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Sanofi India Ltd.

BSE: 500674 Sector: Health care
NSE: SANOFI ISIN Code: INE058A01010
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OPEN 6390.00
PREVIOUS CLOSE 6406.15
VOLUME 464
52-Week high 9300.00
52-Week low 6320.70
P/E 25.36
Mkt Cap.(Rs cr) 14,786
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 6390.00
CLOSE 6406.15
VOLUME 464
52-Week high 9300.00
52-Week low 6320.70
P/E 25.36
Mkt Cap.(Rs cr) 14,786
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Sanofi India Ltd. (SANOFI) - Auditors Report

Company auditors report

To the Members of Sanofi India Limited

Report on the audit of the Financial Statements

Opinion

1. We have audited the accompanying financial statements of SanofiIndia Limited ("the Company") which comprise the Balance Sheet as at 31stDecember 2021 and the Statement of Profit and Loss (including Other ComprehensiveIncome) Statement of Changes in Equity and Statement of Cash Flows for the year thenended and notes to the financial statements including a summary of significantaccounting 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 ("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 31st December 2021 and totalcomprehensive income (comprising of profit and other comprehensive income) changes inequity and its cash flows for the year then ended.

Basis for Opinion

3. We conducted our audit in accordance with the Standards on Auditing(SAs) specified under Section 143(10) of the Act. Our responsibilities under thoseStandards are further described in the Auditor's Responsibilities for the Audit of theFinancial Statements Section of our report. We are independent of the Company inaccordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia together with the ethical requirements that are relevant to our audit of thefinancial statements under the provisions of the Act and the Rules thereunder and we havefulfilled our other ethical responsibilities in accordance with these requirements and theCode of Ethics. We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our opinion.

Key audit matter

4. Key audit matter is that matter which in our professionaljudgement was of most significance in our audit of the financial statements of thecurrent year. This matter was addressed in the context of our audit of the financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on the matter.

Key audit matter How our audit addressed the key audit matter
Appropriateness of provisions recognised and disclosures made in respect of certain regulatory and tax matters Our audit procedures included the following:
Refer Notes 23 39(a) 43 and 45 to the financial statements.
Being in the pharmaceutical industry the Company is highly regulated by various authorities like the National Pharmaceutical Pricing Authority and other regulators and it has outstanding regulatory cases under the Drug (Prices Control) Order 1979 (DPCO 1979) and Drug Prices Control Order 2013 (DPCO 2013) relating to prices charged for some of its formulations. - Understanding and evaluation of the design and testing the operating effectiveness of controls in respect of assessment of tax and regulatory exposures their accounting and disclosures in the financial statements;
The Company has received the following demands in the earlier years: - Obtaining a complete list of litigation matters and reviewing the underlying orders and other communication received from regulatory authorities and management's responses thereto to assess status of the litigations;
(a) DPCO 1979 - Demand of Rs 861 million against which provision of Rs 205 million was recognised. - Evaluating the independence objectivity and competence of management experts involved;
(b) DPCO 2013 - Matter remanded back to National Pharmaceutical Pricing Authority (NPPA) by the Hon'ble Delhi High Court however provision recognised in earlier years has been retained of Rs 162 million. - Reviewing opinion of management's legal adviser and consultants' advice as applicable;
In respect of the above matters based on the assessment done by the Management in consultation with its legal advisors the likelihood of any additional outflow is considered as remote. - Evaluating the management's assessment on the probability of outcome and the magnitude of potential outflow of economic resources in respect of (a) regulatory matters and; (b) tax matters including involvement of our tax experts for assessing complex tax matters based on recent rulings and latest developments in case laws;
In addition to the above there are several cases under direct and indirect tax laws which are pending for decision at various authority levels in respect of which the Company has disclosed contingent liabilities of Rs 2781 million. - Evaluating the Company's disclosures for accuracy and adequacy regarding the significant litigations of the Company.
The management's assessment with regard to the tax matters is supported by advice from independent consultants. Based on the audit procedures performed we did not identify any significant exceptions relating to the provisions recognised and disclosures made in the financial statements in respect of regulatory and tax matters.
We considered this as a key audit matter as evaluation of these matters requires significant management judgement and estimation interpretation of laws and regulations and application of relevant judicial precedents to determine the probability of outflow of economic resources for recognising provisions and making related disclosures in the financial statements. The application of accounting principles as given under Ind AS 37 Provisions Contingent Liabilities and Contingent Assets 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.

Other Information

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

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

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 in the audit or otherwise appears to be materially misstated. If basedon the work we have performed we conclude that there is a material misstatement of thisother information we are required to report that fact.

We have nothing to report in this regard.

Responsibilities of management and those charged with governance forthe financial statements

6. The Company's Board of Directors is responsible for the mattersstated in Section 134(5) of the Act with respect to the preparation of these financialstatements that give a true and fair view of the financial position financialperformance changes in equity and cash flows of the Company in accordance with theaccounting principles generally accepted in India including the Accounting Standardsspecified under Section 133 of the Act. This responsibility also includes maintenance ofadequate accounting records in accordance with the provisions of the Act for safeguardingof the assets of the Company and for preventing and detecting frauds and otherirregularities; selection and application of appropriate accounting policies; makingjudgements and estimates that are reasonable and prudent; and design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the financial statements that give a true and fair viewand are free from material misstatement whether due to fraud or error.

7. In preparing the 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.

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

Auditor's responsibilities for the audit of the financialstatements

8. 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. 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 financial statements.

9. As part of an audit in accordance with SAs we exercise professionaljudgement and maintain professional scepticism 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 control 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 with reference to financial statements 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 the goingconcern basis of accounting and based on the audit evidence obtained whether a materialuncertainty exists related to events or conditions that may cast significant doubt on theCompany's ability to continue as a going concern. If we conclude that a materialuncertainty exists we are required to draw attention in our auditor's report to therelated disclosures in the financial statements or if such disclosures are inadequate tomodify our opinion. Our conclusions are based on the audit evidence obtained up to thedate of our auditor's report. However future events or conditions may cause the Companyto 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.

10. 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.

11. We also provide those charged with governance with a statement thatwe have 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.

12. From the matters communicated with those charged with governancewe determine those matters that were of most significance in the audit of the financialstatements of the current year and are therefore the key audit matters.

We describe these matters in our auditor's report unless law orregulation precludes public disclosure about the matter or when in extremely rarecircumstances we determine that a matter should not be communicated in our report becausethe adverse consequences of doing so would reasonably be expected to outweigh the publicinterest benefits of such communication.

Report on other legal and regulatory requirements

13. As required by the Companies (Auditor's Report) Order 2016("the Order") issued by the Central Government of India in terms of sub-section(11) of Section 143 of the Act we give in the Annexure B a statement on the mattersspecified in paragraphs 3 and 4 of the Order to the extent applicable.

14. As required by Section 143(3) of the Act we report that:

(a) We have sought and obtained all the information and explanationswhich to the best of our knowledge and belief were necessary for the purposes of ouraudit.

(b) In our opinion proper books of account as required by law havebeen kept by the Company so far as it appears from our examination of those books.

(c) The Balance Sheet the Statement of Profit and Loss (includingother comprehensive income) the Statement of Changes in Equity and Statement of CashFlows dealt with by this Report are in agreement with the books of account.

(d) In our opinion the aforesaid financial statements comply with theAccounting Standards specified under Section 133 of the Act.

(e) On the basis of the written representations received from thedirectors as on

31st December 2021 taken on record by the Board of Directors none ofthe directors is disqualified as on 31st December 2021 from being appointed as a directorin terms of Section 164 (2) of the Act.

(f) With respect to the adequacy of the internal financial controlswith reference to financial statements of the Company and the operating effectiveness ofsuch controls refer to our separate Report in "Annexure A".

(g) With respect to the other matters to be included in the Auditor'sReport in accordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 inour opinion and to the best of our information and according to the explanations given tous:

i. The Company has disclosed the impact of pending litigations on itsfinancial position in its financial statements - Refer Note 23 39 43 and 45 to thefinancial statements;

ii. The Company has long-term contracts as at 31st December 2021 forwhich there were no material foreseeable losses. The Company did not have any long-termderivative contracts as at 31st December 2021;

iii. There has been no delay in transferring amounts required to betransferred to the Investor Education and Protection Fund by the Company during the yearended 31st December 2021;

iv. The reporting on disclosures relating to Specified Bank Notes isnot applicable to the Company for the year ended 31st December 2021.

15. The Company has paid/provided for managerial remuneration inaccordance with the requisite approvals mandated by the provisions of Section 197 readwith Schedule V to the Act.

Annexure A to Independent Auditors' Report

Referred to in paragraph 14(f) of the Independent Auditors' Report ofeven date to the members of Sanofi India Limited on the financial statements as of and forthe year ended 31st December 2021

Report on the Internal Financial Controls with reference to financialstatements under Clause (i) of subsection 3 of Section 143 of the Act

1. We have audited the internal financial controls with reference tofinancial statements of Sanofi India Limited ("the Company") as of

31st December 2021 in conjunction with our audit of the financialstatements of the Company for the year ended on that date.

Management's Responsibility for Internal Financial Controls

2. The Company's management 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 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 of fraudsand errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Act.

Auditors ' Responsibility

3. Our responsibility is to express an opinion on the Company'sinternal financial controls with reference to financial statements based on our audit. Weconducted our audit in accordance with the Guidance Note on Audit of Internal FinancialControls Over Financial Reporting (the "Guidance Note") and the Standards onAuditing specified under Section 143(10) of the Act to the extent applicable to an auditof internal financial controls both applicable to an audit of internal financial controlsand both issued by the ICAI. Those Standards and the Guidance Note require that we complywith ethical requirements and plan and perform the audit to obtain reasonable assuranceabout whether adequate internal financial controls with reference to financial statementswas established and maintained and if such controls operated effectively in all materialrespects.

4. Our audit involves performing procedures to obtain audit evidenceabout the adequacy of the internal financial controls system with reference to financialstatements and their operating effectiveness. Our audit of internal financial controlswith reference to financial statements included obtaining an understanding of internalfinancial controls with reference to financial statements assessing the risk that amaterial weakness exists and testing and evaluating the design and operatingeffectiveness of internal control based on the assessed risk. The procedures selecteddepend on the auditor's judgement including the assessment of the risks of materialmisstatement of the financial statements whether due to fraud or error.

5. We believe that the audit evidence we have obtained is sufficientand appropriate to provide a basis for our audit opinion on the Company's internalfinancial controls system with reference to financial statements.

Meaning of Internal Financial Controls with reference tofinancial statements

6. A company's internal financial controls with reference to financialstatements is a process designed to provide reasonable assurance regarding the reliabilityof financial reporting and the preparation of financial statements for external purposesin accordance with generally accepted accounting principles. A company's internalfinancial controls with reference to financial statements includes those policies andprocedures 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 authorisations of management and directors of theCompany; and

(3) provide reasonable assurance regarding prevention or timelydetection of unauthorised acquisition use or disposition of the Company's assets thatcould have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls with reference tofinancial statements

7. Because of the inherent limitations of internal financial controlswith reference to financial statements including the possibility of collusion or impropermanagement override of controls material misstatements due to error or fraud may occurand not be detected. Also projections of any evaluation of the internal financialcontrols with reference to financial statements to future periods are subject to the riskthat the internal financial controls with reference to financial statements may becomeinadequate because of changes in conditions or that the degree of compliance with thepolicies or procedures may deteriorate.

Opinion

8. In our opinion the Company has in all material respects anadequate internal financial controls system with reference to financial statements andsuch internal financial controls with reference to financial statements were operatingeffectively as at 31st December 2021 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.

Annexure B to Independent Auditors' Report

Referred to in paragraph 13 of the Independent Auditors' Report of evendate to the members of Sanofi India Limited on the financial statements as of and for theyear ended 31st December 2021

i. (a) The Company is maintaining proper records showing fullparticulars including quantitative details and situation of property plant andequipment.

(b) The fixed assets are physically verified by the managementaccording to a phased programme designed to cover all the items over a period of two yearswhich in our opinion is reasonable having regard to the size of the Company and thenature of its assets. Pursuant to the programme a portion of the fixed assets has beenphysically verified by the management during the year and no material discrepancies havebeen noticed on such verification.

(c) The title deeds of immovable properties as disclosed in Note 5(a)on Property Plant and Equipment and Note 18 on Assets classified as held for sale to thefinancial statements are held in the name of the Company.

ii. The physical verification of inventory (excluding stocks with thirdparties) have been conducted at reasonable intervals by the management during the year. Inrespect of inventory lying with third parties these have substantially been confirmed bythem. In our opinion the discrepancies noticed on physical verification of inventory ascompared to book records were not material.

iii. The Company has granted secured loans to two companies covered inthe register maintained under Section 189 of the Act. There are no firms or LimitedLiability Partnerships covered in the register maintained under Section 189 of the Act.

(a) In respect of the aforesaid loans the terms and conditions underwhich such loans were granted are not prejudicial to the Company's interest.

(b) In respect of the aforesaid loans the schedule of repayment ofprincipal and payment of interest has been stipulated and the parties are repaying theprincipal amounts as stipulated and are also regular in payment of interest asapplicable.

(c) In respect of the aforesaid loans there is no amount which isoverdue for more than ninety days.

iv. In our opinion and according to the information and explanationsgiven to us the Company has complied with the provisions of Section 186 of the CompaniesAct 2013 in respect of the loans provided by it. The Company has not granted any loans toparties covered under Section 185 of the Companies Act 2013. The Company has not made anyinvestments or provided any guarantees or security to the parties covered under Section185 and 186 of the Act.

v. The Company has not accepted any deposits from the public within themeaning of Sections 7374 75 and 76 of the Act and the Rules framed thereunder to theextent notified.

vi. Pursuant to the rules made by the Central Government of India theCompany is required to maintain cost records as specified under Section 148(1) of the Actin respect of its products. We have broadly reviewed the same and are of the opinionthat prima facie the prescribed accounts and records have been made and maintained. Wehave not however made a detailed examination of the records with a view to determinewhether they are accurate or complete.

vii. (a) According to the information and explanations given to us andthe records of the Company examined by us in our opinion the Company is regular indepositing the undisputed statutory dues including provident fund professional taxemployees' state insurance income tax duty of customs cess goods and service tax andother material statutory dues as applicable with the appropriate authorities. Also refernote 39(b) to the financial statements regarding management's assessment on certainmatters relating to provident fund.

(b) According to the information and explanations given to us and therecords of the Company examined by us there are no duty of customs value added taxservice- tax goods and service tax which have not been deposited on account of anydispute. The particulars of dues of income-tax sales tax and duty of excise as at 31stDecember 2021 which have not been deposited on account of a dispute are as follows:

Name of the statute Nature of dues Amount (Rs in million) ^ Period to which the amount relates Forum where the dispute is pending
The Income-tax Act 1961 Income-tax including tax deducted at source and interest as applicable 51 Assessment Year 2011-2012 Income Tax Appellate Tribunal
1029 Assessment Years 2008-2009 2011-2012 to 2019-2020 Up to Commissioner's level
The Central Sales Tax Act 1956 and Local Sales Tax Acts Sales tax 2 1999-2000 Sales Tax Appellate Tribunal
4 1998-1999 2008-2009 and 2012-2013 to 2013-2014 Up to Commissioner's level
The Central Excise Act 1944 Export Obligation 4 2012-2014 Additional Director General of Foreign Trade
Disallowance of MODVAT 39 2007-2008 to 2011-2012 Appellate Tribunal
Excise Duty including interest and penalty as applicable 23 1993-1997 2005-2007 2015-2016 Assistant Commissioner and Commissioner of Central Excise Service Tax and Customs
Medicinal and Toilet Preparation (Levy of Excise Duty) Act 1955 Dispute whether Central or State Excise Duty 23 January 1990 to August 1997 Central Board of Excise and Customs
13 1996-1997 to 1998-1999 Commissioner of State Excise Duty Maharashtra

viii. As the Company does not have any loans or borrowings from anyfinancial institution or bank or Government nor has it issued any debentures as at thebalance sheet date the provisions of Clause 3(viii) of the Order are not applicable tothe Company.

ix. The Company has not raised any moneys by way of initial publicoffer further public offer (including debt instruments) and term loans. Accordingly theprovisions of Clause 3(ix) of the Order are not applicable to the Company.

x. During the course of our examination of the books and records of theCompany carried out in accordance with the generally accepted auditing practices inIndia and according to the information and explanations given to us we have neither comeacross any instance of material fraud by the Company or on the Company by its officers oremployees noticed or reported during the year nor have we been informed of any such caseby the Management.

xi. The Company has paid/provided for managerial remuneration inaccordance with the requisite approvals mandated by the provisions of Section 197 readwith Schedule V to the Act. Also refer paragraph 15 of Independent Auditor's Report.

xii. As the Company is not a Nidhi Company and the Nidhi Rules 2014are not applicable to it the provisions of Clause 3(xii) of the Order are not applicableto the Company.

xiii. The Company has entered into transactions with related parties incompliance with the provisions of Sections 177 and 188 of the Act. The details of suchrelated party transactions have been disclosed in the financial statements as requiredunder Indian Accounting Standard (Ind AS) 24 Related Party Disclosures specified underSection 133 of the Act.

xiv. The Company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures during the year underreview. Accordingly the provisions of Clause 3(xiv) of the Order are not applicable tothe Company.

xv. The Company has not entered into any non-cash transactions with itsdirectors or persons connected with him within the meaning of Section 192 of the Act.Accordingly the provisions of Clause 3(xv) of the Order are not applicable to theCompany.

xvi. The Company is not required to be registered under Section 45-IAof the Reserve Bank of India Act 1934. Accordingly the provisions of Clause 3(xvi) ofthe Order are not applicable to the Company.

For Price Waterhouse & Co. Chartered Accountants LLP
Firm Registration Number: 304026E/E-300009
Asha Ramanathan
Partner
Place: Pune Membership Number: 202660
Date: 23rd February 2022 UDIN: 22202660ADKCBR4145

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