the Ind AS Financial Statements
1. We have audited the accompanying standalone financial statements of SanduPharmaceuticals Limited ("the Company") which comprise the Balance Sheet as at31st March 2019 the Statement of Profit and Loss including the statement of OtherComprehensive Income the Statement of Cash Flow and the Statement of Changes in Equityfor the year then ended and a summary of significant accounting policies and otherexplanatory information.
2. In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone financial statements give the information requiredby the Companies Act 2013 as amended ("the Act") in the manner so required andgive a true and fair view in conformity with the accounting principles generally acceptedin India of the state of affairs of the Company as at March 31 2019 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 standalone financial statements in accordance with theStandards 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 Standalone Financial Statements' section of ourreport. We are independent of the Company in accordance with the 'Code of Ethics' issuedby the Institute of Chartered Accountants of India (ICAI) together with the ethicalrequirements that are relevant to our audit of the standalone financial statements underthe provisions 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 sufficient and appropriate toprovide a basis for our audit opinion on the standalone financial statements.
Key Audit Matters
5. Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone financial statements for the financial yearended on March 31 2019. These matters were addressed in the context of our audit of thestandalone financial statements as a whole and in forming our opinion thereon and we donot provide a separate opinion on these matters. For each matter below our description ofhow our audit addressed the matter is provided in that context.
We have determined the matters described below to be the key audit matters to becommunicated in our report.
|S. No. ||Key Audit Matter ||How our audit addressed the key audit matter |
|1. ||Recognition of Revenue measurement presentation and disclosure as per Ind AS-115 "Revenue from Contracts with Customers". (Refer Sub-note No. L of Note 2 of Accounting Policy). ||Our audit procedures included and were not limited to the following - |
| || || We performed walkthroughs to understand the key processes and identify key controls related Ind AS-115 "Revenue from Contracts with Customers" |
| || || On a sample basis we performed testing to verify physical deliveries of product in the year to ascertain transfer of control. |
| || || 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 Standalone Financial Statements and Auditor's Report Thereon
6. The Company's Board of Directors is responsible for the preparation of the otherinformation. The other Information comprises the information included in the ManagementDiscussion and Analysis Director's Report including Annexure to Director's ReportCorporate Governance and Shareholder's Information but does not include the standalonefinancial statements and our auditor's report thereon.
7. Our opinion on the standalone 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 standalone financial statements ourresponsibility 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 during the course of our audit or otherwise appears to bematerially misstated. If based on the work we have performed we conclude that there is amaterial misstatement of this other Information we are required to report that fact. Wehave nothing to report in this regard.
Responsibilities of Management for the Standalone Financial Statements
9. The Company's Board of Directors is responsible for the matters stated in Section134(5) of the Companies Act 2013 ('the Act') with respect to the preparation of thesestandalone financial statements that give a true and fair view of the financial positionfinancial performance (including other comprehensive income) cash flows and changes inequity of the Company in accordance with the accounting principles generally accepted inIndia including the Indian Accounting Standards specified under Section 133 of the Actread with the Companies (Indian Accounting Standards) Rules 2015 as amended.
This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding the assets of the Company andfor preventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent and design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the accuracy and completeness ofthe accounting records relevant to the preparation and presentation of the standalonefinancial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.
In preparing the standalone financial statements management is responsible forassessing the Company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessmanagement either intends to liquidate the Company or to cease operations or has norealistic alternative but to do so.
The Board of Directors is responsible for overseeing the Company's financial reportingprocess.
Auditor's Responsibility for the Audit of the Standalone Financial Statements
10. Our objectives are to obtain reasonable assurance about whether the standalonefinancial 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. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these standalone financial statements.
11. As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the standalonefinancial 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 relevant to the audit inorder to design audit Procedures that are appropriate in the circumstances. Under section143(3)(i) of the Act we are also Responsible for expressing our opinion on whether theCompany has adequate internal financial controls system in place and the operatingeffectiveness of such 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 standalone financial statements or if such disclosures are inadequate to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor's report. However future events or conditions may cause the Company to cease tocontinue as a going concern.
Evaluate the overall presentation structure and content of the standalonefinancial statements including the disclosures and whether the standalone financialstatements represent the underlying transactions and events in a manner that achieves fairpresentation.
Materiality is the magnitude of misstatements in the standalone financial statementsthat individually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the financial statements may be influenced. We considerquantitative materiality and qualitative factors in
(i) planning the scope of our audit work and in evaluating the results of our work; and(ii) to evaluate the effect of any identified misstatements in the financial statements.
Communication with those charged with governance
We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.
From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the standalone financial statementsof the current period and are therefore the key audit matters. We describe these mattersin our auditor's report unless law or regulation precludes public disclosure about thematter or 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
12. 1) As required by the Companies (Auditor's Report) Order 2016 ('the Order') issuedby the Government of India -Ministry of Corporate Affairs in terms of sub-section (11) ofsection 143 of the Act we enclose in the 'Annexure-A" a statement on the mattersspecified in paragraphs 3 and 4 of the said Order.
2) As required by Section 143 (3) of the Act based on our audit we report to theextent 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 purposes 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 Balance sheet the statement of Profit and Loss including other comprehensiveincome
the Statement Cash Flow and statement of changes in equity dealt with by this Reportare in agreement with the books of account.
(d) In our opinion the aforesaid standalone 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 the directors as on March31 2019 taken on record by the Board of Directors none of the Directors is disqualifiedas on March 31 2019 from being appointed as a director in terms of Section 164 (2) of theAct.
(f) With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate report in 'Annexure-B"; and
(g) With respect to the other matters to be included in the Auditor's Report inaccordance with the requirements of section 197(16) of the Act as amended: In our opinionand to the best of our information and according to the explanations given to us theremuneration paid by the Company to its directors during the year is in accordance withthe provisions of section 197 of the Act.
(h) With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rule 2014 as amended inour opinion and to the best of our information and according to the explanation given tous:
i. The Company does not have any pending litigation which would impact its financialposition.
ii. The Company does not have any long-term contracts having material foreseeablelosses. The Company does not have any derivatives contracts.
iii. The Company is not liable to make any payments towards Investor Education andProtection Fund.
Annexure -A to the Auditor's Report (Referred to in paragraph 1 under the heading'Report on Other Legal and Regulatory Requirements' of our Report of even date on the IndAS financial statements for the year ended on March 31 2018 of Sandu PharmaceuticalsLimited )
(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of plant property and equipment.
(b) According to the information and explanations given to us the plant property andequipment have been physically verified by the management in a phased manner at regularintervals based on program designed to cover all the material items. In our opinion thefrequency of verification is reasonable having regard to the size of the Company and thenature of its assets. No material discrepancies were noticed by the management on suchverification.
(c) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the title deeds of immovable properties areheld in the name of the Company. In case of leasehold land that have been taken on leaseand disclosed as plant property and equipment in the Ind AS financial statements thelease 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 the inventory has beenphysically verified by the management at reasonable intervals and no materialdiscrepancies were noticed on such verification.
(iii) According to the information and explanations given to us the Company has notgranted loans to companies firms limited liability partnership or other parties listedin the register maintained under Section 189 of the Companies Act 2013. Accordingly theprovisions of clause 3(iii)(a) to (c) of the order are not applicable to the Company andhence not commented upon.
(iv) In our opinion and according to the information and explanations given to us theCompany has complied with the provision of section 185 & 186 of the Companies Act2013 in respect of loans investments guarantees or securities as applicable.
(v) The Company has not accepted any deposits from the public and hence the directivesissued by the Reserve Bank of India and the provisions of section 73 to 76 of the Act.Therefore the provisions of the clause (v) of paragraph 3 of the Order are not applicableto the company.
(vi) We have broadly reviewed the accounts and records maintained by the companypursuant to the Companies (Cost Records and Audit) Rules 2014 read with Companies ( CostRecords and Audit) Amendment under Section 148 of the Act and are of the opinion thatprima facie the prescribed Cost records have been made and maintained. We have howevernot made a detailed examination of the records with a view to determine whether they areaccurate or complete.
(vii) (a) The Company is regular in depositing with appropriate authorities undisputedstatutory dues including Provident Fund Employees' State Insurance Income-tax Servicetax Sales Tax Custom Duty Excide Duty Goods and Service Tax and other materialstatutory dues as applicable. Based on our audit procedures and according to theinformation and explanations given to us there are no arrears of undisputed statutorydues which remained outstanding as at 31st March 2019 for a period of more than sixmonths from the date they became payable except dues of Tax Deducted at sourceaggregating to Rs.452612 (P.Y. Rs. 450746/-) on account of defaults pertains to prioryears.
(b) According to the information and explanations given to us and records of theCompany no dues of Income-tax Sales tax Service Tax VAT are outstanding in the booksof the Company on account of any dispute.
(viii) According to the information and explanations given to us the company has notdefaulted in repayment of dues to banks and financial institution. The Company has nottaken any loan from the Government and has not issued any debentures.
(ix) The Company has not raised any money by way of public offer or further publicoffer (including debt instruments) and in our opinion the term loans have been applied forthe purpose for which they were raised.
(x) According to the information and explanations furnished by the management whichhas been relied upon by us there were no frauds on or by the Company noticed or reportedduring the course of our audit.
(xi) According to the information and explanations give to us and based on ourexamination 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. Therefore the provisions ofclause 3(xii) of the Order are not applicable to the Company.
(xiii) According to the information and explanations give to us and based on ourexamination of the records. In our opinion all transactions with related parties are incompliance with sections 177 and 188 of the Companies Act 2013 and the details have beendisclosed in the financial statements as required by the Applicable accounting standards.
(xiv) The Company has not made any preferential allotment or private placement ofshares or fully or partly convertible debentures during the year under review and henceclause 3(xiv) of the Order is not applicable to the Company.
(xv) According to the information and explanations give to us and based on ourexamination of the records the company has not entered into any non-cash transactionswith directors or persons connected with them and hence provisions of section 192 of theAct are not applicable.
(xvi) In our opinion the Company is not required to be registered under section 45-IAof the Reserve Bank of India Act 1934.
Annexure-B to Auditors report
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act")
1. We have audited the internal financial controls of Sandu Pharmaceuticals Limited("the Company") as of 31 March 2019 in conjunction with our audit of thestandalone financial statements of the Company for the year ended on that date.
Management's Responsibility for Internal financial Controls
2. The Board of Directors of the Company is responsible for establishing andmaintaining internal financial controls based on the internal control over financialreporting criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial controls overFinancial Reporting issued by the Institute of Chartered Accountants of India ('ICAI').These responsibilities include the design implementation and maintenance of adequateinternal financial controls that were operating effectively for ensuring the orderly andefficient conduct of its business including adherence to company's policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information as required under the Companies Act 2013.
3. Our responsibility is to express an opinion on the Company's internal financialcontrols & financial reporting based on our audit. We Conducted our audit inaccordance with the Guidance Note on Audit of internal Financial Controls over FinancialReporting (the "Guidance. Note.'") issued by ICAI and the Standards on Auditingand deemed to be prescribed under section 143(10) of the Companies Act 2013 to theextent applicable to an audit of internal financial controls both issued by the Instituteof Chartered Accountants of India. Those Standards and the Guidance note required that wecomply with ethical requirements and plan and perform the audit to obtain reasonableassurance about whether adequate internal financial controls over financial reporting wasestablished 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 internal financial Controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgment including the assessment of the risks ofmaterial 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 basis for our audit opinion on the Company's internal financial control systemover financial reporting.
Meaning of internal financial controls over Financial Reporting
6. A company's internal financial control over financial reporting is a processdesigned to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance withgenerally accepted accounting principles. A company's internal financial control overfinancial reporting includes those policies and procedures that (1) pertain to themaintenance of records that in reasonable detail accurately and fairly reflect thetransactions and dispositions of the assets of the company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of financialstatements in accordance with generally accepted accounting principles and that receiptsand expenditures of the company are being made only in accordance with authorizations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorized acquisition use or disposition of thecompany's assets that could have a material effect on the financial statements.
Inherent Limitations of Internal Financial Control Over Financial Reporting
7. Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.
8. In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at 31 March 2019 based on theinternal control over financial reporting criteria established.
9. by the Company considering the essential components of internal control stated inthe Guidance Note on Audit of Internal financial Controls Over Financial Reporting issuedby The Institute of Chartered Accountants of India.
For Dileep & Prithvi
Firm Reg. No. 122290W
M. No. 183378
Date: 29th May 2019